Stuckness: Congress Fiscal Track Record
Congress has taken a lot of knocks in recent years, so much so that it might have escaped our attention that the United States Congress once lived to an exemplary standard of fiscal responsibility.
In the following chart, Congress’ Fiscal Track Record, I display the contrast between two periods of Congressional fiscal performance, an exemplary period of twenty-six years following the end of World War II, and then a somewhat more irresponsible period that began in the early 1970s and continues even today.
In the twenty-six budget years 1947-1972, Congress ran fiscal surpluses eight times. It ran deficits smaller than one percent of GDP on ten occasions, deficits between one and two percent on four occasions, and deficits of two to three percent on four more occasions. No deficits during that period exceeded three percent of GDP.
The second set of bars pick up the story in 1973 and carry it forward through 2014. Twenty-three budget years stayed within the limits set in the earlier period, but they were biased toward larger deficits, not smaller deficits. The other nineteen budget years – nineteen – generated deficits exceeding three percent of GDP! In seven of those years, Congress ran deficits that were three to four percent of GDP; in eight of those years, Congress ran deficits that were four to six percent of GDP, and in four of those years, Congress ran deficits that exceeded six percent of GDP.
(discussion continued following the chart)
What explains the dramatic difference in performance between these two periods? There were several factors. In the first postwar period, both parties had just emerged from a war in which their members had worked together in an all-out battle for victory. Both parties blended a mix of conservatives, moderates, and liberals. Bipartisanship was an internal necessity for both parties, which made it easier for the parties to practice a measure of bipartisanship in working together on budgets. House and Senate committees were led by people who prided themselves on their sense of fiscal responsibility. And congressional districts also blended constituents of varying views.
In the 1970s, though, political realignment reshuffled the parties. Conservatives gravitated to the Republican Party, liberals gravitated to the Democratic Party. And gerrymandering reshuffled the nation’s congressional districts. Instead of voters choosing the elected officials they wanted, elected officials got to choose the voters they wanted.
The national interest began to fade from view, eclipsed by intense partisanship. Conservatives didn't mind using borrowed money to finance tax cuts for their constituents; liberals didn't mind using borrowed money to finance the social programs that their base was hoping for. Deficit spending proved to be a source of political advantage for both parties.
Structural changes had a corrupting influence; partisan changes had a corrupting influence. On both sides of the aisle, American politics had lost a good part of its moral anchor.
Note the graph again. Once America had Congresses that served the national interest. Those traditions began to disappear in the 1970s. America’s fiscal stuckness testifies to our loss.