One of the most overlooked items of the federal budget is the non-security discretionary budget. Despite accounting for only about 15 percent of federal expenditure, it includes some pretty important government functions. Half of the non-security discretionary budget accounts for the entirety of the federal government’s role in economic development, consumer protection, public safety, environmental protection, as well as portions of the safety net. The other half is made up of vital public investments in infrastructure, education, and research and development, which are necessary to keep the economy strong and globally competitive for decades to come. In fact, the non-security discretionary budget is practically the sole provider of these investments, with few existing elsewhere in the budget.
We’ve given good marks to President Obama’s 2013 budget for its upfront job creation proposals, efforts to promote tax fairness, and for realistically stabilizing the debt-to-GDP ratio over the second half of the decade (as the output gap shrinks). But unfortunately, his budget proposal achieves much of its savings by maintaining the non-security discretionary cuts in the first phase of the Budget Control Act, the debt ceiling deal that established 10-year caps on discretionary spending. As a result, his budget forces non-security discretionary outlays down to their lowest level as a share of GDP ever recorded (the data begins at 1962). That’s even lower than the Bowles-Simpson proposal!
The president has admirably made public investments a high priority, promoting increases in transportation, school facility repair and modernization, job training, R&D, and college access. But this vision is hard to reconcile with a rapidly shrinking non-security discretionary budget, as it will lead to even steeper reductions to everything else, with disastrous consequences.