January 7, 2013

Budget Cuts

Congress reminds me of an old married couple who spend most of their time harping at each other over every little thing. We all know couples like that. They seemingly can't stand being together, but they can't imagine living any other way. A similar malignant co-dependency has settled in over our political system. Like visitors sitting in the living room listening to the old couple squabble, we are uncomfortable watching our politicians and wish they would not act in such a self-absorbed and embarrassing way.

Yeah, right, like that's going to happen. Instead, Congress drags out the agony day after day, deadline after deadline. The next deadline in the saga over the Federal budget is February 28. The debt ceiling must be lifted and something must be done to modify the massive mandatory cuts to the federal budget that Congress imposed upon itself last year.

Before we go any further, take a look at a pie chart of the 2012 federal budget. It will tell you everything you need to know:

 Source: www.usbudgetalert.com

Simple math tells you that defense, Medicare and Medicaid, and Social Security account for two-thirds of the budget. For those of you, like me, who are unsure about the category "Other Mandatory Spending," here is a summary of what that includes, taken from www.usbudgetalert.com:
  • Federal Civilian Retirement: $87 billion
  • Food Stamps (now known as "SNAP"): $80 billion
  • Earned Income and Child Tax Credits: $79 billion (taxpayers receive "refunds" larger than their tax liabilities)
  • Unemployment Compensation: $77 billion (has increased dramatically due to high unemployment)
  • Veterans Benefits: $71 billion
  • Military Retirement: $49 billion
  • Supplement Security Income: $47 billion (minimum monthly benefit for aged, blind and disabled who are not covered by Social Security)
  • Family Support: $25 billion (includes the state-run Temporary Assistance for Needy Families program which replaced welfare in the 1990s, child support enforcement, and child care)
  • Child Nutrition: $19 billion (includes school lunches, school breakfasts, and other child and adult care food programs)
  • TARP (troubled asset relief program): $16 billion
  • Farm programs: $13 billion
  • Children's Health Insurance Program (CHIP): $9 billion
The other big category, "Everything Else," is just that, everything else the federal government does, from USDA to NASA. What you and I think of as the federal government accounts for just 17 percent of the budget. Throw in food stamps and other mandatory programs and you still haven't gotten to a third of the spending. As a point of reference, the base budget for the Department of Defense in fiscal year 2012 is $707.5 billion. Another $300 billion goes to defense-related activities.

Unless and until defense, Social Security, and Medicare and Medicaid are on the table, we are wasting our time talking about the budget. Right now, we have a stalemate because conservatives resist cuts to defense spending while liberals fight to maintain Social Security and Medicare and Medicaid.

Despite what the Tea Party will tell you, draconian cuts are not necessary to balance the budget, which isn't even a good idea, certainly not at the federal level. What is necessary is to change the arc of spending to slow the bleeding until a recovering economy can alter the scales.

When times are tough, tax revenues go down and social costs go up. An improving economy reverses that. Tax revenues go up and social costs go down. A few years of a strong economy and all that debt disappears. We had a surplus at the end of the Clinton administration. Then came the Bush tax cuts, a couple of unfunded wars, and a bursting bubble or two.

Source: Center on Budget and Policy Priorities

But, hey, we need to get past the finger-pointing. We all know government spending has to slow down. It seems equally obvious that if we are to get anywhere, then we must all agree to give up something. I don't want to pay more for Medicare, but I don't want doctors refusing to treat me, either. My kids accept that they are screwed on Social Security, but surely we can throw them a small bone. And as far as I'm concerned, the defense budget could be chopped in half, but I know that won't happen.

I think the original idea behind sequestration was sound: proportional cuts. Whatever is done to non-defense spending would be done in equal measure to defense spending. Fair and balanced. I believe that's the mantra. Works for me.

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