In a well-functioning democracy, the people articulate their desires and grievances, and their elected officials shape these sentiments into sustainable policies. With this division of labor between citizens and representatives, democracy can be both responsive and responsible.
Like the citizens of many other democracies, Americans have recently signaled that they are tired of austerity and eager for more government action. Last April a Pew Research poll showed that for the first time in eight years, Americans favored a larger government offering more services over a smaller government providing fewer services. In the NBC/Wall Street Journal poll last month, 58% of Americans—the highest share ever recorded—agreed that “government should do more to solve problems and help meet the needs of people,” compared to only 38% who thought that “government is doing too many things better left to businesses and individuals.” Americans favoring a more active government included majorities of all age groups, races, ethnicities and education levels. (Those favoring less-active government included 63% of Republicans, 65% of
voters, and 51% of white men without a college education.)
Americans also hope that increased government action will support a varied list of beneficiaries. A Pew study last month found majorities endorsing the view that government does too little to help young people, the elderly, the middle class and the poor. By contrast, 64% said that government does too much to help the wealthy.
Questions about specific policies confirm these findings. The most recent
survey found that 50% of Americans want the government to increase spending for Social Security, while only 5% want cuts. The comparable figures for Medicare were 45% and 7%; for Medicaid, 38% and 12%.
Nor is there much appetite for reductions in discretionary spending. According to the Kaiser survey, 40% of Americans favor more defense spending while only 19% want less. Seventy percent want more spent on education, while only 7% want less. The Spring 2017 Pew survey found broad support for increased spending on veterans’ benefits, infrastructure, scientific research, environmental protection and assistance to the needy. The only items for which cuts were more popular than increases were diplomacy and foreign aid.
Not surprisingly, surveys also register a steep decline in public concern about the federal budget deficit. In 2013, according to the January 2018 Pew study, 72% of Americans regarded deficit reduction as a top priority. By the beginning of this year the figure had fallen to 48%.
Against this backdrop, the recently enacted 2018 budget, which increases spending on defense, domestic programs and disaster relief by more than $400 billion, is an instance of responsive government. Whether it exemplifies responsible government is another matter.
Last December, President Trump signed a Republican tax bill that will raise the deficit by an estimated $1 trillion over the next decade, and the new budget will add to this figure. Based on data from the Congressional Budget Office, the Committee for a Responsible Federal Budget calculates that the budget deficit will rise from $800 billion in 2018 to $1.19 trillion in 2019, and will increase even more in 2020. If the spending increases for these two years are made permanent, the annual deficit will reach an estimated $1.7 trillion by 2027. And political pressure will make it nearly impossible to roll back these increases.
Even if this spending boost is cut off after two years, the national debt will rise to 99% of annual gross domestic product. If the increase is made permanent, the debt will surpass 105% of GDP, a level not seen since World War II.
Many economists believe that the tax cuts and spending increases will provide massive fiscal stimulus at precisely the wrong point of the economic cycle, boosting growth over the next year or two but risking higher inflation and interest rates down the road, which could choke off growth and lead to the next recession. Others contend that there is still substantial slack in the system and that this stimulus will banish the specter of what
and others call secular stagnation.
We do not know for sure. But we do know that when the next recession comes, the government will have few fiscal and monetary tools left to fight it. If annual budget deficits already exceed $1 trillion, and if the burden of the national debt is already at an all-time high, little room will be left for the antirecessionary measures that governments of both political parties have employed since the early 1930s.
The American people have told Congress how much government they want. Responsible leaders would now inform the people what it will take to pay for this much government. In the absence of such responsibility, our fiscal policy will remain on a collision course with reality. The only question is when the crash will come.
Appeared in the February 14, 2018, print edition.