When Congress and the president think about the budget, they ask the Congressional Budget Office (CBO) to estimate the economic and fiscal impact of the budget’s policies over the next ten years. The CBO does not generally look at the long-term impacts of these policies, so the numbers that ultimately shape the public debate are ten-year numbers. This introduces a serious bias into the policy discourse, often leading to bad policy.
This bias is a problem for one simple reason: policies that have a similar impact on the deficit over the next ten-years may differ sharply in their impact on the deficit over subsequent decades. To make better decisions, we need better information about the impact of our policies on the future.
For example, cutting a dollar of funding for education or basic science research may seem equivalent to cutting a dollar spent on Medicare. A dollar is a dollar, after all. But over the last decade, spending on Medicare has grown roughly twice as fast as spending on the National Science Foundation and four times as fast as funding for Head Start. A policy change to Medicare, one that slows spending growth, can have a much bigger impact on the budget deficit in the long-run than a cut to basic science research or education can. By complementing the traditional ten-year window with a longer window, we can make better comparisons between policies and better choices for the future.
This is a flawed argument, and committed liberals should be especially hesitant to follow it. Let’s apply the logic to climate change. Since we cannot make accurate predictions about long-term temperature, perhaps because climate is complex and technology is constantly changing, does that mean we should not attempt to determine the long-term impacts of our energy policies? The answer is clearly no. Even if we can’t predict the exact temperature thirty years from now, it is worth predicting how different energy resources – coal, shale gas – affect climate change. Thinking long-term is not about pin-pointing what will happen in a given year. It is about understanding how important trends work over time.
The same is true of the budget. A longer window may not tell us exactly how the budget will look in 2043, for example, but it makes it possible to determine how much and what kind of deficit reduction is needed to put our country on a more sustainable course over the long-term. Many policies, such as increasing Medicare premiums for high-earners, work in reliable and understandable ways and have a larger impact over time than they do over ten years. A longer window could show just why reforming entitlements would do more for deficit reduction than the sequester, which avoided entitlement reform and cut the budget for the National Science Foundation and for Head Start by 5%. These are hardly the programs bankrupting America.
The reason that the planet is warming is also the reason the debt is growing – we often favor the present at the expense of the future. Whenever possible, political institutions should correct that tendency rather than amplify it. Otherwise, we end up stuck where we are today: indiscriminately slashing critical investments in our future and passing the bill for unfunded obligations younger generations and the unborn.
For this reason, The Can Kicks Back is working with members of Congress on legislation to incorporate generational accounting and long-term fiscal gap analysis into the budgeting process. These policies can make a difference. If policymakers want to better serve younger generations today, they must think more clearly about the policies that will affect them tomorrow.
Doshi is a member of the Leadership Council for The Can Kicks Back, a non-partisan and Millennial-driven campaign to defeat the national debt and reclaim our American dream. He is a policy analyst in Washington, D.C.