Ever since 1995, the Congressional Budget Office, the main scorekeeper for determining the impact of federal government spending programs upon the United States’ national debt, has been using an accounting scheme that conceals the full scope of the liabilities being taken on by the nation to fulfill the promises of today’s free-spending politicians.
But new legislation reported to be gaining traction on Capitol Hill aims to make those obligations more transparent. Emma Roller of Slate describes the efforts being made to pierce the veil that politicians use to obscure the full cost of their spending, which many Washington insiders would describe as a near-impossible task:
Nick Troiano doesn’t see it that way. He’s the 24-year-old co-founder of The Can Kicks Back, a group that’s doing the thankless task of trying to get young people vaguely interested in the national debt. But the combo-pack of Congress’ intractable differences on fiscal policy and the public’s general apathy toward the debt don’t discourage Troiano. “For us, it’s more of a reason to get involved, not less of a reason,” he told me.
Most of the debt comes from entitlements—Social Security, Medicare, and Medicaid—and an aging population means more people are relying on federal dollars for longer. Higher interest rates and a devalued dollar could lead to a declining standard of living for future generations. That’s why Troiano’s group is lobbying for the Intergenerational Financial Obligations Reform Act, or the INFORM Act. The bill would provide two types of analyses—fiscal gap and generational accounting—to federal budgets in the hopes that it would pressure lawmakers and agencies to focus on longer-term budget solutions.
Right now, the Congressional Budget Office only offers 10-year projections for legislation, and a 75-year fiscal gap analysis once a year. The CBO used to use generational accounting, but decided to nix it from its budget baselines in 1995, saying it’s better used as “a tool for examining broad policy options, rather than as an accounting statement.” That seems to be how the INFORM Act’s authors want to see it used—as more of a sign post than a road map. The INFORM Act would require the CBO to include fiscal gap analyses on any “major pieces of legislation” laws that would affect GDP by half a percentage point over 10 years.
The interesting thing is that the bill, which has bipartisan sponsors, would appear to be quietly picking up momentum just ahead of the Obama administration’s planned target date of mid-October for when the U.S. federal government will run into the national debt ceiling, risking a government shutdown as the administration has clearly communicated that it will not negotiate with those who advocate for fiscal responsibility through spending restraint in the U.S. Congress.
Although the administration would likely deny it, that refusal to negotiate in good faith on the national debt ceiling represents another red line that President Obama has arbitrarily drawn without fully considering the consequences for his actions. Only this time, he’s drawn a red line with the nation’s red ink.
But with legislation like the INFORM Act, it would be a lot harder for politicians to not be aware of the consequences of their fiscal choices. However the nation’s next debt ceiling “crisis” is resolved, it would be useful to have more transparency where the size of the nation’s liabilities are concerned.