A Better Budget: Governance by Grown-Ups

Many Americans might understandably believe, amid all of the wailing and teeth-gnashing over devastating cuts to Medicaid, food programs, and student aid spending, the GOP leadership must be proposing a budget that will reduce our monstrous $1.9 trillion deficit.

They would be wrong.

The One Big Bloated Borrowing Bill—making its way from the Senate back to the House of Representatives this week— will accelerate America’s accumulation of debt by $3.9 trillion over the next decade, according to the nonpartisan Committee for Responsible Budgeting.  Add another $1.4 trillion in new debt when Congress inevitably makes several “temporary” provisions–a common way for Congress to conceal the long-term costs of their giveaways— permanent in a couple of years.  

While GOP leaders gaslight the public about the bill’s cost, nearly every independent expert–from the nonpartisan Congressional Budget Office to the conservative Tax Foundation–know better.  The bill also hasn’t fooled the markets.   After the House passed its less costly version of the bill, Moody’s downgraded U.S. bonds in view of “current fiscal proposals,” while wary bond investors pushed yields higher.  

While some might dismiss my criticism of GOP leaders’ budgetary recklessness as mere partisanship, in truth, both parties own responsibility for our fiscal failures.  Our $36 trillion in debt emanates from a long and bipartisan history of overpromising and overspending— not to mention overlooking our responsibility to future generations. 

As Democrats, we must do better.  Our children—and our nation’s future—depend on it.  To offer America a better path, Democrats must demonstrate what I call “governance by grown-ups.”  

Grown-up governance recognizes the moral imperative of taking the long view: saving, sacrificing, and investing today for our children’s tomorrow.  It maintains critical infrastructure rather than waiting for its more costly replacement.  It overcomes the myopia of drilling today, and worrying about emissions tomorrow.  Above all, it compels us to stop spending our children’s money. 

We don’t need to look far to find responsible, grown-up budgeting.  Every year, mayors, CEO’s, and executive directors throughout the country confront tough budgets by consulting experts, engaging stakeholders, and informing the public. For example, when I became San Jose’s mayor in 2015, we faced skyrocketing payments on $4 billion in employee retirement debt that forced us to close fire stations and shutter libraries.  We engaged actuaries and economists; spent hundreds of hours in difficult negotiations with 11 unions; and extensively communicated with voters to approve the pension reform agreement.  The resulting savings helped us reactivate fire stations, libraries, and other services, and we left my successor a $30 million surplus.

We succeeded by deploying a familiar approach to confronting budgetary challenges: deploying expertise, engaging in tough conversations, and making decisions transparently.  This isn’t new.  It’s just new to Congress. 

Let’s start with expertise. Inspectors general saved taxpayers some $70 billion in waste and fraud last year, or $18 for every $1 spent on their work.  Rather than firing 17 inspectors general or threatening the takeover of the General Accounting Office, as Trump has, Congress could actually implement their advice.   The IRS could also help reduce the deficits by hiring specialists in corporate, cryptocurrency, and other transactions to gather roughly $625 billion in tax revenue that tax cheats hide from Treasury collection each year.  Instead, DOGE will cut IRS experts.

Second, we must engage powerful stakeholders in tough conversations.  Defense comprises the largest category of discretionary federal spending, and powerful industry lobbyists persuaded Congress to propose $150 billion more spending in this bill.  Yet Congress could save tens of billions annually by abandoning schlerotic procurement processes that reward the same half-dozen contractors, buying more technology products off the shelf, shifting from cost-plus to fixed-price contracting, and scaling the Defense Innovation Unit’s approach of  working  directly with technology providers.  We could save more by heeding our experts—Pentagon generals—and retire antiquated weapons systems, and invest half of the savings into systems modernization.  We could overcome pork-drive political parochialism by reviving the 1990’s approach of the Base Realignment and Closure Commission: proffer the Pentagon’s list of cuts for an up-or-down vote on the floor, without amendments.

Third, we owe our taxpayers transparency.  We must stop promising what we can’t afford–as when Trump painted Congress into a corner by pledging $5 trillion in tax cuts.  The public should also know that not all tax goodies bring the same economic benefits: the $14 million estate tax exemption will pad the assets of a generation of wealthy heirs, but will create far fewer jobs than a deduction for research and development investment.  We also must forthrightly acknowledge the looming insolvency of our Social Security and Medicare funds.  This gap requires more than merely cutting the billions in waste that the General Accounting Office and Inspector General have uncovered. It requires making difficult choices— starting with lifting the inequitable wage cap on payroll taxes that exempts very high earners from paying payroll tax on every dollar in the way that middle-income earners must pay. 

None of this grown-up decision-making comes easily.  By shirking it, however, Congressional Republicans have abdicated their responsibility for our fiscal future.  Democrats can seize this moment – if we have the courage to do so.