Posts tagged with: budget

Jordan Ballor, research fellow at the Acton Institute, will be a panelist at the American Enterprise Institute’s event “I Hope I Die Before I Get Old” on Wednesday, April 20. The event runs from 6-8 pm at the Wohlstetter Conference Center in Washington (1150 Seventeenth Street, N.W., Washington, D.C. 20036). The panel will be discussing and fielding questions on America’s long-term budget crisis and “The Call for Intergenerational Justice.”

Ballor has been very active in both topics. He recently wrote a commentary titled “Back to Budget Basics” and engaged in a discussion with Gideon Strauss, CEO of The Center for Public Justice and co-author of “The Call for Intergenerational Justice,” on The Call. Audio from the discussion can be found here.

If you plan to attend the event please be sure to register. The American Enterprise Institute will also be broadcasting live footage of the event for those who are unable to make it. To register for the event, find out more information, or to watch the event live on April 20th please click here.

With the ongoing budget debate there is much discussion about what to cut and what not to cut, whether taxes should be raised, and if we should avoid even considering cutting certain programs. At the center of the discussion is the state of entitlement programs.

One program everyone in Washington seems to be leery of is Social Security. Whether it is because of ideologically supporting the program or afraid of ruining a political career, Social Security, again, may remain untouched. Political culture has taught elected officials to avoid the topic of reforming Social Security. In the past, those who have attempted to address issues related to it have been demonized. And when re-election time came around, many private interest groups made sure to fund ads to negatively attack anyone’s past attempts of reforming Social Security. However, with our current debt crisis and economic problems, now is not the time to ignore Social Security. Leadership is needed to tackle the hard problems.

Social Security has run aground. The Congressional Budget Office (CBO) reported that program will officially run out of money by 2037 if the program is not reformed.  Furthermore, the CBO also projects that this year Social Security will collect $45 billion less in payroll taxes than it pays out.

Just as alarming as the lack of leadership is the number of Americans who benefit from it who will be dramatically affected if Social Security does fail. According to the Social Security Administration (SSA) over 54 million Americans will receive $730 billion in benefits in 2011, these numbers also includes those who are disabled our receiving survivor benefits. For the month of February, the SSA paid over $58 billion to its beneficiaries. The numbers get even more daunting when they are coupled with the number of Americans who rely on Social Security as their sole source of income.

The SSA states, “Among elderly Social Security beneficiaries, 22 percent of married couples and about 43 percent of unmarried persons rely on Social Security for 90 percent or more than their income.” The Institute of Women’s Policy Research also provides alarming numbers. According to their data, in 2009, 29 percent of women and 20 percent of men relied on Social Security for all of their income. It is important to keep in mind that Social Security provides many elderly members with the necessary money to avoid poverty. As a result, instead of letting Social Security continue to run its unsustainable course, it is imperative to fix to program so vulnerable members in our society can continue to be aided by it. (more…)

A commentary by Acton Research Director Samuel Gregg titled “Deficit Denial, American Style” which was published in Acton News & Commentary on March 9th appeared today in the Detroit News as “It’s time to curb welfare growth” and was also picked up by RealClearPolitics. Gregg provides an enlightening examination on the growth of the welfare system, and with our current budget problems, the need to also reform it:

If, however, the results of a much-discussed Wall St Journal-NBC News poll released on March 2 indicate what Americans really think about fiscal issues, then much of the country is clearly in denial – i.e., refusing to acknowledge truth – about what America needs to do if it doesn’t want to go the way of many Western European nations.

While the poll reveals considerable concern about government debt, it also underscores how unwilling many Americans are to reduce those welfare programs that, in the long-term, are central to the deficit-problem.

Here are the raw facts. America’s federal social security program has become the largest government pension scheme in the world in terms of sheer dollars. It is also by far the federal budget’s single greatest expenditure item.

According to the Office of Management and Budget, “human services” ― Social Security; Medicare; Health-expenditures; Education, Training, Employment, and Social Services; Veterans benefits; and the euphemistically-named “Income Security” (i.e., unemployment-benefits) ― were consuming 4 percent of America’s GDP in 1949. By 1976, this figure had increased to 11.7 percent. In 2009, it was consuming 15.3 percent of GDP.

During the same period, human services began consuming a steadily-increasing size of federal government expenditures. In 1967, human services spending was 32.6 percent of the federal budget. By 2009, this figure had increased to 61.3 percent. It is predicted to rise to 67 percent by 2016. In 2010, 75 percent of human services spending was on Social Security, Medicare, and Income Security ― in short, the core welfare state.

These disturbing numbers make it clear any serious federal deficit reduction must involve spending-cuts to federal welfare programs. That doesn’t mean other areas of government-spending should be immune from cuts. But the deficit simply can’t be properly addressed without a serious willingness to reduce welfare-expenditures.

The original Acton commentary by Samuel Gregg can be read in full here.

Budget battles have heated up recently throughout the United States, and President Obama’s budget proposal has not been exempted from the intense discussion.

The current proposal by the President pushes our national debt to $15.476 trillion or 102.6 percent of our GDP.  Furthermore, there are no cuts to entitlement spending which consist of 57 percent of the spending in the budget, or approximately $2.14 trillion.

While it is imperative to our economic recovery to have a budget that is fiscally sound, it is also crucial to have a budget that is morally sound.  There are critics to cutting entitlement programs, however, a fiscally sound budget which may require a look at entitlement cuts and reforms, will help the poor and vulnerable.  If we continue the spending trend the United States has been fostering under previous budgets than economic recovery will be hampered which means less job opportunities.  The poor and vulnerable will be dependent on entitlement programs, violating the principle of subsidarity.

A fiscally responsible budget also abides by stewardship principles.  To be good stewards we must look long term and create a strong and stable prospering economy not just now, but for our children and grandchildren.  Monsignor Ignacio Barreiro-Carámbula addresses this issue in his blog post:

…we are leaving our debts to future generations. We are asking them to pay the principal and the interest on our debt with their labors. This is akin to forcing them into a form of indentured servitude to us, and it will last long after we have gone to meet our Maker. By law, one can reject an inheritance if has more liabilities than assets, but a citizen cannot reject public debt if he wants to remain a citizen…

Rev. Sirico also articulates the necessity of morality in the Federal Budget during his recent interview with Raymond Arroyo on EWTN’s World Over.

Blog author: jballor
posted by on Monday, February 15, 2010

NJ Governor Chris Christie: “Today, we come to terms with the fact that we cannot spend money on everything we want.”

Lord Acton: “There are many things the government can’t do – many good purposes it must renounce. It must leave them to the enterprise of others. It cannot feed the people. It cannot enrich the people. It cannot teach the people. It cannot convert the people.”

Blog author: jarmstrong
posted by on Wednesday, May 23, 2007

Both of our major political parties have missed what seems so obvious. One says that we need more tax cuts to strengthen the economy. This is correct. The problem is that they are not willing to also make serious budget cuts. That party has spent more than any previous administration. The other political party wants to expand federal government by spending more of our money by raising taxes. The first plan helps the economy in the short run but not in the long term. The second is an even worse disaster I think.

Look, budget deficits are not a good thing, at least not in my simplistic understanding of economics. What individual would decrease their revenue, at least for the short term, and then also increase spending, for the long term? I know, cutting tax rates generates more money in the long run and thus the government benefits. I agree with that proven principle. Ronald Reagan advanced it and to the astonishment of all his enemies it worked.

What I do not think is a proven fact is that you can keep raising government spending, so as to increase deficits, and not someday have to "pay the piper." The late Milton Friedman, a hero of mine, continually noted that the burden of government is best measured by the level of our spending, not by the level of our tax rates. John Stossel pointed this out very clearly in his syndicated column that appeared in my paper today.

Here is the bad news. Your FICA and Social Security taxes currently exceed the expenditures of these programs. But by 2017 or 2018 this will all change when the baby boomers start to retire in massive numbers and begin to drain the system. Stossel gives President Bush some credit for the falling deficit because of his tax cuts. This plan has shrunk the deficit, at least to some extent. Cutting taxes and cutting deficits are not opposites. Both can and should be done. There is enough blame to go around in Washington. I want to decrease tax rates even further but I also want to seriously decrease federal spending.

John Stossel notes that the anti-Federalist writer Melancton Smith (1787) wrote: "All governments find a use for as much money as they can raise." That is the real issue and few will admit it, whether Republicans or Democrats. One party generally does a better job with this issue than the other but the difference is more one of degree than of deep and true principle, or so it seems to this amateur. I am open to seeing this differently but I think the obvious is pretty obvious. We need to grow the economy, allow people to keep their own money so they can spend it and create new jobs, and limit the role of government in solving every social ill we face. I believe there are some pressing issues that demand federal solutions. I am not a libertarian Luddite. But I also believe that at some point we had better face this deficit issue and slow spending or we will soon face financial and social chaos like we have never imagined.

John H. Armstrong is founder and director of ACT 3, a ministry aimed at "encouraging the church, through its leadership, to pursue doctrinal and ethical reformation and to foster spiritual awakening."

Blog author: jballor
posted by on Wednesday, January 24, 2007

Last night the President spoke of “the challenge of entitlements” and said that “Social Security and Medicare and Medicaid are commitments of conscience — and so it is our duty to keep them permanently sound.”

“With enough good sense and good will, you and I can fix Medicare and Medicaid — and save Social Security,” he averred. The ability of the federal government to negotiate drug prices has been an aspect of the recent debate over Medicare that was brought to the fore in the recent “100 hours” legislative agenda.

A number of conservative commentators have come out against this idea, including Acton’s own Rev. Jerry Zandstra and Benjamin Zycher of the Manhattan Institute (HT: The Reform Club). These are just two voices in a chorus of criticism rising against federal negotiation (I use them just because they are the ones with which I’m most familiar. I don’t mean to pick on anyone in particular).

Both of their arguments seem to me to boil down to this: the government is an effective negotiator and the result of negotiation will be that drug companies will have less money coming in and therefore spending on research and development will suffer.

Zandstra says of successful negotiation, “if, in doing so, you dry up research and development dollars so you aren’t developing drugs to treat cancer and Alzheimer’s and other diseases — if you take the profit motivation away — have you done good? No, you really haven’t.”

Zycher writes, “Federal price negotiations will cause sharp price reductions, but this will yield less research and development investment in new and improved medicines over time.”

These claims fail at a number of points in my opinion. Zycher and Zandstra are probably right on the mere claim that federal negotiation of drug prices will produce a drop in pharma income. But that isn’t the datum that is most relevant to the policy discussion.

Once government has decided to tax us and spend our money on a particular program, I think it is government’s responsibility to spend that money as well as it can, to be good stewards of efficient and productive use of those funds. This is true regardless of whether or not the program itself is one that government should be undertaking. The question of whether the government should be doing or pursuing a particular program or agenda is a different one than whether the government should pursue these programs efficiently and well.

So, given that Medicare is an entitlement to which our government has committed itself, it seems to me that the government is responsble for administering it as cost-effectively as possible. The government needs to make our tax dollars stretch as far as they can. This should include negotiating lower prices paid for prescription drugs, regardless of the effect it might have on drug company profits or research budgets.

It is a separate question whether drug companies need federal support to achieve the current or higher levels of funding for research and development. But let’s assume for the sake of argument that pharma companies do need federal support to find new drugs for “Alzheimer’s and other diseases.” If that’s the case, then the argument for subsidizing pharmaceutical research should be parsed out from the question of drug price negotiation.

Refusing to allow the feds to negotiate prescription drug prices effectively creates a subsidy for drug companies…something I would think that Zandstra and Zycher would be against, at least in principle. But maybe not.

Drug companies are in fact struggling, it seems. Pfizer, for instance, is shutting down operations at three Michigan sites and laying of 2400 workers, as part of a broader layoff of 10% of its workforce. And perhaps the estimated “loss of about five million life-years each year” is sufficient reason to support government subsidy of drug research.

But if conservatives are in favor of government subsidies for drug companies, they need to make that argument stand on its own and separate it from the question of price negotiation. Government subsidy of drug R&D should be a separate question, complete with its own line-item and its own policy analysis.

Blog author: jballor
posted by on Tuesday, December 12, 2006

As noted at WorldMagBlog (among many other places), the incoming Democratic majority in Congress is suspending the process of earmarking, at least temporarily.

Rep. David Obey, D-Wis., and Sen. Robert Byrd, D-W.Va., the incoming chairmen of the House and Senate Appropriations committees, have pledged that “there will be no congressional earmarks” in the upcoming budget.

Earmarks will be available again in the 2008 budget cycle, after “reforms of the earmarking process are put in place.” There’s a lot of smoke right now around the talk of earmark reform. We’ll see next year whether there’s any fire.

Last month Tom Schatz, president of Citizens Against Government Waste, said that making lasting earmark reform will be difficult: “There are three parties in Washington: Democrats; Republicans; and appropriators,” CAGW President Tom Schatz said. “Democrats should expect any serious reform efforts to meet stiff opposition from appropriators who have no qualms about breaking party lines, or the bank, to keep their pork.”

According to CAGW, Rep. Obey has appropriated over $5.5 million in pork since 2005, and has a lifetime rating of 19% or “hostile.” Sen. Byrd, meanwhile, is crowned “The King of Pork” with a rating of 17% and a tally approaching $1 billion in pork since 2000. More on “the King” here.

It’s an open question, then, whether Byrd’s and Obey’s commitment to real reform is authentic.

In the meantime, I recommend checking out other resources at Citizens Against Government Waste.

Blog author: jballor
posted by on Wednesday, September 20, 2006

NBC Nightly News has long had a special feature titled, “The Fleecing of America,” which investigates various instances wasteful spending by government officials.

To get a visual clue about the massive size and diversity of the federal budget, check out “Death and Taxes”, the 2007 edition, “a representational graph of the federal discretionary budget. The amount of money that is spent at the discretion of your elected representatives in Congress. Basically, your federal income taxes.”

The website also notes, “Don’t forget about the national debt! It’s the circle so big it doesn’t even fit in the box.”

I recommend printing out the graph in landscape orientation on ledger-sized paper and posting it somewhere near your desk. You’ll get plenty of questions from curious passers-by.

(HT: Mises Economics Blog)



Update: In response to the limitations of the graph noted by Tim in the comments section below, it should be noted that this graph does only refer to discretionary spending. This does not include either the mandatory spending that falls under the federal budget each year or the various entitlement programs, such as Social Security, which are “off budget.” With this in mind, of course, the pork in the graph above is the good news, relatively speaking.

With regard to speculation as to why the makers of the budget graph chose only to look at discretionary spending, I quote this Reason article: “Because discretionary spending can theoretically be zeroed out each year, it is generally regarded as the clearest indicator of whether a president and Congress are serious about reducing government spending.”

Blog author: jballor
posted by on Tuesday, January 24, 2006

“The political left in America is emerging victorious,” writes Patrick Chisholm, and its true because “the era of big government is far from over. Trends are decidedly in favor of that quintessential leftist goal: massive redistribution of wealth.”

Over the past two decades, “Republicans’ capture of both Congress and the White House was, understandably, a demoralizing blow to the left. But the latter can take solace that “Republican” is no longer synonymous with spending restraint, free markets, and other ideals of the political right.”

Chisholm cites the fact that since 2000, “During the first five years of President Bush’s presidency, nondefense discretionary spending (i.e., spending decided on an annual basis) rose 27.9 percent, far more than the 1.9 percent growth during President Clinton’s first five years, according to the libertarian Reason Foundation. And according to Citizens Against Government Waste, the number of congressional ‘pork barrel’ projects under Republican leadership during fiscal 2005 was 13,997, more than 10 times that of 1994.”

And that’s just the tip of the iceberg, since “discretionary spending is dwarfed by mandatory spending – spending that cannot be changed without changing the laws.”

Read the whole thing: “Triumph of the redistributionist left.”