The budget is the main arena in which the nation as a whole decides on the allocation of resources. What we spend money on — and what we don’t — reflects what we value as a nation. But making those choices isn’t at all simple. It is in the federal budget that the breakdown of consensus in America is most vivid and most dangerous. One side of the political divide wants to cut taxes and shrink existing public services in the name of cutting wasteful government programs and insisting that the poor solve their own problems. The other side wants to increase public spending on social and economic needs — the poor, the unemployed, infrastructure, education and the environment — even as it remains unclear on how to fund the outlays.
With these divisions unresolved, we’ve landed in a first-rate mess. Compared with those in other rich countries, taxes in the U.S. are low. Yet government spending is persistently higher than taxes: the budget deficit is at a record high for peacetime, and Washington is utterly paralyzed when it comes to addressing urgent needs. The only thing that reliably grows in our economy is the public debt. . Interest payments on the debt will soon reach 2% of GDP. In short, the Federal Government collects tax revenue sufficient to cover just four budget items. The rest of the budget is funded by borrowing.
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