JAMES CARTER, KEITH HALL AND JAMES C. MILLER III: There’s A Way To Fix America’s Broken Budget Process

With the presidential election behind us, now comes the awful realization that President-elect Donald Trump is inheriting the federal government’s bleak fiscal future.

President Joe Biden presided over a massive increase in federal spending. Cumulative federal spending jumped by nearly $5 trillion above previous estimates during Biden’s four years (fiscal 2021-2024) in office — an increase of 22.3% relative to the Congressional Budget Office’s (CBO) February 2021 estimate. Although federal revenue also grew faster than CBO anticipated, the spending surge ballooned the cumulative budget deficit 48.2% above CBO’s 2021 estimate for a four-year total of $7.7 trillion.

It did not have to be this way. Had federal spending in fiscal 2024 totaled the $5.258 trillion that CBO had estimated for that year at the start of Biden’s presidency, last year’s budget deficit would have been a “mere” $339 billion. That is only 18.5% as large as the actual deficit of $1.833 trillion.

Despite rising federal revenue, CBO’s fiscal outlook anticipates enormous budget deficits averaging 6.3% of GDP between now and FY’34. (Unfortunately, CBO is likely being too optimistic.)

Why is the outlook so bleak? The answer lies in how some federal policymakers think about federal spending.

Then-House Budget Chairman John Yarmouth (D-Ky.) was caught on tape in 2021 saying, “We [the federal government] don’t have to balance our checkbook. We are like the banker in Monopoly. We create the money. We hand out the money everyone else plays the game with. …. [That means you] can basically do whatever you want, spend whatever you want.”

Yarmouth’s perverse reasoning explains why the federal government spent nearly $6.8 trillion last year. That is the equivalent of $214,105 per second — literally faster than the speed of light (186,282 miles per second).

That’s also 28.4% more than CBO projected for fiscal 2024 when Biden assumed office. The extra spending was a result of the 117^th Congress (2021-22) enacting trillions of dollars of unnecessary spending while elevated inflation and interest rates swelled interest outlays on the federal debt.

The deterioration is likely worse than you realize. CBO estimated in February 2021 that the federal government would spend $284 billion on net interest in fiscal 2024. Given the larger-than-anticipated increase in the federal debt, higher inflation and higher interest rates under Biden, net interest outlays in fiscal 24 totaled $949 billion — or 3.3 times as much as CBO estimated in 2021.

Why did this happen? It happened because the federal budget process is broken.

The Congressional Budget and Impoundment Control Act of 1974, the basis of the current federal budget process, has been in place for literally 50 years. Conceived of during the era of ABBA and bell-bottoms, the Budget Act does little to encourage, much less force, national leaders to weigh the costs and benefits of the programs they champion.

The budget process is hopelessly broken and the results speak for themselves. Under the existing process, federal spending exploded — it was 52% higher last year than in fiscal year 2019 — gross federal debt swelled to $35.9 trillion, and unfunded federal obligations grew to an unimaginable $140 trillion.

After all, if what the federal government spends is “Monopoly money,” there is literally no reason not to spend 1) more, 2) far more and 3) much, much more.

Consequently, the fiscal outlook is steadily worsening. Heed CBO Director Phillip Swagel’s stern warning that the federal government is trapped in “a slow spiral, but it’s still a spiral — of rising debt and rising payments on the debt. The situation is unsustainable.”

Facing this bleak fiscal future, we urge the 119^th Congress to overhaul the Budget Act without delay. A properly reformed budget process would:

—recognize the inherent scarcity of fiscal resources and encourage a thoughtful weighing of national priorities, alternatives, and trade-offs;

—restrain, not encourage, Congress’ inclination to spend, borrow, and tax ever larger sums;

—give considerably more attention to the anticipated economic impact of proposed changes in spending and tax policies;

—enhance transparency;

—incentivize policymakers to seek consensus and meet congressional deadlines;

—hold policymakers accountable for their policy decisions;

—protect minority rights from the will of congressional majorities;

—address known problems with the “scoring” of proposed legislation;

—attract bipartisan support; and

—stand a reasonable chance of being enacted.

The federal budget process is broken. Fixing it is essential to saving America’s future.

James Carter headed President-elect Donald Trump’s tax team during the 2016-17 transition. Previously, he served as a Deputy Assistant Secretary of the Treasury for President George W. Bush.

Keith Hall is a Senior Affiliated Scholar at the Mercatus Center at George Mason University. He served as Director of the Congressional Budget Office from 2015-19.

James C. Miller III served as Director of President Reagan’s Office of Management & Budget from 1985-88.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.