The idea of 'mandatory' Federal spending must be eliminated - Column

The continuing rise of nondiscretionary spending underlines the need for a balanced-budget amendment.

A constitutional amendment to require a balanced federal budget has been defeated, but the problem dictating the need for it continues.

The core of this problem is that peculiar Washington concept known as mandatory, or nondiscretionary, spending.

Thirty years ago, these outlays totaled $36.4 billion, or 30 percent of the budget. Today, mandatory spending is more than $1 trillion, or 62 percent of the budget, and, if not checked, could rise to $1.35 trillion, or 70 percent of the budget, by 2000.

In commentary accompanying President Clinton's new budget proposals, the administration explains that "mandatory and related programs include direct spending and offsetting receipts whose budget authority is provided by law other than appropriations acts. These include appropriated entitlements .... "

In practice, that means the annual federal budget must provide sufficient funds to cover spending required under existing statutes.

Major mandatory spending categories are Social Security, welfare, health care, federal employee retirement, unemployment compensation, food assistance, veterans' benefits, and other programs generally labeled as entitlements, plus interest on the national debt.

Consider just one factor in this "mandatory" spending explosion: In 1960, federal outlays for medical care totaled $1 billion, with 90 percent of that going to veterans.

The addition of the Medicare, Medicaid, and other health programs over the years has brought that spending to $287 billion this year, with projections showing it will reach $433 billion in five years. The veterans' share of federal medical outlays has dropped to 6 percent this year.

That term "entitlement" evolved from the policy that anyone eligible for a given program is entitled to benefits and the government has no choice but to make enough funds available to cover them.

(A side effect of this policy is to put spending for such purposes as national defense and federal law enforcement into the "discretionary spending" category.)

While the concept of mandatory spending became a factor in federal budgeting well before President Clinton's arrival at the White House, his opposition to the balanced-budget amendment indicates he has not grasped the seriousness of the problem or the magnitude of the corrective action needed.

In his budget statement, he said his 1993 deficit-reduction package, which included major tax increases, had also cut entitlement spending by $71 billion over five years, "mostly in the fast-growing Medicare program."

That same budget shows, however, that Medicare spending will increase from $109 billion in 1994 to $148 billion in 1999, totaling $774 billion over the period.

The president's projections for that and other mandatory spending show that no amount of tinkering or Washington-style accounting (a latter-day alchemy that turns more spending into less) is sufficient in the face of a long-established willingness to accept the concept of mandatory spending.

Fortunately, the role of that concept in federal budgeting is not being totally ignored. Rather than continue accepting the underlying entitlement laws as immutable, the new Republican majorities are examining many of them to determine whether they should be retained and in what form.

The GOP leaders who came to Washington promising to shrink the size of government deserve the appreciation of all taxpayers for their aggressive approach to that goal.

The need, however, is to make sure that those attitudes endure beyond the current Congress, that fiscal discipline--not ever-higher spending--is mandatory.

Congress has made various attempts at budget restraint over the past 25 years.

But these initiatives were in the form of laws that could be quickly repealed or eased when they became inconvenient.

That experience offers the most compelling argument for a balanced-budget amendment that would be beyond the vagaries of politics and the demands of special-interest groups.

After the amendment proposal failed by a single vote to gain Senate approval, Majority Leader Bob Dole announced he would bring it up again, probably at a crucial time during the 1996 presidential and congressional elections.

Many of those who voted against the amendment in March might have second thoughts if they have to take a stand on it shortly before asking voters to re-elect them.

Those who voted against the amendment must realize that this is an issue that will not go away.

The American people want a balanced-budget amendment to the Constitution, and lawmakers who ignore that demand do so at their political peril.

COPYRIGHT 1995 U.S. Chamber of Commerce
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