This column by Professor of Biology Dave Gammon was distributed by the Elon University Writers Syndicate and appeared in the the Salisbury Post, the Greenville Daily Reflector, the Elizabeth City Daily Advance, the Rocky Mount Telegram and The Butner-Creedmoor News.
By Dave Gammon
The United States Congress must agree to raise the current debt limit of $31.4 trillion. If they fail to act then sometime this summer the U.S. will default on its debt for the first time in history, sending unpredictable shockwaves through the economy.
We spend $500 billion each year just on interest payments. If our credit rating drops because of a default, then servicing our debt becomes more costly.
President Biden’s solution is for Congress to raise the debt limit with no strings attached. This solution was enacted three times under President Trump, and dozens of times before him. It would solve the short-term problem, but it does not address the chronic problem of the federal government spending more than it takes in.
U.S. House Speaker Kevin McCarthy has instead proposed and the House has passed a “Limit, Save, Growth Act” that raises the debt limit by $1.5 trillion but also reduces federal spending by $4.5 trillion over the next decade, without touching popular entitlement programs.
But do McCarthy’s spending cuts add up to $4.5 trillion? Only if we make questionable assumptions.
Item #1 on McCarthy’s chopping block is $80 billion recently approved by Congress for the IRS to provide better customer service and to pursue those who cheat on their taxes. The nonpartisan Congressional Budget Office concluded that spending this $80 billion would save taxpayers $114 billion in the long run because of increased tax revenue that results from cracking down on cheaters. But even if we assume the $80 billion represents wasteful spending, cutting it brings us less than 2% of the way towards saving $4.5 trillion.
Four more items on McCarthy’s chopping block would eliminate programs cherished by Democrats, but many Republicans find distasteful. Repealing tax credits for green energy programs would save $370 billion. Adding work requirements to safety net programs like food stamps and Medicaid might save up to $120 billion. Canceling unobligated COVID relief funds would save somewhere between $30 to $120 billion. Axing a Biden student loan forgiveness program would save around $460 billion over 10 years.
It is questionable whether McCarthy can claim the fourth item as savings, given that Biden’s debt relief plan is tied up in the courts. But even if we are generous, accounting for these additional items brings total savings to $1.15 trillion. We are still only a quarter of the way to $4.5 trillion.
McCarthy’s final item could potentially save trillions of dollars, but only if lawmakers behave with far more financial restraint than Republicans ever did under President Trump. McCarthy specifically wants to return federal discretionary spending to Fiscal Year 2022 levels and then limit funding for all federal agencies other than the military to an annual growth rate of 1%. Truth is, overall federal spending grew by at least 3% each year under President Trump, even when Republicans dominated Congress.
To paraphrase former President George W. Bush, Speaker McCarthy’s solution to our budget woes relies heavily on “fuzzy math.” And we have not even addressed how to get the Democratically controlled Senate on board.
If McCarthy is serious about balancing the budget, he might take a tip from Disney’s Mr. Incredible: You can’t change math. Math is math!
Each year the federal government brings in less than $5 trillion but spends more than $6 trillion. Balancing the budget means these two numbers must align. Medicare, Medicaid, and other health care expenses account for over a quarter of the Federal Budget. Social Security payments to the elderly account for another quarter. Spending on the military and veterans’ programs accounts for another $1 trillion.
If a politician claims his plan will solve the federal debt problem, we should take him seriously only if his proposal includes either deep cuts to these programs, or else hundreds of billions of dollars in new taxation. Math is math.
I applaud all lawmakers who demonstrate an interest in raising the debt ceiling and balancing the federal budget. Now let’s use math effectively to achieve those worthy goals.
Views expressed in this column are the author’s own and not necessarily those of Elon University.