Archive for the ‘spending’ Category
By John Feehery
Last night, as I welcomed a group of executives from the American Public Transportation Association, I said the following: “Welcome to Washington, where we put the fun in dysfunction. Well, at least it is fun for us.”
I then pointed out, “most economists think that the best thing you can do for the American people is to come up with a short-term plan to boost economic growth and a long-term plan to deal with our long-term fiscal crisis. What did the politicians do? They came up with short-term plan that could stall economic growth and when it came to our long-term fiscal problems, they did nothing, absolutely nothing to reign in entitlement spending.”
If that isn’t dysfunctional, I don’t know what is.
I am glad that President Obama has decided to meet with members of Congress on both sides of the aisle. This is big news to Washington, although most people would have put such meetings as part of any President’s job description.
After all, a big part of the job of President is to work with Congress to change or repeal old laws or create new laws. That usually means actually talking to members of Congress.
Speaking of Congress, many are now wondering if there will be a grand bargain. I actually think that because Republicans and the President allowed the sequester to go forward, that a grand bargain is now much more likely than had the cuts been postponed again.
Americans will start to feel these cuts in the next couple of months. The sequester will first hit the Washington D.C. area, then they will hit places with huge defense contractors and military installations, and from there they will slowly but surely emanate out.
In the world of public transportation, those cuts will have a real impact. I told the gathered Mass Transit officials that if they don’t take these cuts as an opportunity to communicate directly with their elected representatives, that this would be a missed opportunity.
I also let them know in no uncertain terms that a Grand Bargain that sharply limits the growth of entitlement spending should be a big priority. After all, entitlements are eating away at the Federal budget, squeezing out investments in discretionary programs like Defense, education, NASA funding, and yes, investment in infrastructure spending.
I am a big believer in infrastructure spending. I don’t buy the notion that this can be done purely at the state or local level or that it should be done primarily by the private sector. I believe that their needs to be a public-private partnership, that includes cooperation and funding from the Feds and from the State (and local for that matter).
A private-public partnership insures that the best practices of the private sector combine with a universal service that comes with public sector.
You can’t have a public-private partnership though, if most of the federal budget is being eaten up by spending on entitlement programs. And that is why it would be for the best if we take the fun out of dysfunctional and put it back into a fully functional, competent government, one that comes up with the right plan for the right time and not the wrong plan for the wrong time.
By John Feehery
The real budget battle in Washington is not between Republican and Democrats or conservatives vs. liberals.
The real budget battle in Washington is between discretionary spending vs. entitlement spending.
What the hell does that mean?
Discretionary spending is basically money authorized and then approved each year by Congress.
Entitlement spending is money that automatically goes out the Treasury, without much input from Congress at all each year.
Now, most people hate Congress, so they might think that having little Congressional oversight would be a good thing, but it isn’t.
Entitlement spending goes out to a whole class of people, usually old people and poor people. Discretionary spending goes out for specific purposes, and is usually aimed at the future.
Right now, entitlement spending is kicking the skinny little butts of the discretionary crowd.
It used to be fun to be on the Appropriations Committee, which is largely in charge of spending discretionary money. But the thrill is gone, because there is not much money in the discretionary pot anymore.
Social security, Medicare and Medicaid take up about 43% of the Congressional budget, a number that grows unchecked every year. About 20% goes to paying for other entitlement programs (like Farm subsidies and food programs) and to pay off the national debt.
About 20% of the budget goes to pay for defense discretionary spending, a number that should come down now that we are largely done with two overseas wars. Only 18% goes to pay for everything else.
By everything else, I mean money to pay for roads, bridges, science funding, cancer research, NIH, school loans, and any other investment in the future that will make America a better place to live.
Discretionary spending is largely what America invests in the future. Entitlement spending is what America invests in the past.
Last year, Congress and the President agreed to a budget compromise that included automatic spending cuts of about 1.3 trillion dollars. Unfortunately, none of those spending cuts hit the true drivers of entitlement spending. Instead, they largely hit discretionary spending, so if Congress does nothing to reverse itself, America’s investments in the future will take the brunt of the hit.
In 1970, Social Security and Medicare accounted for 15% of the total budget. Today, they account for almost 50% of the entire budget. Pretty soon, if the growth of these two programs are not reversed, they will take up 60% of the budget, and by the end of the century, they will take up 80% of the budget.
If you spend all of your money in a budget taking care of old people, you have no money to pay for defense, or roads or the science funding that could make life better for those old people.
This is the real crisis facing the American people, and it doesn’t matter if you are conservative or liberal, Republican or Democrat.
These are just the budget facts, and we better get a handle on them soon, or we won’t be able to afford to pay our troops in 40 years.