2010 Federalist. No. 21, Budgets

2010 Federalist. No. 21, Budgets


BUDGETS

The Constitution does not require the federal government to create a budget for operations. That leaves all three branches, the Congress, the Executive and the Judiciary to set their own budgets. But only Congress can appropriate funds for the government. So they have to have some forecast to approve before they can levy and collect taxes. They have to know how much money they will need before they can levy and collect taxes. Maybe that was so clear that the founders did not feel that it needed mentioning. The Constitution did require the President to provide a State of the Union report from time to time. It has been practice for the President and the Judiciary to supply their budgets to Congress for their inclusion into the total budget for the whole country. At least it used to be. Congress has what is called a baseline budget. That allows each agency to take last year’s budget amount (all of which, they were sure to spend) and increase it by a fixed increase each year. This is ludicrous. It does not instill frugalness. It instills foolishness and lack of control.

In more recent years, as information has become more immediate and widespread, citizens have gotten better looks at the budget process. When budget issues caused our professional office holders concern, they found ways to hide it. One example is the Social Security Act (SSA), which was passed by Congress on August 14, 1935. Franklin Roosevelt championed the law into being with a promise of future payments to current workers once they retired. Pay a little now, and later when you are older and need medical care and some supplemental income, it will be there. Benefits were based on what you paid in. But what you paid in was never set aside for you except on a piece of paper. The money went directly into the General Fund. Roosevelt and the Congress had been running budget deficits for the last 3 years, and they needed new supplies of tax money; The Social Security Administration provided a source of income that would not need to be repaid for years. But Congress continued to show the SSA as a separate budget, even though the money was not there. In addition to providing a new tax revenue, it also sounded good. It made supplemental retirement benefits available for the elderly, weak or ill.

And then the program got worse. Before long we were covering survivors and dependents. We lowered the ages. We raised benefits. We started Cost of Living Adjustments (COLA’s) in 1975 that the Congress could rubber stamp and make themselves look good. But it broke the system, and today we have more people being paid than we have paying in. This and the billions of dollars of debt are the sure signs of disaster. But this is just Social Security. Here is a list of some more.

Combined Federal, State and Local Welfare Budget, 1992 (millions)

Medicaid $118,067

AFDC 24,923

Food Stamps 24,918

Supplemental Security Income 22,774

Lower income housing asst. 12,307

Earned Income Tax Credit 9,553

Veterans medical care 7,838

Stafford loans 5,683

Social Services (Title 20) 5,419

Pell Grants 5,374

Low-rent public housing 5,008

General medical assistance 4,850

Foster Care 4,170

School Lunch 3,895

Pensions for needy veterans 3,667

General Assistance 3,340

Head Start 2,753

Food supplements,

Women, infants and children 2,600

Training for disadvantaged

youth and adults 1,744

Low-income energy assistance 1,594

Rural housing loans 1,468

Indian Health Services 1,431

Summer youth employment 1,183

Maternal and child health 1,059

JOBS and WIN 1,010

Job Corps 955

Child care block grant 825

School Breakfast 782

Child care for AFDC 755

Nutrition Program for Elderly 659

Housing interest reduction 652

Child and adult care food program 624

"At risk" child care 604

Source: Library of Congress, Congressional Research Service, "Cash and Noncash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data, FY 1990-92," Report 93-832 EPW and earlier reports.



And the problem is that they get bigger every year. The numbers above are from 1992. look left for today’s totals. Look at the rate of increase. Our Congressmen are asleep at the wheel. It has gotten to the point where controlling the discretionary budget is not adequate to control the total budget. The non-discretionary or entitlements budget is so large and growing so fast that it must be fixed or the government and the nation will go broke.



Medicare and Medicaid are both already broke. We are headed for a lower standard of living that many among us are not going to like. Our children will be horrified when they find out what we have done to them and their posterity. Here is another way to look at it. Only 18% is discretionary spending after the military budget.

In FEDERALIST No. 23, Alexander Hamilton wrote

Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions. A complete power, therefore, to procure a regular and adequate supply of it, as far as the resources of the community will permit, may be regarded as an indispensable ingredient in every constitution. From a deficiency in this particular, one of two evils must ensue; either the people must be subjected to continual plunder, as a substitute for a more eligible mode of supplying the public wants, or the government must sink into a fatal atrophy, and, in a short course of time, perish.

In other words, government survives because it has money; money is the governments lifeblood, and for the federal government to thrive, it has to have a direct line to tax collection. If not, then one of two things will happen. Either the people will be plundered into poverty with usurious tax rates, or the government will perish by starvation. If the first option occurs, the second will surely follow. Spending more than the government has invites disaster, not maybe but when.

We have to stop the spending. It is not that hard. It just takes tough love.

1. Sunset all entitlement programs. Put an end date on them. Those that need to be continued, will be cut and reinstated at regular intervals. This leaves the opportunity for oversight at each renewal period.

2. Ban new entitlement programs.

3. Ban baseline budgeting and cut every federal agency budget by 5% plus inflation per year for the next 10 years.

4. Require Congress to prepare and live with balanced budgets each year.

5. Do not allow Congress to borrow funds from one agency to spend in another one. Every nickel of every fund is to be accounted for, and all surplus funds go back to the treasury.

6. Rebuild or eliminate the Social Security Fund.

7. Make war or natural disaster the only exceptions to this plan.

It will not be easy, but we can do it.

Citizen 2010