This week, David Ditch, a policy analyst in Heritage’s Grover M. Hermann Center for the Federal Budget, explains how Congress can balance the budget in 10 years.
Michelle Cordero: From The Heritage Foundation, I'm Michelle Cordero, and this is heritage explains. The treasury department announced last month that the total national debt has surpassed $30 trillion for the first time. That's 30 plus 12 zeros. Just $1 trillion laid end-to-end, would stretch further than the distance of the earth to the sun. Think of that times 30.
>>> Budget Blueprint for Fiscal Year 2022
Cordero: Two years ago, the Congressional Budget Office said that we wouldn't hit this level of debt until the end of 2025, but we got there a lot sooner due to the trillions that were spent battling the COVID-19 pandemic. You would think that these unprecedented spending increases. We're talking government expansions, like never seen before, would make legislators panic and stop the spending madness as the pandemic ramps down. Instead, Congress and the Biden administration are using the crisis to push for a permanently draconian federal government. One that seizes and controls. Endlessly increasing amounts of national resources.
Cordero: Thankfully, The Heritage Foundation recently released its 2022 Budget Blueprint. A comprehensive roadmap for policy makers to reduce out of control federal spending and restore fiscal sanity to Washington. The blueprint identifies more than $12 trillion of spending cuts between 2022 and 2031 compared to current law. The plan also includes more than 200 proposals to restore the federal government to its proper limited role. Today, David Ditch, a policy analyst in Heritage's Grover M. Hermann Center for the Federal Budget, one of the authors of the blueprint, explains how this guide for Congress will strengthen financial health, economic vitality, and national security. Our conversation after this short break.
Cordero: David Ditch, thank you so much for joining us.
David Ditch: Thank you for having me.
Cordero: So, David, is it possible at this point to balance our budget, and how long would something like that take?
Ditch: It is a very serious undertaking. The last time we had a balance budget was about 20 years ago, and unfortunately things have deteriorated to the point where if you implemented our entire proposal called the Budget Blueprint over 200 different policy reforms, it would still take 10 years to get the budget to balance.
Cordero: 10 years. That's not, I mean, that's doable though. That's less than I thought. What are some of the big things that would happen if we actually balanced the budget? Could we actually get out of debt?
Ditch: The important, well, there's two things to keep in mind. One is the absolute value of debt, which right now is an astonishing $30 trillion with a T.
Cordero: Yeah.
Ditch: But there's also, how big is it in relation to the size of the economy? So, if the debt stops growing and the economy keeps growing, eventually the debt becomes manageable. Right now, debt grows way faster than the economy, and it has for a long time.
Cordero: What about inflation? Does that subside once we balance the budget?
Ditch: Ideally, we would help tamp down inflation, well, before then. You can have some level of deficit from the federal government, without it necessarily leading to inflation. Frankly, we have seen that over the last 10 years. Deficits have been high, but they weren't as obscenely high as we saw starting in March, 2020, when the federal government started open up the fire hose as wide as possible and dumped as much money into the economy as possible, oftentimes with very little thought to what the consequences would be.
Cordero: Okay. So what are some of the policy proposals that Heritage's Blueprint calls for?
Ditch: The most important thing we can do to get our nation's financial house in order is to put social security and Medicare on a path to solvency. Because right now, they're a freight train to bankruptcy. The Heritage Budget Blueprint takes a lot of care to make changes that will extend the life of this program that will preserve benefits, especially for the people who need it the most, while at the same time, reducing subsidies that wealthy households currently receive.
Cordero: And then tax reform, you guys want to make that permanent, correct?
Ditch: Yes. There's a misconception on the left that the problem with deficit is that Americans aren't taxed enough. The fact of the matter is you can extend the 2017 tax cuts, and still have tax revenue above historical averages. What we do is we cut a lot of spending such that not only can we make the tax cuts permanent, but we can go even further, makes the tax code even more pro-growth. We had a really good economy before the pandemic hit, but it could have been better, and it can still be better, if we get the right policies enacted then.
Cordero: Okay, let's talk national defense then. We spend a lot of money there, and it's always sort of a point of contention because it's really important, but we also don't want to spend all of our money, would the spending there continue. And this is obviously something that's really important right now with everything going on with Russia and Ukraine.
Ditch: Our defense policy analysts did a really excellent job of showing where we need to have our priorities within national defense. There are some things that are part of the defense portfolio that shouldn't be. There are some things that we can do better. And when we're talking about ships, and planes, and other military hardware, there are certain things that we should be investing in more heavily. The Heritage Budget provides the resources that are necessary for a robust national defense. And it doesn't even come close to affecting whether we get to balance one way or the other.
Cordero: That's great. So what about welfare reform? What do we do with that?
Ditch: We take a lot of welfare programs and we address issues. For example, there are marriage penalties that discourage family formation, and that can trap people in cycles of poverty. There are other programs that don't need to be administered at the federal level. We send them more to the state and local level, and I'm especially thinking of housing programs here. And again, we're maintaining a sufficient social safety net without, as they say, without it becoming a hammock.
Cordero: What about wastes? Are there things, obviously, there are things that need to be cut. Do you guys call out some specific programs?
Ditch: Oh my gosh. When we have 200 different spending cuts, it's almost hard to know where to start. One of the ones that I find the most painful to consider is that, we send millions of dollars every year to a handful of US controlled islands to help prop up rum production. I cannot, for the life of me, understand why we need to be-
Cordero: Yeah.
Ditch: ... using taxpayer dollars to subsidize rum production when the national debt is currently $230,000 for every household in the country. We have to get smart here.
Cordero: Yes. Every year, there's an organization that puts out a list of all the ridiculous spending like that. is there something within the blueprint that has a list of that type of ridiculous spending programs?
Ditch: Yeah. So I think, you're probably thinking of the Citizens Against Government Waste that puts out the pig book. They do outstanding work. We don't have a dedicated section to that, but we do have sections for practically every policy area under the sun. And it doesn't matter what area you're looking at. You will find instances of the federal government, essentially dumping money in a giant pit. And frankly, there's no excuse. I don't care what party you're on. I don't care how expansive or limited using the federal government should be. There's no excuse for many of these problems, not only existing, but in so many cases. These are things that go back decades and it's just, it's criminal.
Cordero: David, you recently put out and op-ed, that's eight ways that The Heritage Foundation's Blueprint, strengthens financial health, economic vitality, and national security. Of these eight ways, and some of the things that you and I are just talked about right now, what do you think the most important area is?
Ditch: There is a hesitancy among a lot of elected officials, and I can understand why towards addressing our major entitlement programs.
Cordero: Mm-hmm (affirmative).
Ditch: Because there are millions of people who genuinely rely on these programs and have been told that they can expect them to be there. The problem is that there were underlying cracks in the foundation of how these programs were set up. Social security problems that were there from the start under FDR. Medicare problems from the start under LBJ. And these problems because they haven't been addressed for decades, it's a snowball. It gets bigger, and bigger, and bigger, and bigger every year. Again, it's not about pulling the rug out from under anyone, whether they're retired, or whether they're nearing retirement. We can preserve these programs in as much as anything. It's not about reducing the total amount of spending, it's about slowing the growth because year after year, these programs are growing 2, 3, 4 times faster than the economy's growing. And basic math says we can't keep that up forever. And we are going to hit a wall before... while the vast majority of today's retirees are still around. This is not a two or three generations down the line problem. This is a current generation problem.
Cordero: Yeah. Yeah. And I mean, to wrap this up, you said, "This is a basic math problem and we can't sustain this." How do we get Congress and America to wake up and see how important this is? What can we do to actually get Congress to actually do something about this?
Ditch: The reason I came in the D.C. area was because of the Tea Party movement in 2009, 2010. I saw an awakening. I saw average citizens waking up to the reality of what the federal government was doing to our country, and fighting back, and pushing back, and making their voice heard. And some of that message, unfortunately, I think has gotten lost in the years since then. And I can see a lot of that rising up again. People are recognizing the damage that these unchecked federal bureaucracies are doing. They're seeing the damage that unchecked federal spending is doing, and the way it's fueling inflation. We've got some new pivotal elections coming up, and we need change.
Cordero: All right. Well, thank you so much for your hard work on this blueprint. It's so important. Let's hope our politicians get it together, and start looking to proposals like this one.
Ditch: Absolutely. Thank you.
Cordero: And that's it for today's episode. I'm going to link to Heritage's blueprint for balance in our show notes. Please share this podcast with your friends and family if you enjoy it, and leave us a five star review and comment. I wanted to close with a quote that I love on this topic from one of my favorites, Dave Ramsey, he says, "The fact is that government can get out of debt the same way you get out of debt. You quit borrowing money, you quit spending, you balance the budget. But to do all that, you'll have to make some sacrifices." All right, that's it. Thanks everyone. See you next week.
Heritage Explains is brought to you by more than half a million members of The Heritage Foundation. It is produced by Michelle Cordero and Tim Doescher with editing by John Popp.
