By J.D. ALT
Let’s imagine pulling together a group of enlightened economic planners to create an American budget for, say, the years 2020-2024. What might they come up with? To begin with, how might they even go about thinking about how to create an American budget?
It’s not so obvious as, for example, the way the Congressional Budget Office might go about it. The CBO would begin by tallying up how much money America’s government will have to spend in the years 2020-2024. Then they’d allocate those projected dollars to various pots of spending—with some calculation about what the spending needs will be for each pot. In the middle of this exercise, they’ll discover that the spending needs for the pots far exceed the number of dollars they’ve projected America’s government will have to spend. So, they’ll tweak the tax revenue numbers, projecting that economic growth in this or that sector will generate more tax collections for the government, and they’ll search for a bevy of cost-savings the government can garner by eliminating “wasteful” spending. Then they’ll repeat the allocation exercise and discover the projected available spending dollars are still far short of what they’ve calculated the pots will demand. Thus they will next have to calculate how many dollars the American government will have to borrow to make up the short-fall—and will have to further calculate how much that borrowing will add to the “national debt,” and how many years (projected into a distant future using imagined numbers for economic growth and future tax-rates) will it take for America to repay the debt. Then they’d publish all these numbers and Congress would blanche and fall into chaos and confusion. The political party out of power would declare the party in power to be “fiscally irresponsible,” driving the nation to bankruptcy, and the arguing would begin over which pots should be reduced or eliminated. Another day in the life of American politics courtesy of the Congressional Budget Office.