By Bright Lee, R Street
Every so often, the world’s eyes turn to the United States federal budget—not with admiration, but with a mixture of bewilderment and concern. Germany’s WirtschaftsWoche(“Economy Weekly”) dubbed the U.S. budget crisis “America’s theatre of the absurd.” Japanese newspaper The Asahi Shimbun didn’t mince words in its editorial on the subject, lambasting U.S. efforts to rectify the situation as “futile,” with a blatant disregard for the lives of its people.
This global scrutiny isn’t unwarranted. The impact of America’s fiscal decisions reaches far beyond the country’s borders. At $7.6 trillion, American government expenditures dwarf those of China ($4.8 trillion) and tower over other developed nations like France ($1.5 trillion). With the U.S. dollar reigning as the world’s reserve currency, this fiscal behemoth has the power to send tsunamis through the global economy.
With great power comes great responsibility—and in this regard, the United States is blatantly neglecting its duty. The U.S. budget process stands out in the developed world for all the wrong reasons. First, when the budget process falters, instead of a fail-safe option kicking in, a fail-deadly scenario (government shutdowns and potential default) unfolds. Among developed nations, only the United States faces these risks due to mere political gridlock. Second, and even more perplexing, is the seeming inability or unwillingness to change. Despite a chorus of suggestions from experts, economists, and policymakers, the U.S. budgeting process has seen little change since the Congressional Budget Act of 1974. Essentially, the country with the most to lose is the least interested in fixing the problem. Instead, it perpetuates political risks and fuels a vicious cycle of worsening deficits and ballooning national debt.
But hope isn’t lost. When you’re stuck in a maze, sometimes the best solution is to look at it from above. And that’s exactly what this three-part series aims to do. By examining how other nations navigate their fiscal labyrinths, we can glean valuable insights and, perhaps, find a way out of our own.
In this international budget travelogue, we’ll explore three compelling case studies that offer a fresh perspective on America’s fiscal challenges. We’ll start with the low-hanging fruit and work our way up to more fundamental (yet still viable) reforms, with each stop on our journey offering valuable lessons for U.S. policymakers and citizens alike.
- Welcome to East Asia, where we’ll uncover how South Korea and Japan manage to sidestep the looming specter of government shutdowns despite their own tumultuous budget negotiations. Automatic continuing resolutions could be a simple yet effective tool that could transform the U.S. budget process from a high-stakes gamble to a stable, predictable affair.
- Jet off to Central Europe to see how the United States could avoid the much less probable (but far more dangerous) consequence of U.S. debt default: a potential global financial crisis and tarnished U.S. credibility. The German Debt Brake is a viable solution that could not only shield the United States from the nightmare of default, but also pave the way toward improved fiscal health.
- Touch down in New Zealand, where we’ll see how transparency, clear fiscal goals, and public engagement have transformed the country’s fiscal trajectory. The straightforward yet concise model challenges the opacity and complexity of the U.S. budget process, offering a roadmap to a more informed and engaged citizenry.
In traversing this global fiscal landscape, we’ll discover that the key to unlocking America’s budget conundrum may be simpler than imagined. As the world looks on, the stage is set for a positive shift in America’s fiscal story. It’s time to look beyond our borders, learn from our global neighbors, and chart a new course toward fiscal responsibility.
Bright (Dokyeong) Lee is a Research Assistant at R Street.