The federal government ended its fiscal year 2024 on September 30, and to no one’s surprise whatsoever, the federal budget is still an unholy mess of overspending and waste. The Congressional Joint Economic Committee, or JEC, recently released their monthly analysis of the US debt, a harmful symptom of federal fiscal irresponsibility. Their report looks at the federal debt for fiscal year 2024 and according to the JEC report, the federal debt increased by over $2.2 trillion that’s an increase of, shockingly, $70,000 per second in the last year. The increase has now brought the federal debt to over 35 point 7 trillion, which breaks down to over 106,000 for every man, woman and child in America, or over 271,000 per household. And if you think that’s bad, that doesn’t even measure the nearly 100 trillion in unfunded liabilities in Social Security, Medicare and Medicaid.
Contrary to what President Joe Biden and Vice President Kamala Harris claim, the annual budget deficit, which causes the growth in debt, has not been caused by a lack of revenue. Their accusation is leveled at the Tax Cuts and Jobs Act of 2017 President Donald Trump’s signature tax cut, and they claim that has led to death drastic increase in federal debt. However, when looking at federal receipts since the passage of the TCJA, one can clearly see that average annual revenue growth has actually beaten average annual revenue growth of the prior decade.
In the same time period, federal spending increased at a rate more than triple that of the growth rate of federal receipts. Furthermore, annual spending was nearly one and a half times greater than federal receipts. Clearly, the federal deficit is not a revenue problem. It is a problem of overspending in Washington. In addition to the wasteful overspending that happens every year, it is worth noting that part of the problem is continual accumulation of debt by running budget deficit annually.
Federal debt, just like personal debt, is subject to interest, as recently reported by Fortune magazine, the interest payments on our soaring national debt now average 3 billion per day. That averages out to more than 1 trillion in interest payments alone on our national debt for the year.
The federal government could benefit from some common sense budget lessons from the states where 49 out of the 50 must balance their budget. The ALEC state budget reform toolkit outlines helpful, positive solutions to the problem of overspending and budgeting as usual. It poses five essential questions to evaluate spending. First, what is the role of government? What are the essential services government must provide to fulfill its purpose? How will we know if government’s doing a good job, what should all of it cost and when cuts must be made? How will they be properly prioritized?
This priority based budgeting model helps lawmakers address five essential questions by providing tools to modernize budgets, improve budget transparency, control costs and improve government efficiency. Some of the more notable tools include a strong balanced budget requirement, a tax and expenditure limit modeled after Colorado’s successful Taxpayer Bill of Rights or TABOR, and a 72 hour budget review time out during which lawmakers and the public are able to review any proposed spending or tax measures before official actions are taken related to the measure.
That’s a great way to address DC style legislating that regularly fails and steamrolls hardworking taxpayers. Remember that infamous line from former Speaker Nancy Pelosi “we have to pass the bill so that you can find out what’s in it.” Hopefully we can all agree we need to take a hard pass on using that approach ever again.
The best instance of priority based budgeting comes from the bipartisan Washington state effort back in 2003 at the time Washington state implemented priority based budgeting to close a budget deficit of 2.4 billion coming out of the.com recession. Had the traditional budgeting as usual been used, legislators would have started with last year’s budget and focused on either cutting programs across the board or raising taxes until the general fund matched the forecasted revenue. The state’s economy was thankfully recognized by both parties as too weak to withstand a tax hike, so that instead, the state prioritized core services and determined what the most important things to buy or deliver were for the dollars invested.
Wouldn’t that be a novel concept if we took that state solution and applied it to our massive problem in Washington DC? DC would do well to learn from state experiments like Washington state with priority based budgeting, as well as lessons learned from other fiscally responsible states that actually balance budgets and limit the growth of spending without these real reforms to spending in limits on its growth, the federal debt will continue to spiral out of control, making America poorer and less safe in the years to come.
For more information, you can visit http://www.alec.org
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