It’s Not Discretionary Spending, Stupid

by Stuart Shapiro

As we veer closer and closer to the end of the game of Chicken over the debt limit, it is important to keep some facts in mind.  The most important of these facts is that the reason our debt is so high has virtually nothing to do with discretionary spending.

Domestic discretionary spending is a small sliver of the budget. Our deficit and debts can be traced to the fact that spending on entitlement programs and defense has shot up, and tax revenues have plummeted to their lowest level in decades. But spending on domestic discretionary programs has grown much more slowly. And, if you correct for inflation, and for growing population, it turns out we’re spending exactly the same amount on these programs as we were a full decade ago.

And, if you remember, a decade ago, we had a surplus.  What has changed in the past decade is a huge increase in spending on defense and Medicare and a huge decrease in tax revenues.  If we need a solution to the problem of deficits, then there really only should be three things on the table: defense, Medicare, and taxes.  And all three should be part of that solution.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.