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A Project of The Annenberg Public Policy Center

Stockman’s Fiery Rhetoric

David Stockman claims that discretionary spending is "out of control."  But it’s up just 1.6 percent this year.

The former Reagan administration budget director caught our attention with an incendiary quote to The Fiscal Times news site, where he urged fellow Republicans to shut down the government if necessary to achieve spending reductions:

David Stockman: It’s time for the Republicans to man-up and let it burn! Discretionary spending is out of control, and if the GOP doesn’t force a big roll-back, they should have their mouths washed out with soap for lying about no new taxes.

We’ll leave aside the fact that the Republicans whom Stockman urged to "man up" include 24 women in the House and 5 women in the Senate. What we wondered about was the statement that discretionary spending is "out of control." So we pulled up the figures from the Congressional  Budget Office.

It is certainly true that there have been big jumps in discretionary spending — the part of the budget subject to annual appropriations by Congress — in the recent past. The level jumped 9 percent each year in fiscal 2008 and 2009 and 8.9 percent in 2010 — increases for which both parties share responsibility. But Stockman was using present tense. What about now?

Discretionary spending in the current fiscal year, which started Oct. 1 and is already nearly half over, is projected to rise only 1.6 percent, CBO says in its most recent budget projections, dated March 11. Furthermore, President Obama’s proposed budget for the coming fiscal year would produce a decrease in discretionary spending of 0.6 percent, even in the unlikely event that Congress approves it without change. CBO also projects a 5.1 percent decrease in 2013 under Obama’s budget proposal.

There’s good reason to be skeptical that discretionary spending will fall by that much in 2012 or 2013. The president proposes to freeze the nondefense portion of discretionary spending while bringing down war-related military spending substantially. But CBO’s projections were issued before the current military action in Libya, for example. As a Congressional Research Service analyst notes in a March 18 report on the budget outlook, history has shown that projections "often understate discretionary spending levels."

But regardless of whether discretionary spending is "out of control," other parts of the budget are rising much faster, and consume much more of the total. All discretionary spending — including the Pentagon budget — makes up just 37 percent of the current year’s estimated outlays. But so-called mandatory spending (including spending for Medicare, Medicaid and Social Security) makes up 57 percent of the total and is rising five times faster than discretionary spending — an estimated 8.3 percent increase in the current year, CBO’s figures show.

The remaining 6 percent of federal spending is consumed by paying interest on the national debt, and interest is rising fastest of all. CBO estimates a 9.1 percent increase in interest payments this year and a whopping 21.3 percent increase in fiscal 2012 under Obama’s budget. If any portion of the budget is truly out of control, that’s the one.

Just for the record, even if Congress cut all discretionary spending to zero — including all military spending — it still would not be enough to eliminate the enormous record deficit projected for this year. CBO estimates discretionary spending at $1.37 trillion, and the current year’s deficit at $1.43 trillion. Balancing the budget will require a lot more than controlling discretionary spending.

Footnote: Stockman — a true budget expert who surely knows these fiscal realities — was likely exaggerating for effect in order to prod fellow Republicans to reconsider their opposition to including tax increases in any deficit-cutting package. Last August, he told a National Public Radio interviewer, "I say we can’t afford the Bush tax cuts." In December, he told a Wall Street Journal interviewer that the deal extending the Bush cuts for another two years was a "flimflam" that would lead to a debt crisis. So he’s on record favoring a tax hike in addition to any spending cuts, and his quote can be read as an ironic rebuke to GOP lawmakers for focusing on the wrong fiscal target.