Managing U.S. budget is more than just spending or cutting

If you Google "U.S. federal budget calculator," you will find a number of sites that allow you to play Budget God and decide how the federal budget might be brought into balance.

The Committee for a Responsible Federal Budget,, and the Bipartisan Policy Center's "Balancing Act" all put tools in your hands to manipulate both the spending and the revenue sides of the equation.

You want the Congress to reinstate the enhanced child tax credit that did so much to reduce child poverty during the pandemic? Well, then deficits will go up.

Want to hold increases in defense spending to 1% annually? That will reduce the deficit - but what about our leadership role in NATO, the war in Ukraine, or the threats to Taiwan?

These are hard decisions and politically charged decisions. Want to take Social Security, Medicare and defense spending off the table and ban tax increases (as some have suggested), well then everything else gets cut by 70% - farm subsidies, highway funds, Pell grants, Medicaid, food stamps, national parks - everything.

This morning, the federal government will not shut down because of a last-second bipartisan vote in the House. It is unclear if Speaker McCarthy's job is now in jeopardy because he did the right thing.

The country has been subject to this kind of brinkmanship too many times. One conservative called this potential government shutdown the Seinfeld Shutdown because it would have been about nothing.

As I wrote a couple of years ago, the federal government does five things. It pays the interest on our debt, a cost that is rising with each Fed rate increase. It provides pensions. It provides health care. It provides security. And then there is a category I called "everything else," which is about 12% to 13% of the budget and includes the things mentioned above - largely various grant programs.

If you want to bring the federal budget into balance over a period of years, there are three levers you can pull. You can reduce spending. You can raise taxes. You can try to stimulate economic growth. The budget plan recently released by conservative House Republicans has a particularly rosy growth forecast that is hardly realistic.

Economics 101 tells us that economic growth can be stimulated in one of two ways - increase productivity or increase the number of workers.

Perhaps artificial intelligence (AI) will usher in an era of spectacular productivity gains. We don't know.

There was predictable howling when President Biden granted nearly half a million Venezuelans an expedited path to work permits, but guess what? They will work as farmworkers, landscapers, maids and - depending on language skills and education - many other vocations, and they will pay taxes and increase government revenue.

Immigration reform is an important part of getting a handle on the federal budget, though you will not find it as an option in those online budget calculators.

The president and House Speaker McCarthy cut a budget deal a number of months ago to bring the debt ceiling crisis to an end. And for the past couple of weeks, a small group of GOP House members - what one commentator called "nihilistic performance artists" - tried to trash the deal and brought the government to the precipice of shutdown.

Those who stress the urgency of getting the federal budget under control are not wrong. The post 9/11 wars, the financial crisis and the pandemic have dealt severe blows to our balance sheet. In the past, so-called bipartisan "super committees" have tried and failed to reach a budget deal. Politically, a second-term president might have a chance to reach such a deal, but a shutdown would have done nothing but cause unnecessary pain.

• Keith Peterson, of Lake Barrington, served 29 years as a press and cultural officer for the United States Information Agency and Department of State. He was chief editorial writer of the Daily Herald 1984-86.

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