Opinion: Rein In Spending to Help Get Control of National Debt

In his State of the Union speech on Tuesday, President Barack Obama said that a key to "winning the future" is to "make sure we aren't buried under a mountain of debt."

"Mountain" doesn't really do justice to how much debt the country has piled up. Right now the federal debt tops $14 trillion. To get a sense of how huge that number is, consider this: If you were to make a stack of 14 trillion $1 bills, it would make two round trips to the moon.

The day after the speech, the Congressional Budget Office made it clear in a new report why this mountain exists. In a word: spending.

As the chart below shows, federal revenues since 1950 have been relatively flat. But spending is slated to shoot up to historic levels. Over the next decade, federal spending will average 23.6 percent of gross domestic product -- a scale never before reached in modern times, except during World War II.

Meanwhile, revenues over the next decade are forecast to average 18.3 percent -- close to the post-war average. And that assumes that all the Bush tax cuts (including those for the middle class) expire, and that Congress doesn't fix the earned income tax credit -- two highly unlikely scenarios.

Federal Spending and Revenue as % of GDP by Decade

Given this, it would seem reasonable to conclude that a first step to getting control of the national debt would be to rein in spending.

And here President Obama has offered some ideas: He proposes first to freeze domestic spending programs for five years, cut defense spending and improve government efficiency. The GOP has upped the ante, proposing to cut domestic programs back to 2008 levels.

But as the new CBO report makes clear, cuts to these "discretionary" programs won't make any real difference, since all the growth in spending relative to GDP over the next decade will come from Social Security, Medicare and Medicaid.