As you
might imagine, I find myself in a lot of discussions about U.S. fiscal policy,
and the budget deficit in particular. And there’s one thing I can count on in
these discussions: At some point someone will announce, in dire tones, that we
have a ONE TRILLION DOLLAR deficit.
No, I don’t think the people making this pronouncement realize that they sound
just like Dr. Evil in the Austin Powers movies.
Anyway, we do indeed have a ONE TRILLION DOLLAR deficit, or at least we did; in
fiscal 2012, which ended in September, the deficit was actually $1.089 trillion.
(It will be lower this year.) The question is what lesson we should take from
that figure.
What the Dr. Evil types think, and want you to think, is that the big current
deficit is a sign that our fiscal position is completely unsustainable.
Sometimes they argue that it means that a debt crisis is just around the corner,
although they’ve been predicting that for years and it keeps not happening.
(U.S. borrowing costs are near historic lows.) But more often they use the
deficit to argue that we can’t afford to maintain programs like Social Security,
Medicare and Medicaid. So it’s important to understand that this is completely
wrong.
Now, America does have a long-run budget problem, thanks to our aging population
and the rising cost of health care. However, the current deficit has nothing to
do with that problem, and says nothing at all about the sustainability of our
social insurance programs. Instead, it mainly reflects the depressed state of
the economy — a depression that would be made even worse by attempts to shrink
the deficit rapidly.
So, let’s talk about the numbers.
The first thing we need to ask is what a sustainable budget would look like. The
answer is that in a growing economy, budgets don’t have to be balanced to be
sustainable. Federal debt was higher at the end of the Clinton years than at the
beginning — that is, the deficits of the Clinton administration’s early years
outweighed the surpluses at the end. Yet because gross domestic product rose
over those eight years, the best measure of our debt position, the ratio of debt
to G.D.P., fell dramatically, from 49 to 33 percent.
Right now, given reasonable estimates of likely future growth and inflation, we
would have a stable or declining ratio of debt to G.D.P. even if we had a $400
billion deficit. You can argue that we should do better; but if the question is
whether current deficits are sustainable, you should take $400 billion off the
table right away.
That still leaves $600 billion or so. What’s that about? It’s the depressed
economy — full stop.
First of all, the weakness of the economy has led directly to lower revenues;
when G.D.P. falls, the federal tax take falls too, and in fact always falls
substantially more in percentage terms. On top of that, revenue is temporarily
depressed by tax breaks, notably the payroll tax cut, that have been put in
place to support the economy but will be withdrawn as soon as the economy is
stronger (or, unfortunately, even before then). If you do the math, it seems
likely that full economic recovery would raise revenue by at least $450 billion.
Meanwhile, the depressed economy has also temporarily raised spending, because
more people qualify for unemployment insurance and means-tested programs like
food stamps and Medicaid. A reasonable estimate is that economic recovery would
reduce federal spending on such programs by at least $150 billion.
Putting all this together, it turns out that the trillion-dollar deficit isn’t a
sign of unsustainable finances at all. Some of the deficit is in fact
sustainable; just about all of the rest would go away if we had an economic
recovery.
And the prospects for economic recovery are looking pretty good right now — or
would be looking good if it weren’t for the political risks posed by Republican
hostage-taking. Housing is reviving, consumer debt is down, employment has
improved steadily among prime-age workers. Unfortunately, this recovery may well
be derailed by the fiscal cliff and/or a confrontation over the debt ceiling;
but this has nothing to do with the alleged unsustainability of the deficit.
Which brings us back to ONE TRILLION DOLLARS.
We do indeed have a big budget deficit, and other things equal it would be
better if the deficit were a lot smaller. But other things aren’t equal; the
deficit is a side-effect of an economic depression, and the first order of
business should be to end that depression — which means, among other things,
leaving the deficit alone for now.
And you should recognize all the hyped-up talk about the deficit for what it is:
yet another disingenuous attempt to scare and bully the body politic into
abandoning programs that shield both poor and middle-class Americans from harm.
Republicans, looking for leverage to slash federal spending, created the phony
debit-ceiling crisis that led to creation of the Congressional deficit-cutting
“supercommittee.” But with the committee close to a deadlock — largely because
Republicans will not agree to higher taxes on the rich — and the deadline for an
agreement approaching, some Republicans are now talking about undoing the
process.
We are no fans of the supercommittee. It is undemocratic, and the deep,
automatic cuts the law would impose if the committee fails to reach agreement
are gimmicky and potentially dangerous. But walking away at this point would be
an embarrassment for Congress and a far-reaching blow to Washington’s financial
credibility.
The committee of 12, divided between the two parties, was required by the Budget
Control Act to come up with a plan to shrink the deficit by at least $1.2
trillion over the next decade through any combination of spending cuts and
revenue increases. If the members fail to agree, the law would automatically
“sequester” $1.2 trillion in spending cuts — heavily affecting defense programs.
Democrats have proposed a $4 trillion mix of cuts and tax increases, carving too
deeply from domestic programs. But Republicans have rejected any tax increases,
and Democrats are rightly refusing to agree to any package without revenues.
If the committee fails, Representative K. Michael Conaway, a Texas Republican on
the House Armed Services Committee, told The Times, “most of us will move heaven
and earth to find an alternative that prevents a sequester from happening.”
Several Republicans are talking about finding cuts elsewhere in the budget, and
that surely means social-insurance programs. Democrats, including President
Obama, would probably block any law that undoes the budget act, but even talking
about doing so reduces the pressure on the panel to reach agreement.
The committee should be working overtime to avoid a sequester, which would cut
virtually every discretionary program at the Pentagon and the Homeland Security
Department by 10 percent in 2013. (Cuts in the following nine years would be
made by Congress but would still be 10 percent.) Medicare providers would be cut
by 2 percent, and there would be major reductions in other domestic programs,
including several necessary for health reform.
But as bad as the sequester would be, it would spare most social-insurance
programs, making it better than the proposals by supercommittee Republicans to
cut more than $2 trillion without raising any revenues. Those would largely
spare the Pentagon but make deep cuts in programs that benefit the needy.
Simply dismissing the committee and undoing the sequester would be such a vast
admission of Congressional failure that it could push down the nation’s credit
rating, lead to chaos in financial markets and severely cripple hopes for an
economic recovery. Republicans created the policies that forced up the deficit
and then refused to compromise with President Obama. They cannot simply walk
away now. Panel members have only a few days to come up with a plan that
balances new revenues with spending cuts. That is the only way to wrestle down
the deficit without doing huge damage to the economy and the country.
On paper, President Obama’s new $3.7 trillion budget is encouraging. It makes
a number of tough choices to cut the deficit by a projected $1.1 trillion over
10 years, which is enough to prevent an uncontrolled explosion of debt in the
next decade and, as a result, reduce the risk of a fiscal crisis.
The questions are whether its tough choices are also wise choices and whether it
stands a chance in a Congress in which Republicans, who now dominate the House,
are obsessed with making indiscriminate short-term cuts in programs they never
liked anyway. The Republican cuts would eviscerate vital government functions
while not having any lasting impact on the deficit.
What Mr. Obama’s budget is most definitely not is a blueprint for dealing with
the real long-term problems that feed the budget deficit: rising health care
costs, an aging population and a refusal by lawmakers to face the inescapable
need to raise taxes at some point. Rather, it defers those critical issues, in
hopes, we assume, that both the economy and the political environment will
improve in the future.
For the most part, Mr. Obama has managed to cut spending while preserving
important government duties. That approach is in stark contrast to Congressional
Republicans, who are determined to cut spending deeply, no matter the
consequences.
A case in point: the Obama budget’s main cut — $400 billion over 10 years — is
the result of a five-year freeze in nonsecurity discretionary programs, a slice
of the budget that contains programs that are central to the quality of American
lives, including education, environment and financial regulation.
But the cuts are not haphazard. The budget boosts education spending by 11
percent over one year and retains the current maximum level of college Pell
grants — up to $5,500 a year. To offset some of the costs, the budget would
eliminate Pell grants for summer school and let interest accrue during school on
federal loans for graduate students, rather than starting the interest meter
after graduation.
Those are tough cutbacks, but, over all, the Pell grant program would continue
to help close to nine million students. The Republican proposal would cut the
Pell grant program by 15 percent this year and nearly half over the next two
years.
The Obama budget also calls for spending on green energy programs — to be paid
for, in part, by eliminating $46 billion in tax breaks for oil, gas and coal
companies over the next decade. Republicans are determined not to raise any
taxes, even though investing for the future and taming the deficit are
impossible without more money.
The budget would also increase transportation spending by $242 billion over 10
years. It does not specifically call for an increased gas tax to cover the new
costs, though it calls on Congress to come up with new revenues to offset the
new spending. Republicans want to eliminate forward-looking programs like
high-speed rail.
The budget is responsible in other ways. It would cap the value of itemized
deductions for high-income taxpayers and use the savings to extend relief from
the alternative minimum tax for three years so that the tax does not ensnare
millions of middle- and upper-middle-income taxpayers for whom it was never
intended. For nearly a decade, Congress has granted alternative minimum tax
relief without paying for it.
House Republicans want to leave military spending out of their budget-cutting
entirely, but Mr. Obama’s budget reduces projected Pentagon spending by $78
billion over five years. If anything, Mr. Obama could safely have proposed
cutting deeper, as suggested by his own bipartisan deficit panel.
The bill for the military is way too high, above cold-war peak levels, when this
country had a superpower adversary. There’s a point where the next military
spending dollar does not make our society more secure, and it’s a point we long
ago passed.
Mr. Obama’s budget also includes a responsible way to head off steep cuts in
what Medicare pays doctors. It would postpone the cuts for two years and offset
that added cost with $62 billion in other health care savings, like expanding
the use of cheaper generic drugs.
But not all of Mr. Obama’s cuts are acceptable. The president is proposing a
reduction by nearly half in the program that provides assistance to low-income
families to pay for home heating bills. Shared sacrifice need not involve the
very neediest.
Ideally, budget cuts would not start until the economic recovery is more firmly
entrenched. But the deficit is a pressing political problem. The Obama budget is
balanced enough to start the process of deficit reduction, but not so draconian
that it would derail the recovery.
The same cannot be said for the plan put forward by Republicans last week. It
would amputate some of government’s most vital functions for the next seven
months of fiscal year 2011. (They haven’t even gotten to next year yet, never
mind the more distant future.)
Real deficit reduction will require grappling with rising health care costs and
an aging population, which means reforms in Medicare, Medicaid and Social
Security, as well as tax increases to bring revenues in line with obligations.
Mr. Obama’s budget does not directly address those big issues, but doing so
would require a negotiating partner, and Mr. Obama, at present, does not have
one among the Republican leaders in Congress. His latest budget is a good
starting point for a discussion — and a budget deal — but only if Republicans
are willing participants in the process.
February 14, 2011
The New York Times
By JACKIE CALMES
WASHINGTON – President Obama, pivoting at midterm from costly
economic stimulus measures to deficit reduction, on Monday released a fiscal
year 2012 budget that projects an annual deficit of more than $1 trillion before
government shortfalls decline to “sustainable” levels for the rest of the
decade.
Still, annual deficits through fiscal year 2021 will add a combined $7.2
trillion to the federal debt, Mr. Obama’s budget shows – after allowing for $1.1
trillion in deficit-reducing spending cuts and tax increases that the president
proposes over the 10-year period. As he acknowledges, after 2021, an aging
population and rising medical costs will drive deficits again to unsustainable
heights.
The budget reflects Mr. Obama’s cut-and-invest agenda: It creates winners and
big losers as he proposes to slash spending in some domestic programs to both
reduce deficits and make room for increases in education, infrastructure, clean
energy, innovation and research to promote long-term economic growth and global
competitiveness.
The president is unveiling his budget to emphasize one of the winners: He will
do so on Monday morning during a visit to a middle school and technology center
in Baltimore.
Among the losers are programs that Mr. Obama has supported, even expanded, in
the past: Popular programs for home-heating aid to poor families and for
community services block grants would be cut in half, and a multi-state Great
Lakes cleanup project would lose a quarter of its money compared to 2010.
Pell grants for needy college students would be eliminated for summer classes,
and graduate students would start accruing interest immediately on federal
loans, though they would not have to pay until after they graduate; both changes
are intended to help save $100 billion over 10 years to offset the costs of
maintaining Pell grants for 9 million students, according to administration
officials.
Officials contrast the administration’s budgetary approach with that of House
Republicans, who are voting this week to slash the current year’s spending by
much larger amounts, sparing few programs from cuts and increasing spending on
none.
“The debate in Washington is not whether to cut or to spend,” said a senior
administration official on Sunday, speaking on condition of anonymity to brief
reporters on the budget in advance of Mr. Obama’s Monday announcement of the
spending plan. “We both agree we should cut. The question is how we cut and what
we cut.”
For the administration’s part, the official said, “It requires cutting programs
that in a different environment we would not want to cut.”
For the current fiscal year 2011, which ends Sept. 30, the Obama budget projects
a deficit of more than $1.6 trillion, a level equal to nearly 11 percent of the
gross domestic product, making it the largest shortfall since the end of World
War II. That projection has swelled recently mostly due to the big tax cut deal
that Mr. Obama and Congressional Republican leaders agreed to in December to
spur the still-fragile economic recovery. It included a payroll tax cut this
year for all Americans.
The deficit for fiscal year 2012 is projected to be more than $500 billion less,
$1.1 trillion, due largely to the end of some of those tax cuts and of the
two-year stimulus package that Mr. Obama signed into law soon after taking
office. Economic growth and deficit-reduction measures account for a lesser
share of the expected improvement.
The 2012 deficit will be the fourth and final year it is projected to exceed $1
trillion.When Mr. Obama took office in January 2009, the deficit for that year
was projected to be – and ultimately was -- $1.3 trillion. A similarly large
shortfall followed for 2010. After this year’s spike to $1.6 trillion, the
president’s budget charts a decline from the trillion-dollar level after 2012 --
to a low of $607 billion in fiscal year 2015 -- before the annual deficits, in
dollars, start inching up again.
Compared to the size of the economy, as economists prefer to measure, the annual
deficits would decline from a projected 10.9 percent of gross domestic product
this year to 7 percent in 2012. By 2015, Mr. Obama projects, the deficit would
be just above his target of 3 percent – the level that many economists consider
sustainable because it means deficits are not growing any faster than a healthy
economy.
Of the $1.1 trillion in net deficit reduction that Mr. Obama claims over the
next decade with his budget, two-thirds would be from cuts in spending and a
third from higher revenues.
The lower spending mostly would derive from Mr. Obama’s proposed five-year
freeze of the same narrow category of so-called non-security discretionary
spending that Republicans are cutting. His freeze would save an estimated $400
billion through 2021.
Mr. Obama also would reduce the Pentagon’s five-year spending plans by $78
billion, reflecting savings recommended by his Defense secretary, Robert Gates.
Separately, war costs are declining, administration officials said, largely due
to the withdrawal of troops from Iraq.
Neither Mr. Obama nor Republicans are tackling the large entitlement programs –
Medicare, Medicaid and, to a lesser extent, Social Security -- whose growing
costs are driving projections of unsustainable long-term debt. But Mr. Obama
does propose to save $62 billion from Medicare and Medicaid by squeezing
care-providers’ reimbursements and expanding federal health programs’ use of
generic drugs.
But those savings, by the administration’s accounting, would offset for two
years the costs of preventing a scheduled big reduction in payments to
physicians who treat Medicare patients. Typically Congress just blocks the
mandated pay cuts for doctors and simply adds the expense to the deficit.
Similarly, Mr. Obama proposes to stop another favorite Washington budget
gimmick: Adding to the deficit the recurring costs of preventing the alternative
minimum tax, which is intended for affluent taxpayers, from hitting middle-class
households. He would offset the roughly $300 billion revenue loss from fixing
the tax for three years, raising a like amount over 10 years by limiting
deductions for upper-income people in the top two tax brackets.
That tax increase for affluent Americans would account for the bulk of the
revenues that Mr. Obama counts in his $1.1 trillion of net deficit reduction.
The rest includes $46 billion over 10 years from eliminating a dozen tax breaks
for oil, gas and coal companies to offset the costs of clean-energy initiatives.
February 23, 2009
Filed at 8:12 a.m. ET
The New York Times
By THE ASSOCIATED PRESS
WASHINGTON (AP) -- President Barack Obama is bringing together dozens of
advisers and adversaries to discuss how to curb a burgeoning federal deficit
laden with Social Security, Medicare and Medicaid obligations.
Obama's summit at the White House on Monday is the first meeting toward a
strategy to address the long-term fiscal health of the nation. The gathering
also comes as Obama prepares ambitious plans to cut the federal deficit by half
within four years.
''It will require doing all we can to get exploding deficits under control as
our economy begins to recover,'' Obama said in his weekend Internet and radio
address. ''That work begins on Monday, when I will convene a fiscal summit of
independent experts and unions, advocacy groups and members of Congress to
discuss how we can cut the trillion-dollar deficit that we've inherited.''
Even before it began, some of its 130 invited participants cautioned against
overinflated expectations.
''It can either be a nice press event. Or it can be a substantive event,'' said
Republican Sen. Judd Gregg, whom Obama appointed as commerce secretary before
the New Hampshire lawmaker balked. ''History tells us it will be the first.
We've had these meetings before. There's always a lot of people willing to point
out the problem.''
Yet, he said, there is seldom anyone willing to make the difficult decisions to
solve those problems.
As the nation's economy continues its downward spiral, Obama's advisers are
keeping their focus on the broader fiscal troubles that have sent millions to
unemployment rolls. Taken in context, the summit is but one part of the White
House's larger approach to the coming weeks focused on Obama's priorities for a
first term, including a State of the Union-style address on Tuesday.
That speech is not likely to include plans to deal with long-crumbling
entitlement programs.
The Senate's top Republican, Mitch McConnell of Kentucky, said a solution
already exists in legislation written by Gregg and his Democratic counterpart on
the Budget Committee, Sen. Kent Conrad of North Dakota.
Their measure would create a bipartisan commission to deal with Social Security,
Medicare and Medicaid. The entitlement programs face eventual bankruptcy,
although experts differ on how urgently each is threatened.
Many House Democrats, however, remain opposed to a commission, including Speaker
Nancy Pelosi. Obama has indicated he's open to the idea -- and many others -- as
a way to move toward a viable solution.
McConnell said any movement would be a step toward getting a handle on the
unfunded liabilities.
''So I hope what the meeting at the White House is about tomorrow is about
sobering up here and beginning to rethink the kind of debt that we're laying on
future generations,'' McConnell told CNN's ''State of the Union'' program on
Sunday.
That comes hand-in-hand with the president's plans to deal with the deficit.
Obama plans to cut the federal deficit in half by the end of his first term,
mostly by scaling back Iraq war spending, raising taxes on the wealthiest and
streamlining government. The goal is to halve the federal deficit to $533
billion by the time his first term ends in 2013.
He inherited a deficit of about $1.3 trillion from his predecessor, President
George W. Bush.
Meanwhile, Peter Orszag, director of the federal Office of Management and
Budget, said Monday he believes the new fiscal plan will lure some Republican
support -- in contrast to the stimulus bill that got only three GOP votes in
Congress.
He said he thinks some Republicans will back the plan because of proposals to
overhaul the expensive U.S. health care system.
''Health care clearly is the key to our fiscal future,'' he said on CNN, ''so we
need to get health care costs u nder control and we want to do that this year.''
WASHINGTON
(AP) — Far from slowing, the government's deficit spending will surge to a
record $1.5 trillion flood of red ink this year, congressional budget experts
estimated Wednesday, blaming the slow economic recovery and last month's tax-cut
law.
The report was sobering new evidence that it will take more than President
Barack Obama's proposed freeze on some agencies to stem the nation's
extraordinary budget woes. Republicans say they want big budget cuts but so far
are light on specifics.
Wednesday's Congressional Budget Office estimates indicate the government will
have to borrow 40 cents for every dollar it spends this fiscal year, which ends
Sept. 30. Tax revenues are projected to drop to their lowest levels since 1950,
when measured against the size of the economy.
The report, full of nasty news, also says that after decades of Social Security
surpluses, the vast program's costs are no longer covered by payroll taxes.
The budget estimates will add fuel to the already-raging debate over spending
and looming legislation that would allow the government to borrow more money as
the national debt nears the $14.3 trillion cap set by law. Republicans
controlling the House say there's no way they'll raise the limit without
significant budget cuts, starting with a government funding bill that will
advance next month.
Democrats and Republicans agree that stern anti-deficit steps are needed, but
neither Obama nor his resurgent GOP rivals on Capitol Hill are — so far —
willing to put on the table cuts to popular benefit programs such as Medicare,
farm subsidies and Social Security. The need to pass legislation to fund the
government and prevent a first-ever default on U.S. debt obligations seems sure
to drive the two sides into negotiations.
Though the analysis predicts the economy will grow by 3.1 percent this year, it
foresees unemployment remaining above 9 percent.
Dauntingly for Obama, the nonpartisan agency estimates a nationwide jobless rate
of 8.2 percent on Election Day in 2012. That's higher that the rates that
contributed to losses by Presidents Jimmy Carter (7.5 percent) and George H.W.
Bush (7.4 percent). The nation isn't projected to be at full employment —
considered to be a jobless rate of about 5 percent — until 2016.
The latest deficit figures are up from previous estimates because of bipartisan
legislation passed in December that extended George W. Bush-era tax cuts and
unemployment benefits for the long-term jobless and provided a 2 percentage
point Social Security payroll tax cut this year.
That measure added almost $400 billion to this year's deficit, CBO says.
The deficit is on track to beat the record of $1.4 trillion set in 2009. The
budget experts predict the deficit will drop to $1.1 trillion next year, still
very high by historical standards.
Republicans focus on Obama's contributions to the deficit: his $821 billion
economic stimulus plan, boosts for domestic programs and his signature health
care overhaul. Obama points out that he inherited deficits that would have
exceeded $1 trillion a year anyway.
The chilling figures came the day after Obama called for a five-year freeze on
optional spending in domestic agency budgets passed by Congress each year.
Republicans were quick to blame Obama for the rising red ink. Rep. Jeb
Hensarllng of Texas, chairman of the House Republican Conference, said the
report "paints a picture that is more dangerous than most Americans could
anticipate."
"What is our leader in the White House doing about it? Asking Congress to raise
the debt ceiling, proposing new spending and sticking future generations with a
multi-trillion dollar tab," Hensarling said.
Democrat Kent Conrad, chairman of the Senate Budget Committee, pointed to a
problem lawmakers are sure to keep facing:
"When the American people are asked what they want done and to prioritize what
they want, they want the deficits and debt dealt with. But when they are asked
very specifically, will they support changes in Social Security, the polls say
no. Changes in Medicare? The polls say no. Changes in defense spending? The
polls say no."
"I would've liked very much if the president would have spent a bit more time
helping the American people understand how really big this problem is," added
Conrad, D-N.D.
Republicans are calling for deeper cuts for education, housing and the FBI —
among many programs — to return them to the 2008 levels in place before Obama
took office.
But those nondefense programs make up just 12 or so percent of the $3.7 trillion
budget, which means any upcoming deficit reduction package — at least one that
begins to significantly slow the gush of red ink — will require politically
dangerous curbs to popular benefit programs. That includes Social Security,
Medicare, the Medicaid health care program for the poor and disabled, and food
stamps.
Neither Obama nor his GOP rivals on Capitol Hill have yet come forward with
specific proposals for cutting such benefit programs. Successful efforts to curb
the deficit always require active, engaged presidential leadership, but Obama's
unwillingness to thus far take chances has deficit hawks discouraged. Obama will
release his 2012 budget proposal next month.
"The proposals we've seen so far from the president and congressional
Republicans amount to little more than tinkering around the edges," said Concord
Coalition Executive Director Bob Bixby.
"Somebody is going to have to bite the bullet and get this process going," said
Maya MacGuineas of the Committee for a Responsible Federal Budget, a bipartisan
group that advocates fiscal responsibility. "And that somebody has to be the
president."
Obama has steered clear of the recommendations of his deficit commission, which
in December called for difficult moves such as increasing the Social Security
retirement age and reducing future increases in benefits. It also proposed a
15-cents-a-gallon increase in the gasoline tax and eliminating or scaling back
tax breaks — including the child tax credit, mortgage interest deduction and
deduction claimed by employers who provide health insurance — in exchange for
rate cuts on corporate and income taxes.
CBO predicts that the deficit will fall to $551 billion by 2015 — a sustainable
3 percent of the economy — but only if the Bush tax cuts are wiped off the
books. Under its rules, CBO assumes the recently extended cuts in taxes on
income, investment and people inheriting large estates will expire in two years.
If those tax cuts, and numerous others, are extended, the deficit for that year
would be almost three times as large.
Tax revenues, which dropped significantly in 2009 because of the recession, have
stabilized. But revenue growth will continue to be constrained. CBO projects
revenues to be 6 percent higher in 2011 than they were two years ago, which will
not keep pace with the growth in spending.
