Restoring Fiscal Sanity—How to Balance the Budget

Alice M. Rivlin and Isabel Sawhill (Brookings Institution Press, 2004)

Reviewed by A.C. Hyde

 

The Brookings Institution’s lat-est budget collection surely deserves a thoughtful and com-prehensive review as a notable book for 2004. Unfortunately, this editor’s affiliation with Brookings requires a different tack, both to sat-isfy requirements for objectivity and to enable using Restoring Fiscal San-ity to make a specific point about federal budgeting realism. Restoring Fiscal Sanity is a simple collection of six complex chapters—each dealing with a different domain in the fed-eral budget. Three chapters deal with expenditure sectors: national security, domestic spending, and social secu-rity (aptly entitled the impact of an aging population). Two chapters pro-vide assessments and prescriptions on spending and revenues to include impacts for three models of govern-ment (smaller, larger, and smarter).

 

The End of the Federal Domestic Budget

The relevant point for this post-script review is the editors’ first chapter on why growing deficits matter. This opening essay performs the obligatory assessment of current federal spending and revenues trans-forming the current numbers into a decadal look ahead. There, almost without comment, is a graph on page 19 entitled “The Current Squeeze.” This is true budgeting surrealism. The Current Squeeze is taken from Eugene Steuerle’s 2003 policy brief at the Urban Institute and depicts the convergence of baseline fed-eral revenues with baseline spend-ing for Social Security, Medicare and Medicaid, defense, and interest payments. Rivlin and Sawhill note simply: “Indeed, expected growth in these programs, along with projected increases in interest on the debt and defense, will absorb all of govern-ment’s currently projected revenues within eight years, leaving nothing for any other program.”

 

Nothing. Now there is a message for the US Departments of Educa-tion, Transportation, the Interior, and Agriculture, the US Environmental Protection Agency. and many others. In 2011, your budget will be zero.

 

Of course, it is not going to happen. Just like the sun will keep shining and the polar ice caps will still be there. Because long before 2011, whoever is president and whoever controls the Congress will agree to put up a combined package of $2 trillion plus in tax increases, defense spending cuts, and social service roll-backs. They will have to, of course. That is what the politics of budgeting are all about.

 

But any public manager looking at the current squeeze figure is going to ask: What kind of budgeting system would even let that kind of course be set in the first place? Budgeting sur-realism; Dali would have loved it.

 

A. C. Hyde is a senior consultant with The Brookings Institution’s Center for Public Policy Education and an associ-ate editor for The Public Manager.