The days of record setting deficits ($1.4 trillion in 2009) are behind us. The budget deficit has fallen from 10% of GDP in 2009 to an estimated 5.3% in 2013 and the national debt is projected to fall from 76.3% of GDP to 73.1% in 2018. Our nation’s improved fiscal situation can be attributed to a recovering economy, tax revenue increases, and the draconian spending cuts enacted by the sequester. Instead of a grand bargain, Democrats and Republicans in Washington have gone for a piecemeal approach to deficit reduction and neither side is happy. The left thinks we need higher taxes and more stimuli spending on job growth, while the right continues its austerity crusade.
And yet despite their differences, the President and Congress have authorized about $3 trillion of deficit reduction, but at what cost? Our representatives in Washington chose short-term solutions over long-term reform. The skyrocketing costs of entitlement programs, especially Medicare and Medicaid have not been addressed. The Congressional Budget Office forecasts the deficit will start rising again in 2016 due the burdens of our aging population.
Congress continues to let the American people down. Instead of entitlement reform, we received the indiscriminate, across the board spending cuts. These reductions may lower the deficit, but they will not create jobs. As Jared Bernstein of the Center on Budget and Policy Priorities put it, “We’ve over focused on the deficit. It’s time to tackle the job crisis.”
Our economy will never recover if we do not invest in the jobs, infrastructure, and research of the future. This is the exact opposite of what Congress has done. In a previous post, I discussed how our nation’s infrastructure investment gap would slow future growth. Research funding by the National Institute of Health has been cut by 17%in the past decade, which “adjusted for inflation, puts overall funding at levels not seen since 1999.” If the sequester cuts continue, the NIH will lose $19 billion dollars in funding over the next 10 years.
In order to stay globally competitive, the United States should increase research and development spending, not decrease it. Countless innovations and immense economic value can come from government grants. According to a Battelle Memorial Institute report, the $3.8 billion human genome project yielded $800 billion in economic growth and created 310,000 jobs. Unfortunately, it seems more likely that future scientific breakthroughs will come from outside of the United States.
We need to take advantage of this period of falling deficits before it's too late.
Chad Kolinsky is a blogger and active member at The Can Kicks Back.