Lawmakers and candidates often bemoan how high U.S. debt is and how much higher it will go if nothing changes.
But they’ve been focusing almost exclusively on squeezing savings from the smallest part of the federal budget: “discretionary” spending on defense and domestic programs, which fund everything from the military to national parks and museums to food safety to Head Start and research and development.
But that’s not what’s driving long-term debt to unsustainable levels.
In fact, within a decade, defense and domestic spending is on track to fall to its lowest level as a share of GDP since 1962, according to the Congressional Budget Office.
Meanwhile, lawmakers and candidates typically dodge dealing with the real debt drivers — “entitlement” spending, which includes the major healthcare programs (Medicare, Medicaid and insurance subsidies) as well as Social Security, and interest on the debt.
Within 20 years, CBO projects that entitlement spending plus interest will suck up virtually every tax dollar coming into the federal government, up from 65% of revenue today.
In the wake of domestic spending cuts
In some cases, lawmakers have chosen to slow the spending growth rate for discretionary programs.
But in other cases, there have been actual cuts.
For instance, the Army Corps of Engineers, the Environmental Protection Agency and the National Science Foundation now have less money in absolute terms than they did just a few years ago, according to the Bipartisan Policy Center.
Some of the cuts have been more politically motivated than others. The EPA, which Republicans often accuse of regulatory overreach, is operating with $2 billion less than it had in 2010.
And the IRS — long a political punching bag — is now operating with about $900 million less than it got six years ago.
As a result, that agency has lost more than 17,000 employees through attrition and its audit rates have dropped.
“In cutting the IRS budget, historical collection results suggest that the government is forgoing more than $5 billion a year in enforcement revenue, just to achieve budget savings of a few hundred million dollars,” said IRS Commissioner John Koskinen this spring, whom a group of House conservatives is trying to impeach.
BPC researchers found that lawmakers are also spending less money on education and health research, pollution control, job training, community development and repairing and modernizing transportation infrastructure.
For instance, funding for research and development — which is the front line for future innovations that can grow the economy — is at its lowest level as a share of the economy in 50 years, down from its all-time high in 1964.
So, where do the presidential candidates stand?
Neither Donald Trump nor Hillary Clinton have proposed any real solutions for how to address the steep rise in entitlement spending. Trump senior economic adviser Stephen Moore notes that Trump wants to repeal the Affordable Care Act and with it the cost of its insurance subsidies. But there’s no clear indication what he’d replace it with or what that would cost.
On the discretionary side, both Trump and Clinton have said they want to bolster infrastructure spending, which most people believe is sorely needed.
When it comes to controlling debt, Clinton has committed to pay for her new spending proposals — mostly through tax hikes on the wealthy. So were she to have her way, debt is not projected to grow much more than it is expected to currently.
In terms of Social Security, she backs two proposals to actually expand benefits in small ways, and supports hiking payroll taxes on the rich to pay for that expansion. That solution is also the only one she’s backed as a way to cure the program’s long-term shortfall.
Trump has proposed a very expensive tax plan, which will greatly expand debt. And his proposals to cut spending in an effort to curb debt focus solely on the smallest part of the budget.
He’s called for the elimination of the EPA and the Department of Education. He wants to defund Planned Parenthood. And he’s a big fan of cutting that catchall “waste, fraud and abuse.”
