Federal Budget 101

Having spent much of my two years after college and before grad school parsing through the federal budget, I take a certain type of sick joy in listening to the spins surrounding the President's budget. Will the President's budget cut the deficit in half before he leaves office? The answer is "yes" if you're Josh Bolten, OMB Director at the White House, and "no" if you're the Congressional Budget Office. Both are right, and neither make their predictions based on anything approaching political reality. This is just the type of beltway dilemma that leaves more people with headaches, than with any idea of how their hard earned tax dollars are being spent. While the mainstream media enjoys pointing out specific cuts, and trust me, there's enough specific cuts to keep the articles rolling 'til the House and Senate vote on their packages, very little attention is paid to the overall budget picture. Appreciating this, I thought I'd take a run at cutting through some of the budget-speak, Washington-lingo, and flat out spin, to see where we really are. Or in "blogosphereic" terms, its some reality-based commentary on our current fiscal woes.

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.