How The GOP Will Whiff On The Debt Ceiling Showdown

There are three long-term budget numbers that tell you all you need to know about why the upcoming debt ceiling battle is likely to result in a big whiff when it comes to ameliorating that nation’s roaring fiscal crisis. To wit, CBO’s current Rosy Scenario budget outlook projects $60 trillion of revenues but $80 trillion of Federal outlays over the next 10 years—with the following crucial allocation among the major spending categories.

CBO February 2023 Projections of 10-Year Federal Outlays:

• Mandatory Programs: $48.2 trillion

• Discretionary Programs: $21.2 trillion

• Net Interest: $10.5 trillion

So here’s the meat of the matter with respect to any so-called 10-year deficit reduction plan. You would need a strong majority in both houses and a presidential signature to save even one dime of the $48.2 trillion in mandatory spending. Getting all three at the same time is an exceedingly tall order in today’s fractured political environment, where a 1965-style Lyndon Johnson/overwhelming Congressional majority set-up has not been seen for more than a half-century.

Yet absent that confluence of powers, entitlements simply do not get curtailed or reformed. Non-action is the embedded default policy position, meaning that relentless spending growth is the order of the day.

Lack of overwhelming tripartite control of the legislative machinery, in fact, is the reason that during the last 25 years there has been virtually no legislation to reduce entitlement spending by any material amount.

As a result, entitlement-driven mandatory spending has risen at an 6.5% annual rate since 2000 or  more than 1.6X faster than the 4.0% rate of nominal GDP growth.

Now, however, the situation is actually worse. Even if Sleepy Joe capitulated and the divided Senate rolled over, the Trumpified GOP House majority has become a flat-out flock of chickens with their head in the sand when it comes to entitlement reform.

For want of doubt, here is what they are actually proposing with respect to the built in gross spending (before off-setting receipts) of $52.7 trillion for mandatory/entitlement programs over the next decade.

Foremostly, the GOP’s latest plan proposes a zero percent cut on the Big Four Untouchables, which will cost $37.5 trillion over the next decade and account for 54% of total non-interest spending.