Under current law, CBO projects that the budget deficit this year, will be about $1.3 trillion, or more than 9 percent of the country’s total output. Looking beyond this year, the budget outlook is daunting: Under current law, CBO projects that the deficit will drop to about 3 percent of GDP by 2013 but remain in that neighborhood through 2020. By that point, interest payments alone would cost more than $700 billion per year.
Our problem, obviously, is mandatory spending, which makes up about two-thirds of the nation’s federal expenditures each year. There is no question that reforming it is necessary to making sure this country’s fiscal health is sustainable over the long-term.
But in the short run, there are also smaller, incremental steps Congress can take to start dealing with the spending problem, such as capping discretionary spending. It’s not much, but it’s an important start. If nothing else, it is a practice in self-control that would probably be good for Congress to experience. Over the course of the twelve years the caps were in place (1990-2002), these caps helped contain the insatiable appetite of Congress.
I know that Senators Claire McCaskill (D., Mo.) and Jeff Sessions (R., Ala.) have an amendment pending directed at reinstating binding discretionary caps. I will be very interested to see whether it passes. If it does, it would be a sign of Congress’s tiny willingness to start being serious about spending restraints. If it doesn’t, we need to really worry, because, if they won’t even do this, what are our chances that they will tackle the big nasty entitlement problem?