The first, and most glaring, misunderstanding in the general public, focuses on the role the President plays in the budget process. Since the 1974 Budget Act (see: good bedtime reading if you are having trouble sleeping) was signed into law, the President’s role in the budget process has been a guiding one. He/she submits a budget proposal to Congress and the proper committees in both bodies act on that submission. Within the President’s budget are a host of legislative, regulatory, and other assumptions (Ex. drilling in the Arctic National Wildlife Refuge is said to raise $4 billion, up from last years assumed total thanks to the spike in oil prices). These assumptions are the President’s wishlist for the year. The final numbers administration officials are using now (claims surrounding what the President’s budget would do to the deficit) are based on Congressional approval of ALL of the President’s proposals. This includes, but is not limited to, moving control of the Community Development Block Grant to the Dept. of Commerce, closing down the National Civilian Community Corps, and cutting some 100 other programs (as the Presidents budget claimed to do last year also). One tiny problem there … most of those proposals, many of which Bolten, et. al rely on to chip away at the deficit are DOA at the Hill.
Which brings us to important point #2, which is really the correlate of point #1. If the President only guides, or makes suggestions and proposals to, the budget, who is really pulling the strings? Congress. Yes, the same people that brought you Abramoff, Delay, Terri Schiavo, and turned a $236 billion surplus (for as far as anyone’s budget forecast could see) into yearly deficits in excess of $400 billion and a national debt of $8.3 trillion (oh yeah, the debt limit will get raised in the next few months too … and all of us in Massachusetts thought Marie St. Fleur was bad!). Congressional control of the federal budget has its positive and negative aspects. Long time committee chairs and ranking members are loathe to see programs within their jurisdiction slashed. While Republicans have been able to demand loyalty in the Delay era, there is little reason to believe that post-Delay, in an election year, and in dire need of good news, there will be 100% party loyalty. For individual programs, this is good news. Find the right ear, and you might just live to see FY 2008. Overall, though, Congressional failure to enact some of the President’s proposals, only worsens budget forecasts and our current fiscal standing. This is where the Congressional Budget Office’s work is informative.
CBO has a legislative mandate to produce budget predictions based only on current laws. While OMB assumes everything (and right they should, since they are the President’s budget men and not the budget watch dog for the legislative branch), CBO assumes nothing. For this reason, you will see many of the Democratic leaders on the budget refer to CBO baselines and projections. Additionally, Republicans and Democrats who fear the crush the retire of the baby-boom generation will put on our federal entitlements (see: Social Security, Medicare, Medicaid … also referred to as non-discretionary spending, since their spending levels are not controlled by Congress, but are tied to demographic indicators), will refer to CBOs projections for those programs, since they give us a fair look at where this spending will head if nothing is done.
So where does that leave us? Unfortunately, as so often is the case in Washington, truth is neither black or white. Like Mac Bundy, NSC Director of JFK and LBJ said, “Gray is the color of truth.” Some of the President’s proposals will be adopted, but their total effect on our current deficit and debt will be miniscule at best. While President Bush is right to warn of the effect the baby-boom generation will have on non-discretionary spending, his warnings ring hollow considering the opportunity he had in 2000 to secure retirement of this generation, reform these programs, and erase the federal debt. Instead, we are back where we were in the early 1990s.
After a decade of “voodoo economics,” Americans are being rudely awaken from the dreamy slumber of “have-your-cake-and-eat-it- too” conservatism. The federal budget, no matter how you parse it, analyze it, or spin it, is a statement of our nation’s priorities and values. In the proposal President Bush has put forward, which will be largely mirrored by Congressional Republicans, the only priority is political expedience. Instead of leading Americans, of all political leanings, to a better future, President Bush has chosen to lead our nation down a perilous path, the end of which cannot be seen, but the ramifications of which will be felt for years.
I’ve seen a number of different sources claim that future expenditures on * Iraq * Katrina
aren’t in the budget and their numbers aren’t accounted for in the deficit projections. I guess since Congress hasn’t appropriated the money it can’t be assumed, but everybody knows they’ll spend more for both.
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You’re the budget guy. Do you know what the heck I’m talking about?
you officially found the Democratic message on the budget without any help!
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Since the war began in Iraq, the majority of funds have been appropriated through supplemental appropriatons. Last year, Senator Byrd (D-18th century) included an ammendment to the last supplemental expressing the sense of the Senate that further appropriations for the war should be included within the regular DoD approps/budget. Surprise, surprise. The administration is ignoring Congress again.
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Unfortunately, there’s some precedent for this … see: FDR. During WWII, FDR had two budgets. He kept the non-war budget balanced and the rest he refused to discuss when it came to deficits and debt. Morality aside, its where Bush got the idea of talking about “non-defense/homeland security discretionary spending” … listen for that phrase … its a bureaucratic way of saying … “I’m hacking social/domestic spending, I’m fiscally conservative”
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On Katrina … well, thats where the Administration becomes the “sound bite presidency again” (see: do everything for the victims they need, we’re addicted to oil). You know, people said Bill Clinton governed based on gallup polls, but at least he followed through. Bush speaks based on gallups pulls, but you can’t believe a word he says.
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For the record, last year Bush didn’t include the budgetary impacts of his social security reform in the budget. For the 4th year in a row, he’s ignored the growing Alternative Minimum Tax (for more information check out Rep. Richie Neal of the MA 2nd, hes a crusader on this issue). Oh yeah, and he hacks programs that promote energy conservation … but don’t expect the media to make the connection there.
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Keep the questions coming …
the Center for American Progress sends around their daily talking points, and aside from being a great way to shoot down your conservative friends/enemies, they provide a good quick analysis into the days news.
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Here’s their thoughts on the administrations omission of Katrina relief/recovery/anything from the fed budget … http://www.americanprogressaction.org/site/apps/nl/content2.asp?c=klLWJcP7H&b=699965&ct=1969571
So, just as a practical matter, I’ve been wondering how the costs of the Iraq war do get funded if they are not included in “the budget?” Are they tacked on at some random date as a supplemental? Does that ever get included in a final calculation of the revenues and expeditures for the federal government at the end of the year? Does it just vanish as an “off budget” expense? If the latter, how does it get paid for? By printing money and not telling anyone? Jolly confusing, if you ask me.
to the world of the federal budget. Generally, I’d say it’s f-ing confusing … but I’ll go with jolly, since that makes this more British sounding, and things done with a British sound are always either more proper or fun/funny.
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The Iraq war, and Afghanistan for that matter, is, to some degree, funded two ways. One, obviously, is through the yearly Departmet of Defense appropriations process. The second, less obvious, is through what is commonly referred to as “supplementals” … supplementals are just that, supplemental spending authority (appropriations literally are not money, they are the authority to spend money from the treasury … in other words, a supplemental appropriation is expanded or increased authority for the DoD, State, or whatever agency is delineated, to spend more money). Supplemental approps do get calculated in the final yearly budget numbers (deficit and debt). No way to avoid that. The distinction between supplementals and regular appropriations is the time frame and certain limitations (supplementals have less restrictions because, by their very nature, they are outside the regular budgetary procedure), but in large part, is largely rhetorical.
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As to how are the supplementals paid for? Well, like evrything else these days, they are paid for by borrowing money, half of which we are borrowing from the world’s pre-eminent economic power … China. And while we’re on that topic … whether you were against the Iraq war or not (and I was 100% against it), you could have funded the whole thing, pegged domestic spending only to inflation, shored up social security and paid down some of the debt had we not continued to OBSESSIVELY CUT TAXES. I will now step down from my soap box.
Everybody has heard something about the debt. We are “concerned about leaving it to our children”, etc” What seems to get lost is the current impact of our debt. While it is going up we are budgeting nearly $400 Billion dollars a year in interest on it in the FY 07 budget. Think about that number for a minute. Before we spend a dime on anything else we are forking over $400 Billion in Debt Service. And the number goes up every year with our deficits. It is like borrowing money to pay off the interest on your loans. Forget that, it isn’t like that, it is that.
Ed, this is the point I would die to find a better way to hammer home with the public. Take a look at all “domestic discretionary spending” (or as we all think of it, the good stuff government does) and it doesn’t even measure up to debt service.
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Last year the deficit was about $350 billion-ish, but we added to the debt another $550 billion.
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Basically, no matter how you account for it, we need to get our fiscal house in order. Step 1 (and its not just this simple) is repealing the tax cuts, step 2 is tax reform (ever thought about taxing people’s bad behavior – consumption, waste, etc. – instead of their good behavior – labor, just a thought), and step 3 is looking at medicare, medicaid, and social securirty over the LONG term, and making them solvent for the next 75-100 years (big way to do that is to run surpluses – – some times its so simple it hurts).
The other thing we have to look at is the impact of the feeding frenzy that has had the nation drinking the cool-aid over the threat posed by terrorism. The neocons have blown the whole thing up so that Bin Laden poses a threat greater than Hitler, and we have done everything possible to make it so. Someone has got to have enough sense to take a step back and ask is all this spending getting us anywhere – The answer is obviously no, but it appears that we are aiming at permanent “war footing” where it is impossible to rein in spending. We are talking about a trillion dollars for the adventures in Iraq and Afghanistan.
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The other things we have to do is develop a smarter government (no that isn’t necessarily an oxymoron). How can anyone justify not negotiating for bulk buying negotiations in the medicare drug program, or collecting royalties on bublic land that are often 10 cents on the dollar. I’ve worked on state and local budgets for twenty five years, and I take it for a given that government is never as efficient as people believe it can be, but the last five years, between tax cuts, and outright giveaways, has taken the process to whole new level. My perscription:
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1. Really grow the economy. First and most important. Revenues go up, expenses go down.
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2. Stabilize your revenue sources. It seems like all we have discussed for the past five years are ways to cut back on our revenues. To make it add up we’ve created rosy scenarios that can’t pan out. You’ve got to have real and honest numbers.
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3. Tackle problems one at a time. Make changes in entitlement programs incremental. Face up to the facts. For example Social Security is not a savings plan, it is an intergenational compact whereby one generation offers support to the prior one with the expectation that the next will do the same. Again look at the numbers, that is what it is, actually always has been, but the concepts scare us so we bob and weave around them. One of the weirdest thing about the current system is that we give the most to those who need the least, and that the lowest incomed population is widows over 80. It is irrational, but can only change incrementaly if you don’t want to blow the whole compact asunder.
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4. View defense as much less a military problem than a leadership problem. Globalization is just making it a race to the bottom, and our passion for using military force is just pissing people off around the world. A different approach; the first world giving trade advantages to developing countries who have strong labor and social safety net programs, instead of the current policy which rewards those that don’t. It brings both stability and security. Hasn’t anybody noticed that as “free trade” has expanded in our hemisphere that there are now even more anti-American governments than before? Maybe part of defending ourselves is to stop using our power in the world to make enemies?
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Look, I developed budgets for a city that was in Bankrupcy. I took the take a deep breath, look at all your options, work from real data, deal with political realities where you have to, and solve problems one at a time approach. That was what was happing when Clinton left office. There is nothing in the Federal budget that can’t get fixed.