Obama Signs Up for the Spending Challenge

Last week, the President said “my first priority is to figure out how can we reduce wasteful spending so that, you know, we have a baseline of the core services that we need and the government should provide, and then we decide how do we pay for that. As opposed to figuring out how much money can we raise and then not have to make some tough choices on the spending side.”

This is similar to our thinking in issuing the “Spending Challenge” where we ask people to come up with as many spending cuts as possible while recognizing that what we can’t fix on the expenditure side of the budget, we’ll have to on the revenue side. (Keep those ideas coming.)

The growth of federal spending is what is driving the future budget imbalances.


Under the President’s proposed budget, both spending and revenues would be well above historical averages, and that assumes most of the Bush tax cuts are extended. And spending only increases more after the next ten years due to further growth in the largest entitlement programs from aging and health care costs. (It is pretty depressing that we just reformed health care and yet still talk about health care costs as the single biggest threat to the budget.) It follows that spending reductions would be the starting point.

So we like the President’s approach—priority number 1 should be to identify all the spending cuts we can. But if we can’t find enough to get the deficit to a sustainable level (and so far, no one has), then we are going to have to look to taxes as well.