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Post Budget Issues in the US
Created by John Eipper on 01/27/12 2:40 PM

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Budget Issues in the US (Randy Black, USA, 01/27/12 2:40 pm)

Is it safe to assume that most among WAIS run their households on a financial budget? At the Black household, we certainly do.

At the beginning of each year, about the time I do my taxes, which is now, I look at last year's budget, easily verified using my online bill pay function and financial software to examine how we spent our money over the past year. I then project income and outgo for the coming year.

Using the pie charts and separated out financial information, my software illustrates: all funds expended the previous year on house payments, car payment, insurance, savings, groceries, utilities, medical bills, professional dues, charitable contributions, clothing, and all the rest. Even the occasional checks that I must write are coded into their own little niche.

You might expect that the United State government would also have a budget, right? Guess what friends, the United States Congress has not enacted a federal budget going on 1,000 days.

That's two years, eight months and 26 days since our nation last had a budget! Last time I looked, the fed had tens of thousands of workers whose only reason to exist is to produce a federal budget. Why in the world do we need all of those workers if we don't have a budget, and have not had one for 1,000 days?

April 29, 2009 was the last time that Congress was able to pass a budget submitted by President Obama. Now for those among us who mistakenly believe that there is some sort of Republican Party conspiracy to deny the president his budget, you are mistaken.

The last time President Obama submitted a budget, it was so bad that all 51 Democrat Senators voted against it.

Adding insult to injury, or perhaps to rationalize his inability to lead his party, Senate Majority Leader Harry Reid said it would be "foolish" to have a budget "in my opinion."

Was Congress really inhibited by "Republican or Tea Party obstructionists" as some Democrats and most of the media espouse? Again, this is myth. In fact, more major pieces of legislation were bilaterally passed annually since Obama was elected than in any year of the Bush 43 administration.

On the budget issue, or lack thereof, the Democrats could not even get a budget out of committee, which they controlled. Ask Sen. Kent Conrad (D-ND), who chaired the Budget Committee. I repeat: The Democrats voted down the only budget submitted by the president that got out of committee, 51-0.

Since that last budget passed, the Congress has spent $9.7 trillion. The problem is that they had only $5.3 trillion in their coffers.

The saddest news might be that when Obama proposed a FY12 budget last year, the Senate voted 97-0 against it. When House Budget Committee Chairman Paul Ryan (R-WI) offered his version in May 2011, his version was defeated 57-40. Not one Democrat voted for the Republican budget. Now that's obstructionism.

http://www.taxpolitics.com/2012/01/1000-days-later/

JE comments: The "who's more obstructionist" debate doesn't sound fruitful to me, but I would like to discuss the importance (or lack thereof) of a federal budget. As much as we enjoy the metaphor, household (or even municipal or state) and national budgets are not the same thing.  How vital is it that a nation-state which controls its own money supply stick to a (pre-determined) budget? (I like the Spanish word for budget, "presupuesto," which literally presupposes what you are going to spend.) One thing that has been shown over the last 2 + years is that it isn't a necessity for the daily operation of this country. I do agree with Randy Black on this statement: "Why in the world do we need all of those workers if we don't have a budget, and have not had one for 1,000 days?" I wonder if these "tens of thousands" of bean counters (that many?) could enter their own dismissals into the federal spreadsheets.



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  • Does a Nation Need a Budget? (Alan Levine, USA 01/27/12 2:40 PM)
    Countries can exist without budgets, as the last 1,000 days in the US proves. (See Randy Black's post of 27 January.)

    The question is: can they exist well? In principle, they can. If the ruler(s) were disciplined and prudent or if the country was flush with unexpected income, one can easily imagine national prosperity without a budget. Unfortunately, neither of these is the current situation in the US. Rather, our current lack of a budget is due to the unwillingness of our politicians to make difficult choices, and our politicians' unwillingness is due to a more general unwillingness among the citizens as a whole.


    To be sure there are a few politicians, such as Paul Ryan, who are serious about dealing with these difficulties. Ryan and the Democrat Ron Wyden recently proposed a rescaling of Medicare in which Ryan stepped back from his more radical proposal last year in order to try to get support from the Democrats.


    But in general, the democratic publics (and thus their politicians) are proving every bit as untimely and inefficient in dealing with difficulties as Tocqueville and Plato and others have expected and explained. The European publics seem to be even less willing to confront difficult circumstances than the American one. The US is in relatively decent position to solve its financial woes. Ending the Bush tax cuts would eliminate about 50% of our projected national debt. Adjusting the formulas for Social Security, Medicare, and Medicaid would go a long way toward fixing the rest. These changes represent the kind of "grand bargain" that everyone knows is out there. I think Europe would have to make much more austere adjustments, but I might be wrong about that.


    Tocqueville predicted that democratic peoples will eventually be able to solve their problems, but only after temporizing and much inefficiency along the way. We shall see if his optimism for democracy in the end will prove justified.


    JE comments: I must go back and read my Tocqueville. He seems to have gotten just about everything right about US political culture.



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    • Does a Nation Need a Budget? On Tangents and Heilbroner (Robert Whealey, USA 01/29/12 4:39 AM)
      Both Alan Levine and JE (27 January) are going off on too many tangents. Both scholars should read Robert Heilbroner's The Worldly Philosophers. Three chapters would be a start--on Adam Smith, Karl Marx and John Maynard Keynes.

      I have recommended Heilbroner before. But most WAIS readers do not like to think about the subject of the history of economic thinking. America's current journalists read literature but little history.


      JE comments: 'Tis a morning of WAISly discontent. But I ask Robert Whealey: wasn't Alan Levine discussing Tocqueville?  For the history of the political economy in the US, that's a pretty good place to start.


      Moreover, a lot of the best WAIS content begins life as a tangent.


      Speaking of which--anyone going to watch the Super Bowl next Sunday (5 February)? Can there be a (non-)event with greater hype? I am going to be in Chile on an impromptu weekend visit (more details to come), so I'll probably have to miss it.



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