A Deficit Cure: Spend More Money Now
I’ve spent the past couple of months listening to political candidates in a variety of formats. I like most of them as people, but I am struck by how thin our political discourse can be.
Consider the federal purse. Politicians are quick to zoom in and focus on specific programs they’d like to trim. Cut the budget. Easy. Case closed. But what’s missing from that simple narrative is math.
Where is the real savings? What’s the cost right now and over the next few decades?
Three issues that jump out at me are higher education, immigration and health care.
A recent study by Goldman Sachs found that young people carrying huge student loans are purchasing fewer homes. As noted by The Washington Post’s Wonkblog: “Only a small share of young adults – 6.6 percent – are borrowing sums that exceed $50,000. But they carry a disproportionate share of the debt.”
And it’s not just fewer houses being purchased — it’s less buying of everything. This next generation is burdened with more than $1 trillion in student loans; the very same cohort we expect to pay for my generation’s retirement.
According to Pew Social Trends: The Millennial generation is “entering adulthood with record levels of student debt: Two-thirds of recent bachelor’s degree recipients have outstanding student loans, with an average debt of about $27,000. Two decades ago, only half of recent graduates had college debt, and the average was $15,000.”
So cuts in higher education “save” money — unless you look at the entire economic picture. The case should be made by citizens about why it’s sometimes smarter for the federal government to spend more money, not less, on key priorities. Educating the next generation, the one that’s going to pay all the bills, ought to be one of those areas where spending more now might save us all money down the road.
The economic impact of immigration is just the opposite. The same folks who would cut federal budgets want the federal government to spend even more money to secure the borders. But we are already spending record amounts. The federal government spends more on border enforcement than it does on the combined budgets of the FBI, DEA, Secret Service, US Marshals Service and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Money is not going to “solve” the border issue.
But what might? Demographic reality. The Economist notes that the “number of 15-24-year-olds in Mexico and El Salvador will start declining between 2015 and 2020. Since illegal crossers tend to be young men, this will surely ease the pressure on the border. And over the next 40 years fertility rates in both countries are forecast to drop below America’s.”
Now let’s go straight to the bottom line here. The Congressional Budget Office projects the current immigration reform bill in the Senate would save some $135 billion during the first decade of implementation, including more money for border enforcement. Taxpayers would save an additional $685 billon between now and 2023 because of increased revenue.
OF COURSE, the easiest way to balance the budget is to press ahead with health care reform. The federal government’s three Medicare, Medicaid, and Children’s health total some 22 percent of the federal budget in 2013. This is where real savings can be found. But that means subscribing to the notion that the Affordable Care Act is a start — and an idea that is moving in the right direction. “The recent slowdown in health care cost growth and the new projections offer encouraging signs that these savings are achievable, if challenging,” according to Paul Van de Water, senior fellow, from the Center on Budget and Policy Priorities.
There is nothing wrong with debating the size of government, how much is spent on border enforcement, or even the cost of higher education. But it would be a lot better discussion if we could move beyond slogans and look at the complete ledger with more of the pluses and minuses listed. Then to do that we’d have to start by acknowledging — and agreeing — that the budget deficit is declining. The latest figures from the Treasury report a $94 billion deficit in July 2014, down by $3 billion from just a year ago. And most budgets project the deficit to shrink for at least the next decade.
Mark Trahant holds the Atwood Chair at the University of Alaska Anchorage. He is an independent journalist and a member of The Shoshone-Bannock Tribes. For up-to-the-minute posts, download the free Trahant Reports app for your smart phone or tablet.
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