The Fiscal Ratchet: Why Government Spending Never Decreases

The Proposition

Federal spending in constant dollars has increased in every decade since 1930. It has increased under Republican presidents and Democratic presidents, under Republican Congresses and Democratic Congresses, during wars and during peace, during recessions and during expansions. The only variable that predicts federal spending is the calendar. This is not a partisan observation. It is an arithmetic one.

WHAT HAPPENED

• The CBO's latest long-term budget outlook projects federal spending at 24.1% of GDP by 2034, up from 21.0% in 2015
• Mandatory spending (Social Security, Medicare, Medicaid, interest on debt) now constitutes 72% of the federal budget
• Discretionary spending, the portion Congress votes on annually, is 28% and declining as a share
• Total federal debt has surpassed $36 trillion, with interest payments exceeding $900 billion annually
• Neither party's budget proposals would reduce the debt-to-GDP ratio over the next decade

THE CONSERVATIVE DIAGNOSIS

The fiscal ratchet operates through a mechanism that is elegant in its simplicity: spending creates constituencies, constituencies create political costs for reduction, and political costs create permanence. A program that begins as an emergency measure becomes a baseline. A baseline becomes an expectation. An expectation becomes a right. Each step is individually defensible and collectively catastrophic.

The conservative who complains about the size of government while voting for defense increases, tax cuts without corresponding spending reductions, and farm subsidies for his district is not a hypocrite in the vulgar sense. He is a rational actor responding to incentives that punish fiscal discipline and reward fiscal indulgence. The system is not broken. It is working exactly as the incentive structure demands.

THE LIBERAL ERROR

The progressive responds to the fiscal ratchet by arguing that government spending is investment, and that investments produce returns. This is sometimes true and sometimes false, but it is always beside the point. The question is not whether individual programs produce returns but whether a system that can add programs and never subtract them is sustainable. The answer, arithmetically, is no.

The progressive who celebrates each new program as an investment must also explain why no investment has ever been liquidated, why no program has ever been declared complete, and why the "temporary" measures of the New Deal, the Great Society, and the War on Terror are all still with us. An investment with no exit strategy is not an investment. It is an obligation.

THE CONSTITUTIONAL QUESTION

The Founders did not anticipate a government that would spend $6.7 trillion annually, but they did anticipate the tendency of governments to grow. Madison's Federalist No. 51 argued that "ambition must be made to counteract ambition," a structural check that assumed competing branches would restrain each other's spending. The assumption has proved incorrect. Both branches prefer spending to restraint, because spending distributes benefits to identifiable groups while restraint distributes costs to diffuse populations.

The structural check that Madison envisioned has been replaced by a structural accelerator: each branch competes not to restrain the other but to claim credit for the spending the other proposes.

WHAT PRUDENCE REQUIRES

The honest conservative position is not that government spending should be reduced, a goal that has been pursued unsuccessfully for nine decades, but that the rate of increase should be slowed to below the rate of economic growth. This is the only mathematically feasible path to a declining debt-to-GDP ratio, and it is the only politically feasible path because it requires no program to be cut, only to grow more slowly than the economy.

This modest goal has been achieved in exactly two periods since 1945: 1995-2000 and 2013-2015. Both required divided government and a president willing to accept sequestration or surplus as a political achievement. Both were followed by spending increases that erased the gains within four years.

SOURCES

• Congressional Budget Office, Long-Term Budget Outlook (2026)
• Office of Management and Budget, Historical Tables
• Federal Reserve Economic Data, federal debt statistics
• Madison, Federalist No. 51

POLLERBULL SIGNAL

• What moves odds: Fiscal policy does not move electoral odds in the short term. Voters reward spending and punish austerity, which is why the ratchet exists.
• What would falsify this: If a candidate wins a federal election while explicitly campaigning on specific spending cuts (not vague "waste" reduction), the political incentive structure has shifted and the ratchet faces a genuine constraint.