Entitlement spending must change

President Obama's budget is out and it is an eye popper — the largest peacetime one in history. Still, it claims to contain $1.7 trillion in budget cuts, or is it $2.4? Or some other number? Republicans insist that those cuts are phony and focus on the tax increases, which they put at $2 trillion. Maybe $3. Or more. Or less.

I could look up the exact numbers in the actual budget document, but these very loose estimates are factually just as good, not only because political spin has been applied to the budget message by the two parties, but also because the budget is an estimate of economic activity and tax returns over the next 10 years. In an economy as large, complex and constantly changing as ours, it is hard to predict with precision how much growth will occur this year, let alone 10 years from now.

Further, the law requires that the budget make certain assumptions, most of which will certainly be wrong. For example, the budget assumes that Congress will pass laws cutting back on Medicare in a way they never have. It also assumes growth rates for the economy which are more robust than private economists foresee. If Congress fails to pass those cuts, or if the economy grows at a different rate, all of the figures based on those assumptions are fantasy. That's why every 10 year projection made by every president has always been wrong.

You can pick whatever numbers you wish and be wrong along with both President Obama and Speaker Boehner. However, write your numbers down because the next budget projection is not 10 years away, but one. Twelve months from now, whoever is president will offer a new set of projections, stated with precision down to the last dollar, and this year's numbers will be completely forgotten. This is an annual process, not a decadal one. If you think this is a crazy way to budget for a multi-trillion dollar operation, you are right.

What is not fantasy is the fact that the long-term spending curve of entitlement spending, a solid majority of all federal outlays, is inflexibly going up. The only way to turn it down is to change the structure of those programs. Ignoring the present budget exercise, we still have a good picture of what will happen over the next 10, 15 or 20 years if no changes are made. Benefits per person are firmly described in current law, and the number of people who will reach retirement age in that period is easily determined through actuarial tables that also tell us how many current beneficiaries will die.