Home » federal spending
Category Archives: federal spending
Can government do it all?
How has the role of the American government changed over time? How has it affected us?
The American government of today:
· is held responsible for stimulating our economy: they control our interest rates, they take responsibility for creating jobs, they subsidize industries and offer assistance to companies that fail.
· is responsible for keeping our society decent, moral, safe and healthy: they write laws to protect us from hurting ourselves, decide what we’re allowed to eat, drink and smoke, use taxes and fines as a way of modifying our behavior, regulate and license professions in meticulous detail and oversee our general care.
· is a charity: they attempt to eradicate poverty by supplying food, housing and medical care, they facilitate higher education, provide safety nets for those who fall short, support seniors, and redistribute wealth.
· is an international watchdog: they enforce peace and democracy by policing the globe, sending our troops to hundreds of bases around the world.
Should our government be pursuing these goals?
There’s no doubt that things like charity and the advancement of peace are worthwhile objectives, and that society should have organizations to pursue them. But what we must evaluate is whether the government of a free society is the proper institution to be pursuing each of these broad aims.
Does this viewpoint sound completely foreign and eccentric? If so, consider this: a century ago not a single issue listed above was on the federal government’s agenda. As a matter of fact, these would have been considered unconstitutional uses of power.
A transformation of government
Though we realize that technology, social norms and other influences are changing our lives at lightning speed, we may fail to recognize that the role of government has also changed significantly in the past century.
Our federal government was originally designed to perform strictly limited functions. Checks and balances restrained the size and scope of government and kept its responsibilities focused on individual liberty.
The role of Congress is spelled out very specifically in our Constitution:
-
to levy and collect taxes
-
coin money and regulate its value
-
establish post offices and roads
-
issue patents
-
define and punish piracies, felonies and counterfeiting
-
declare war
-
raise, support and regulate armies, navy and militia
-
regulate commerce with foreign nations, the states, and Indian tribes
-
establish uniform rules and laws on naturalization and bankruptcies
-
and to make laws necessary to properly execute these powers.
As the 10th Amendment stipulates, “the powers not granted to the national government…are reserved to the states or the people.” In other words, according to the Constitution, no matter how compelling the cause, the federal government simply does not have the jurisdiction to pass laws on matters not specifically granted to them.
But sentiments changed drastically in the 20th century.
Unrestrained power means unrestrained spending
In 1913 the 16th Amendment was ratified, permitting a federal income tax. With a new source of tax dollars now at Congress’s disposal, special interest groups sprang up, demanding government programs to support causes that never could have been funded before.
During the Great Depression of the 1930’s, Franklin Roosevelt’s New Deal agenda increased the role of government in unprecedented ways. But FDR and his Congress were required to prove the constitutionality of their programs. They did so by expanding the interpretation of the “general welfare” clause of the Constitution.
Article I, Section 8 of the Constitution says, “The Congress shall have power to lay and collect taxes, duties, imposts, and excises to pay the debts, provide for the common defense, and promote the general welfare of the United States.”
During FDR’s administration, the courts interpreted this phrase to mean that Congress could spend money for any purpose, whether a constitutionally enumerated power or not, as long as legislators deem it to be in “the general welfare of the United States.” For the first time in our history, this small clause was used to allow Congress to spend money in any way they deemed desirable.
Is more government the answer?
Just one consequence of unrestrained power is a national debt that is currently $16.8 trillion, increasing by $3.81 billion a day.
Is it possible that our Founding Fathers, who so cherished liberty and so feared government oppression, would have included a clause in our Constitution permitting Congress infinite and uncontrollable spending and legislative power?
For more detailed commentary on the effects of expanding government, please read my earlier writings on this topic here.
Thinking freely about integrity
When a company spends recklessly, cannot afford to pay its debts, and then asks hardworking taxpayers to bail them out, is that fair?
Bailing out corporations in financial distress has recently been deemed a responsibility of government. Not surprisingly, it’s created a great deal of resentment from citizens who don’t want to pay the price of others’ greed or mistakes.
- Many executives at failing firms used government bail-out money to pay themselves multi-million dollar compensation. Some received over $5 million in pay.
- The Office of Management and Budget estimates TARP will cost taxpayers $63 billion.
But what about a government that spends recklessly, cannot afford to pay its debts, then asks hardworking taxpayers to bail them out? Is that fair?
- In 2011 we spent $711 billion for defense, double what we were spending a decade ago. That’s more than what China, Russia and the next dozen top military nations spend combined.
- Our government is borrowing 35 cents of every dollar it spends. In 2012, taxpayers spent twice as much on interest payments as it did on transportation infrastructure, and three times as much as it spent on education.
When taxpayer dollars are spent irresponsibly, be it by CEOs or politicians, Americans are straddled with a debt that’s unjust.
Integrity must be upheld on every front
Americans need to demand honesty and integrity from both the public and private sector. If we’re thinking freely, we know we can’t allow politicians to get away with fraud or deceit that we wouldn’t tolerate from the private sector.
In August 2011, Democrats and Republicans promised to work together to reduce future federal budgets through the Budget Control Act.
The White House issued a press release assuring Americans that
- legislators would place “caps on discretionary spending that will produce more than $900 billion in savings over the next 10 years,”
- recover “savings of $350 billion from the base defense budget – the first defense cut since the 1990,” and
- reduce “domestic discretionary spending to the lowest level since Eisenhower… through entitlement and tax reform.”
The deadline for this deal was January 2013, two months after the 2012 elections.
In the ensuing 17 months, both Democrats and Republicans failed to budge in any negotiations, delivering on none of these promises.
When an automatic “sequester” budget cut of 1.2% kicked in, the President called it “brutal” and “severe.” (Though after many media stories prove this to be an overstatement, he backpedaled, changing his protest to, “This is not the apocalypse. It’s just dumb.”)
But if shaving such a small percentage from this year’s budget seems so arduous, how are we to believe that our representatives ever intended to hold up the bipartisan agreement in the first place?
Why is such a minor reduction so difficult?
We’ve been warned of the major effects the sequester cuts may produce. Supposedly branches of the military will be cut to the bone, we’ll be waiting for hours to go through airport security, national parks will shut down, etc.
What neither Democrats nor Republicans are explaining is that more than two-thirds of federal spending is labeled “mandatory” and isn’t on the negotiation table. To maintain this constraint, we’d have to nearly shut down the rest of government to actually balance the budget.
No double standards
Compare the situation above to the following: Ford offers a car that will get 50 miles to the gallon. After deciding to purchase it, you learn the car actually has the same mediocre gas mileage as your old car. When you complain, you’re told by Ford’s president that you were dumb to expect a car to get that kind of mileage. But if you insist, he’ll take the doors off to get the mileage down a bit more.
Of course, the company expects you to buy their cars again next time.
As discussed in my previous post, it’s as unethical for a politician to make promises he can’t keep as it for is a businessman to do so. In fact, ethics in our public sector is even more crucial, since we have no choice but to pay for the things our legislators pass into law.
That’s my opinion. Let’s hear yours.
Thinking freely: the sequester
How does partisan bias affect our reasoning? The fallout from the sequester is a good illustration. As usual Democrats are blaming Republicans, conservatives are blaming liberals. Are we thinking freely, or are we simply allowing our ire to fall along party lines?
Who’s really to blame for this predicament?
Last week President Obama told us, “Republicans in Congress face a simple choice. Are they willing to compromise to protect… education and health care and national security… or would they rather put hundreds of thousands of jobs and our entire economy at risk just to protect a few special interest tax loopholes that benefit only the wealthiest Americans and biggest corporations?”
Republican House Speaker John Boehner claims that what most Americans “might not realize from Mr. Obama’s statements is that it is a product of the president’s own failed leadership… Just last month, the president got his higher taxes on the wealthy, and he’s already back for more.”
The press has done a thorough job of reporting the partisan finger-pointing and the government’s catastrophic warnings. But it’s not as easy to find facts on the heart of the issue.
- Congress and the Executive branch mutually agreed to the sequester as a stipulation for raising the debt limit back in August 2011. In the “bipartisan victory” press release issued by the White House back in 2011, the administration called the deal “A DOWNPAYMENT ON DEFICIT REDUCTION BY LOCKING IN HISTORIC SPENDING DISCIPLINE” (their bold and capital letters, not mine.)
- It sounded like a worthwhile endeavor at the time: it provided the government some immediate cash and gave Washington 17 months to come up with a plan to cut $900 billion from the budget.
Irrelevant distractions:
As we’ve all learned from arguments with our significant others, bringing up a side issue can keep us from dealing with more difficult, deep-seated matters that lie at the root of our problems. Sometimes it’s easier to fight about who took the trash out last than admit that neither of you have been living up to your promises.
- The tax debate is a completely separate issue from the sequester agreement. Any discussion as to whether taxes on the rich, the middle class or anyone else should be raised is merely a diversion. Both parties mutually agreed to cut $900 billion from the budget. Tax revenue is immaterial.
- All the clamor might lead us to believe that, even if this situation isn’t ideal, at least we’re headed towards curbing government’s excessive spending. But the $85 billion sequester cut is less than one tenth of what was agreed upon in August 2011. Washington’s spending problem is virtually the same as it ever was:
The heart of the problem:
- Discretionary programs rarely get cut because it’s generally not in a politicians’ best interest. For every lawmaker who is attempting to make cuts to a program, there’s another who is championing its cause, supported by a lobby of constituents who benefit by it.
- We rarely see groups demonstrate their gratitude when politicians make tough budget decisions. But when programs are cut there are always angry factions. Unpopular politicians don’t get reelected.
- Deal making (“I’ll save your program if you vote to save mine”) is rampant.
- There’s no repercussion to politicians when budgets aren’t passed or if we spend more than we have. The government simply borrows more or the Federal Reserve prints more money to pay the added expense. The House and Senate have not agreed on a budget since 2009.
We need to focus on solutions to the root problem. If Congress’ pay, future pensions and/or ability to run for reelection were tied to passing balanced budgets, lawmakers would have a much greater incentive to be judicious about spending.
If Americans were no longer sidetracked by partisan battles, legislators would quickly learn that there was no place to pass the blame.
Please share your thoughts (anonymously if you’d like) here.
Free to Think 