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Posts Tagged ‘discretionary spending’

12
Jul

Senator Obama Was Right

   Posted by: Pat    in Budget/Economy, Congress, entitlements, health care   Print Print

Senator Barack Obama, March, 2006:

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure,” he said. “It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.”

Senator Obama was right. Too bad, he’s now the President and appears to have not meant a word of that statement above. Too bad for all of us. President Obama has tried to portray himself as the adult in this debt ceiling debate, but when it comes to taking care of our nation’s fiscal well being his administration has made a drunk teenager in love look responsible and mature. Just months ago he released a budget so unserious that his own party and the entire Senate disowned it 97-0. He came into office to lead a country facing massive debt and managed to make the situation even worse as our debt has sky rocketed in the past 3 years. He not only has failed to do anything to rectify our coming entitlement crisis, he has actually made them even worse by passing a new health care entitlement and vilifying anyone who is willing to address Medicare, Social Security, and Medicaid, all of which are facing major funding shortages.  Barack Obama is many things, a good leader, he is not.

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I would like to thank David Harsanyi of the Denver Post and The Detroit News for helping me compile this small list featuring just some of the bureaucratic web that is our federal government:

  • 56 separate programs to help people better understand their finances
  • 18 federal food and nutrition assistance programs, costing taxpayers $62.5 billion in 2008
  • 10 agencies or departments administering 82 programs dealing with teacher quality
  • 80 different economic development programs
  • 15 different agencies overseeing food safety
  • 18 programs responsible for delivering food assistance to the poor
  • 24 federal agencies operating data centers
  • 20 programs dealing with homelessness
  • 44 programs among Education, Labor and Health and Human Services Departments delivering employment and job training programs
  • 5 agencies within the Transportation Department administering more than 100 involved in surface transportation, highway, traffic safety, and railroads

I’m sure many of these programs serve a valuable purpose, but the redundancy of similar programs showcases a federal government that has grown to such a size that it is just feeding off it self. Bureaucracies by their nature grow they don’t wither and the plethora of these programs and departments listed above is proof. Eighty-two programs for promoting teacher quality! We are just talking federal level here, folks. Under President Obama, the budget of the Department of Education has more than doubled, with even this year, where ‘austerity’ is in vogue, seeing it grow another 4.2%. This is not money for books or better teachers, this is a raise for the bureaucracy known as the Department of Education.

In this chart below made by the Cato Institute, one can easily see the growth of all aspects of government from 2007-2012:

I would like to highlight the tremendous growth of ‘Other Mandatory’, which according to CATO features federal employee benefits, food stamps, etc and ‘Domestic Discretionary’, which of course features funding for bureaucracies like the Department of Education, Transportation, etc. President Obama has said that he wants to freeze spending on these sectors. Well, that’s nice, but how about we bring them back down to a level pre-Stimulus spending binge instead. It’s like our government has had 10 shots of patron and said ‘that’s enough, I’m done’. Unfortunately, that leaves us all in a sick and woozy position.

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2
Mar

Budget Politics: Defense vs. Entitlement Spending

   Posted by: FMFP    in Budget/Economy   Print Print

As I wrote yesterday, the Continuing Resolution (CR) likely to arrive at the President’s desk today or tomorrow will grant the government a two week reprieve from what many people were preparing for – a government shutdown. Rightly criticized for simply kicking the can down the road, I’m curious to see what will happen in two weeks considering the broader divide between the Senate Democrats and House Republicans has not really been addressed. In fact, all sides knew this deadline was coming since the 111th Congress passed their CR back in December. So passing this two week CR doesn’t exactly inspire confidence that an agreement to fund the government through September is imminent.

Like many major budget battles, much of the dispute (and ultimately, the resolution) resides in the varying effectiveness of each side’s public relations effort. The Republicans’ position is that America’s high debt and stagnant economy are symptoms of the larger problem – a government that is bloated and spending at unsustainable levels. Therefore, we need to cut the size of government starting with discretionary spending (as opposed to entitlement spending that is considered mandatory). The Republicans claim these cuts are both a down payment on further spending reforms to come and a fulfillment of their campaign promise to rein in our debt (roughly $14.3 trillion) and deficit (projected at $1.6 trillion for 2011).

The Democrats’ position is that our economy is fragile right now and any major cuts like the ones proposed by the Republicans will deflate our current recovery (see yesterday’s reference to Goldman Sachs and Moody’s analysis claiming a loss of 700,000 jobs if Republicans plans to cut $61 billion are adopted). In a nutshell, their argument is that now is not the right time for cuts (without necessarily stipulating that cuts in the future are altogether necessary).

So who’s right and perhaps more importantly for our current discussion, who is winning the public relations battle? Well that’s obviously a complicated question but it just might be the Democrats. On one hand, we see a sustained interest among the public in reining in government spending – cutting the Republicans’ direction.

But on the other hand, we see a real misunderstanding among the public over the composition of government outlays (spending in real people language). For instance, a recent poll released by Tarrance Group shows:

“A majority of voters incorrectly believes the federal government spends more on defense/foreign aid than it does on Medicare and Social Security (63%). Also, a similar majority (60%) incorrectly believes problems with the federal budget can be fixed by just eliminating waste, fraud and abuse. Voters do not casually agree with these untruths- at least 40% strongly agree. Further, less than half (44%) believe Medicare and Social Security costs are a major source of problems for the federal budget (49% disagree).”

These numbers should hearten Democrats because they cut against (factually correct) claims made by Republicans that 1) entitlements/mandatory spending remains the biggest budgetary problem and 2) spending on non-defense discretionary programs (where most of the stimulus dollars were allocated) is also out of control. I’ll back up the assertions just made in a second, but first one more point for the Democrats. The poll demonstrates the prevalence of a long-standing liberal position among the public. Specifically, the claim that defense spending is at least as much – or more, depending how liberal you lean – to blame as entitlements for our budget problems.

Now for the facts. Discretionary spending – including defense – is roughly 1/3 of the federal budget. The other 2/3? You guessed it – mandatory spending, made up primarily of the big three: Social Security, Medicare and Medicaid.

Even if we were to take the poll’s findings head on, we would still find the public’s beliefs dubious. Defense/security spending equals roughly 20% of the federal budget. Social Security and Medicare? Roughly 35%. And even scarier, mandatory spending is growing nearly five times the pace of discretionary spending. So it’s really not even a close call. (Btw, I used a liberal-leaning think tank for these numbers in case you were wondering – the Center on Budget and Policy Priorities).

Since I’m trying to keep these posts at a manageable length (and not really succeeding), I’ll close with my main points. The Democrats seem to be in a strong position if they can sell their position that the real problem is defense spending and the fragile economic recovery is dependent on maintaining government’s current level of support.

Meanwhile, Republicans have a long road uphill to educate the average American on the serious budget problems facing the country and the relatively minor impact the discretionary cuts they’re proposing will have on the economy. Ultimately, they need to convince Americans that the problem lies not just in eliminating waste, fraud and abuse, but rather setting priorities on what we can afford as opposed to what we would like to be able to pay for.

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