Both President Obama and Rep. Paul Ryan propose cutting non-defense discretionary spending to a historic low.
reported. In the last half-century, wars have ended (the defense budget includes investment, too), and infrastructure has languished, while entitlements have grown. Now payments to individuals have doubled their share of the budget to 65 percent. Investments have fallen to 14 percent.
The United States is a rich, aging country. We're acting our age. With growing health care costs, we now spend 2.4 times as much on the elderly as on children -- a ratio that isn't out of line with other rich economies. We don't want to cut entitlements for seniors, and we don't want to pay families to accept higher taxes. As a result, government grows while "Government" shrinks.
This week, Nobel Prize-winning economist Joseph Stiglitz visited The Atlantic. I asked him when, if ever, the deficit would be a problem. He rejected the question pretty quickly. "It's not about the size of the deficit," he said, "so much as what you're spending it on. If you're going to create debt, create assets." Create assets.
Insurance is the part of the budget that manages risk and broadly protects us from poverty: poverty from circumstance, poverty from retirement, poverty from medical bankruptcy. Non-defense discretionary spending is the part of the budget that creates assets. Both categories are important. But, squeezed between our promises to seniors and our aversion to taxes, the latter is on track to fall to historic lows, in both the White House budget and the GOP budget. It is very had to win any sort of future with a backsliding investment strategy.
This post originally appeared on The Atlantic.