Discretionary Spending Growth

It’s been quite amusing recently to watch conservatives such as Andrew Sullivan wrestle with the question of how they would balance the budget. The fundamental problem that they face is that the types of government spending that they want to cut just don’t add up to many dollars. Similarly, the growth in spending that they imagine has happened under Bush has been confined overwhelmingly to those types of spending that they like.

The following table is an update of something I’ve put up before. It takes the spending that was enacted for 2006 for all discretionary items and compares it to spending in 2001.

Source: CBO. 2001 figures inflated by the change in the GDP price deflator to show them in 2006 dollars. Figures include supplemental appropriations for 2006 for Iraq, Katrina, etc.

In per capita terms and adjusted for inflation, all non-defense discretionary spending grew by only 14% during the period 2001-06, which is an average growth rate of 2.7% per year. Not exactly what I would call runaway growth.

This brings me to one of the few ways in which I actually agree with Bush’s assessment of his own presidency: when he claims that he has held down the growth of non-defense discretionary spending, I think he’s basically right. The cause of today’s budget deficit is not the growth in non-defense discretionary spending. The causes of the budget deficit are higher defense spending, higher health care costs, and tax cuts.

The implication, of course, is a simple one, though it still escapes many conservatives (though not all; see Bruce Bartlett, for example): it will be impossible to reverse the general fund deficit (i.e. the deficit excluding the SS surplus) of the past 5 years without doing some combination of a) cutting defense spending; b) radically reforming the nation’s health care system to bring down health care costs; and c) raising taxes. Conservatives that honestly believe in fiscal prudence will have to embrace those options before they will ever be able to come up with a deficit-reduction proposal that is actually credible.

Kash