On Wednesday of last week, three lucky people won a share of the $1.5 billion jackpot, giving them $500 million each. This might sound like a very big number to you and me, but based on the behavior of politicians in Washington, D.C., it isn’t. Let’s imagine what Congress could do with the money if they were the sole winners of the Powerball based on the CBO's budget for 2015.
Spending on Social Security was projected to be $808 billion. With the Powerball money, Congress could fund the Social Security programs for about 15 hours.
Medicare spending was set to be $532 billion, which the Powerball would fund for just over 24 hours.
Federal spending on education was projected to be $117 billion. At this rate, the Powerball would fund education programs for about 4.5 days.
To pay off just the federal deficit for 2015, Congress would have to win the Powerball 290 times. With winning numbers being drawn only twice per week, this means that Congress would have to win every single time it was drawn for the next 5.5 years.
With their total budget for 2015 being $3.9 trillion, Congress spent the equivalent of the Powerball winnings every 3 hours and 20 minutes. And what did we get with this grotesque amount of spending? A mere 13 percent approval rating according to a recent Gallup poll. How did we let our spending get to this level?
A lack of effective budgetary oversight.
To be sure, there is budgetary oversight. But there are so many budget tricks and gimmicks that can be and are used on such a regular basis that the idea of Congress having a meaningful budget is somewhat farcical. For example, in discussing the effects of a proposed tax or spending bill, committees must establish two numbers: the baseline, which is a projection of what will happen if current law remains unchanged, and a score, which is the effect on the budget that a bill will have. Different assumptions or methodologies used in establishing either of these numbers can produce wildly different results. With the incentives that committee members face, selecting the assumptions and methodologies becomes a game in and of itself.
Another commonly used trick is to phase programs in over time. While doing so is done under the auspices of gradually implementing big programs, phasing them in helps to reduce the score of big spending programs by spreading the total cost of the program over multiple budget years. For example, suppose that a new spending program is projected to cost $100 billion. If Congress were to try to spend all of that in one year, there would be a $100 billion hit to the budget. But if they phase it in over ten years, there would only be a $10 billion hit to the budget in the current year, which is much smaller and more politically manageable. Further, this bill would also force future Congresses to spend the remaining $90 billion because the program would have already been passed. In fact, Congress would actually have to vote to repeal this spending. The effect would be the same either way, but phasing it in over time would be much easier to pass or at the very least, harder to block.
These are just two gimmicks that can be and are used. A budget process that takes these and other gimmicks into account has never been more necessary for the long-term health of the nation. Ask yourself: how long could you operate your household just by using budget tricks like these?
Hebert holds a Ph.D. in Economics from George Mason University and is currently an assistant professor of Economics at Ferris State University. His expertise is in taxation, regulation, and public policy.