April 10, 2011

Federal Spending

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An update on Federal Spending from Mike Wilson, President of the Cincinnati Tea Party:

Lost in the Washington D.C. debate is perspective on federal spending and any context over what the current fight is about. The media won't do this since adding context favors Republicans, so I'm going to try and shed some light on it (warning, math and numbers coming up).

In 2010, the Democrats controlled the presidency and had commanding majorities in both houses of Congress. They failed to pass a 2011 budget. What does this mean?

In a normal year, Congress passes 13 appropriations bills which fund everything from the Department of Energy, to the military, to national parks. These are called the discretionary part of the budget. Notably absent from these bills are what is called "mandatory spending" - these are what are commonly referred to as entitlement programs. Instead of being reauthorized each year, those programs are structured so that they pay benefits according to certain eligibility requirements. Unless Congress passes laws to change these programs, they continue in perpetuity. 

***note that all numbers below are approximate and are estimates*** 
The current fight over "government shutdown" is about 2011 non-military discretionary spending. Social Security, Medicare, Medicaid, other entitlements, and interest on the debt comprise about 3/5 of the nearly $3.5 trillion in federal spending - about $2.1 trillion. The remaining 2/5 is split about equally between defense and other spending. This means that the current fight is over about 19% of federal spending - about $660 billion - and for that, only about half the year remains. The Republicans in their 2010 election campaign promised to cut $100 billion from that number.

The continuing resolution agreed to last night by Speaker Boehner, Majority Leader Reid, and President Obama cuts a total of $38.5 billion from the roughly $317 billion remaining in FY 2011 (25/52 weeks of spending). On the 10-year basis that the media always cites, this represents $780 billion in cuts over 10 years. Some say that Boehner sold out by not holding out for $100 billion. Others are happy with the $38.5 billion. I take the middle ground - I think this a positive first step, but ONLY a first step. While this may be among the largest (non-post war) spending cuts in American history, it amounts to a week and a half of the 2011 deficit. If we stop here, we have accomplished nothing.

The anticipated 2011 deficit is $1.5 trillion - more than twice the $660 billion in spending up for debate right now. The simple truth is that entitlements and defense must be on the table in order to balance the budget. It is simply not possible to do so otherwise. This means the real fight occurs with the 2012 budget and beyond. The House Republican budget, introduced by Budget Committee Chair Paul Ryan (R-WI), is the first serious proposal from either party that attempts to reflect reality.

Understand that while the short term is bad, the long term is worse. Social Security and Medicare spending will begin to shoot up as baby boomers begin to retire and Medicaid spending will greatly increase under Obamacare. These programs are already broken and must be fixed.  Ultimately, these three programs and interest on the debt have the ability to destroy our economy if left unchanged.

The Tea Party must continue to pressure the politicians to make the hard, but necessary decisions. We must also work to educate our family, friends and neighbors. The average person understands that spending and deficits are a problem. Unfortunately, they also think that the budget can be balanced by eliminating foreign aid and welfare. Because you know better, you are critically important.

The Democrats didn't pass a budget in 2010 because they wanted the Republicans to take the heat this year. They plan to demagogue this issue and scare people into maintaining the unsustainable status-quo. We have to be the truth squads alerting people to the seriousness of the crisis.

Our work isn't done, we will rally on Tax Day in Glendale, and we will continue to advocate for our core principles - fiscal responsibility, limited government, and free markets. While it isn't easy work, it is the least we can do for our children and grandchildren.