As Congress considers how to boost the economy, they should begin by ceasing behavior that harms the economy: this means ending wasteful government spending and reforming entitlement programs to reduce the government’s implicit debt.
Federal spending has been growing at a pace that outpaces inflation and population growth. While some of this growth can be justified as necessary to fund the war effort and national security activities, non-defense discretionary spending grew by more than a third in real terms since 1999.
Discussions of spending restraint often focus on eliminating government waste and frivolous earmarks-important goals to be sure. Yet the most important budgetary problem facing the government is the growing cost of entitlement programs. Already more than half of the federal budget is on autopilot. Social Security and Medicare alone consume 40 percent of the federal budget. As the baby boomers retire, the costs of these programs will swell. If nothing is done to address their costs, spending on other programs (including defense) will be crowded out, taxes will have to rise dramatically, or we will incur massive new debt.
Policymakers should act soon to control spending, both by ending government waste and by reforming entitlement programs.