Saturday, January 20, 2018

Stillwater Republican Women

A brief introduction to the federal budget

The Constitution states: “No money shall be drawn from the Treasury, but in consequence of Appropriations made by Law; and a regular statement and Account of Receipts and Expenditures of all public Money shall be published from time to time.” (Article I, Section 9, Clause 7)
The courts have consistently upheld that all expenditures from the public funds must first be appropriated by congress. For example, in United States vs MacCollom (1976) the court explained an “established rule” that “the expenditure of public funds is proper only when authorized by Congress, not that public funds may be expended unless prohibited by Congress.”
Congress also uses this power to change, limit, suspend or repeal various provisions of existing law. The Court has only directed that Congress explain its purposes when doing so.
Now let’s look at the budget itself. The federal budget is made up of three categories: mandatory spending, discretionary spending and net interest on the debt. Mandatory spending makes up over half of the total budget, and consists of criteria-based programs.
These programs are established in law and are essentially unlimited appropriations. Social Security, Medicare and Medicaid are the primary programs in this category, and as a larger portion of the population meets the criteria, more money is paid out. Social Security is the largest Federal spending program, surpassing defense in 1993.
The important thing to understand about this category and these programs is that they are not subject to the budget wrangling that occurs every year. They just keep on paying whether the Government is functioning or not.
Net interest on the national debt is currently about one sixth of the total budget, and is also outside of the annual appropriations process. It gets paid regardless of the state of the budget.
As we all know from our credit cards, the more debt there is, the more interest we have to pay, and less money is available to spend on other important things.
That leaves roughly one third of the total Federal budget in the discretionary category. Discretionary funding is the portion of the budget that requires appropriations bills every year. Currently, about half of discretionary spending consists of defense spending.
In 2014 spending on defense was one half (as a percentage of GDP) of what it was in 1965. But “safety and security” functions are required to continue in spite of the budget, so the military still gets paid if there is a gap in budget approval process.
The rest, known as Non-Defense Discretionary (NDD) pays for EVERYTHING ELSE! This covers:
1. Diplomacy and international affairs – international development and humanitarian assistance. Examples include Peace Corps, World Health Organization, the global HIV and AIDS initiative, and disaster relief.
2. Law enforcement and governance - including Department of Homeland Security, drug interdiction, the IRS and basic government operations.
3. Science, environment and energy – conservation and management of natural resources, the Park Service, NASA and the EPA.
4. Economic security - programs providing assistance to households covering housing, fuel, childcare and food costs.
5. Health care and health research - including veteran’s hospital and medical, National Institutes of Health, Indian Health Service and Community Health Centers, the FDA and the Consumer Product Safety Commission.
6. Transportation and economic development – highway system and airport security.
7. Education and training – K-12 education, early education, services for people with disabilities, the Pell Grant program, cultural programs, public libraries and museums.
As the other two categories continue to grow, the discretionary portion becomes smaller. But in 2014 discretionary spending (including defense) was about $1.2 trillion, and the government borrowed nearly half - $486 billion.
Without borrowing we could have paid for only the defense portion.While it is essential to have a Balanced Budget Amendment, it is clear that simply reducing discretionary spending is not going to achieve the necessary outcome.
It is incumbent upon all of us to have at least a rudimentary understanding of the federal budget. After all, this is OUR money being spent. It should reflect our values and priorities.
Equally important is the fact that in our constitutional republic, appropriating funds through the budget process is one of two ways that the legislative branch (congress) has to constrain a President who abuses his constitutional responsibilities. The other is impeachment.