Budget Problems Continue in Washington

The President on Tuesday signed the continuing resolution that funds the government through September and (gasp) keeps the sequester cuts intact. Now that it appears sequestration isn't going away (and yet the earth continues to spin merrily on its axis), the focus should be on how this small step might be extended.
Unfortunately, the reaction to Paul Ryan's relatively modest budget indicates the fight for smaller government will continue to be an uphill battle in the current political climate. The Ryan budget has brought predictable condemnation from the political left. Sen. Harry Reid called it "extreme," and the New York Times called it "the worst of the Ryan budgets." The plan's sin: restraining the growth of federal spending to 3.4 percent instead of 5 percent.

While there are some of us that don't feel the Ryan budget goes nearly far enough, it was never going to become law as is with a Democratic White House and Senate. But here's the important question: does sequestration and Ryan's follow-up give proponents of limited government a reason to be optimistic?
Currently, the answer is no.

Sequestration has yet to cause a public revolt and the markets have treated it with indifference throughout. Although the cuts that happened under sequestration are hardly an occasion for a victory lap, they are a small and welcome bit of evidence that government can spend less without society as we know it coming to an end.

Sequestration reduces federal spending by $44 billion this year, which is a relatively small sum considering that total spending will be around $3.5 trillion. The budget deficit alone is projected to be around $850 billion. That means to balance the budget this year, the spending cuts would have to be almost 20 times larger. However, sequestration barely scratches entitlement programs, which dominate the federal budget and are the source of our long-term fiscal problems. And because it doesn't actually terminate any agencies or programs, spending can be restored in the future.

So in the big picture, sequestration hasn't changed all that much. Federal spending is still on a dangerous upward trajectory. Unfortunately, while there is much talk about the need to reform the welfare state in order to make it more affordable, the underlying desirability of our centralized system of cradle-to-grave entitlement programs remains virtually unchallenged on Capitol Hill. And while the Pentagon's bloated budget is being challenged, only a handful of policymakers are questioning the underlying desirability of the United State's global military footprint.

The size and scope of the federal government needs to be dramatically reduced. Republicans are commonly understood to be in favor of limited government, but their track record suggests otherwise. Federal spending went through the roof under Republican rule in the previous decade. After reclaiming the House in 2010, Republicans positioned themselves as the frugal alternative to the debt-happy Obama administration. Unfortunately, the manner in which Republicans handled sequestration indicates that they are still unwilling or incapable of making a principled argument for smaller government.

Ever the defenders of the warfare state, Republicans bemoaned the sequestration cuts made to the Pentagon's budget. Mirroring the administration's orchestrated hysteria over cuts to domestic programs, some Republicans even claimed that the cuts would "gut" the military - a specious assertion considering that military spending under sequestration would be higher in real dollars than peak Cold War spending.

So if sequestration doesn't do a whole lot to shrink the size and scope of government, what about Mr. Ryan's proposal? In his budget, Ryan calls for ending Obamacare, but that wouldn't end the federal government's involvement in health care. Ryan says that higher education subsidies should be capped, but that wouldn't end the federal government's involvement in education. How the federal government delivers the goods might change, but a more efficient government isn't the same as limited government. And if the goal is limited government, as Republicans often claim, then there has to be actual limits on what the government is involved in.

The tough reality is that the average voter is content to spend other people's money on programs that they benefit from. And every government program is backed by a special interest that will fight tooth-and-nail to protect their share of Uncle Sam's loot.

That's an obviously difficult dynamic to overcome. But if progress is to be made, serious policymakers need to start explaining to the American people how the federal government doing less will do more to enhance their personal and economic well-being. That means making the case for limited government. Until that happens, the question of whether or not proponents of limited government should be optimistic will remain no.