U.S. Federal Budget – Part VI, Which Budget? Which Vision?

An Overview:

First, the President and his Democratically controlled House and Senate, which could have passed anything they wanted (and did for the most part), didn’t or wouldn't pass a budget for FY2011, so that started us down the path of continuing resolution after continuing resolution before we could really discuss the FY2012 Budget, that finally got resolved a few weeks ago.  And just to add to  your knowledge base the democratically controlled Senate has not passed a budget in over 2 YEARS!  

The 2012 budget process was unofficially kicked-off with the President’s own National Commission on Fiscal Responsibility (Obama commissioned this group to give us a bi-partisan path to deficit reduction) that came out with their “Moment of Truth” in December of 2010; after which came Obama I on February 14, 2011, followed by the House Budget Committee in April (April 05, 2011), with their “Path to Prosperity,” after which was followed up by Obama II (April 13, 2011), and in between the House Budget and Obama II there were others offered up by a few caucuses and study groups that in various forms were ultimately voted down in the House. 

Unfortunately, the President did not seem to think too much of his own commission’s “Moment of Truth” as his initial FY2012 budget offering didn’t incorporate any of its components and in fact continued with nearly $1.7 Trillion in deficit spending with only a minimum reduction of the debt. The House seemed to take it more seriously in its “Pathway to Prosperity” as it incorporated some of the Fiscal Commissions recommendations by cutting spending and attempting to make real reform. The rest of the various groups/caucuses and ultimately even the President himself, decided that they might want to get involved in the federal ‘reduction” process, or at least pretend, as they offered various forms of spending cuts and deficit reduction plans. 

Before we go on, and just to bring this right up to date and keep you in the proper perspective, the first seven months of FY2011 is running at a deficit of $871 Billion – do you think we need to do something now or maybe wait another few years?  Once again, we have the President’s Bi-Partisan Fiscal Commission and his subsequent Budgets I & II, the House Budget, the Congressional Progressive Caucus, “The People’s Budget” (Democratic Socialists), the Congressional Black Caucus, and the Republican Study Committee, “Honest Solutions,” all vying to steer the spending and the country to their vision. 

Summary of Budget Offerings:

President’s Fiscal Commission (Dec 2010) - Achieve nearly $4 trillion in deficit reduction through 2020, more than any effort in the nation’s history - Reduce the deficit to 2.3% of GDP by 2015 (2.4% excluding Social Security reform), exceeding President’s goal of primary balance (about 3% of GDP) - Sharply reduce tax rates, abolish the AMT, and cut backdoor spending in the tax code - Cap revenue at 21% of GDP and get spending below 22% and eventually to 21% - Ensure lasting Social Security solvency, prevent the projected 22% cuts to come in 2037, reduce elderly poverty, and distribute the burden fairly - Stabilize debt by 2014 and reduce debt to 60% of GDP by 2023 and 40% by 2035.

The President I (Feb 14, 2011) - $3.78 Trillion in Spending - $1.7 Trillion in additional deficit spending – Claims $1.1 Trillion in Debt reduction but at its core is $780 Billion in unspecified “reductions” - Lowers Deficit Spending to $748B by 2015 then increases it back to $1.158 Trillion by 2021 - Increases Debt held by Public as a percentage of GDP to 87.4% - No Entitlement reform.

The House (Apl 5, 2011) - $2.94 Trillion in Spending - $1.08 Trillion in additional deficit spending - Reduces Debt by $6 Trillion over 10 years - Reduces Debt held by Public as a percentage of GDP to 67.5% - Balances the Budget by 2015 - Entitlement and Tax reform.

Deficits as a Percentage of GDP

Plan	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2012-2021
CBO March Baseline	9.8%	7.0%	4.6%	3.6%	3.2%	3.3%	3.0%	2.9%	3.0%	3.1%	3.1%	3.7%
President's Budget	9.5%	7.4%	5.5%	4.4%	4.1%	4.4%	4.3%	4.3%	4.7%	4.8%	4.9%	4.8%
House (Ryan)Budget	9.2%	6.3%	4.3%	2.9%	2.4%	2.5%	2.0%	1.8%	1.9%	1.8%	1.6%	2.7%

Rep. Paul Ryan's budget has significantly lower deficits than President Obama's budget under the same economic conditions with a deficit over 3.3 percentage points lower in 2021 and averages 2.1 percentage lower over the ten year window. As a result, the debt path is also on a better trajectory.

The Republican Study (Apl 7, 2011) - $3.318 Trillion in Spending - $1.3 Trillion in Debt – Balances the Budget by 2019

The President II (Apl 13, 2011)  In an unprecedented move never done before by an American President Obama offers up a second Budget since his first one was so pitiful and didn't even attempt to lower the defict - now his new Budget reduces over-all debt $4 Trillion over 12 years (the CBO and all other proposals are based on 10 year plans – this offering of the President showing reductions over 12 years has never been done before and is against CBO rules) – Calls for more reductions in defense and non-defense discretionary spending, health care and other mandatory programs then his first budget – he also is now calling for tax reform, reduce tax expenditures and cut tax rates – maintains a large federal government and still does not meet his own Fiscal Commission which many agree should be the minimum.

The key thing to know here is that although the CBO tells us the Presidents budget will stimulate the economy through 2016, however from 2017 to 2021 they “project that President Obama's policies would decrease economic output…”   We see the President doing something that works for him politically in the short run for re-election but in the long run (after he leaves office) it hurts the country and the American people.

The Progressive Caucus (Apl 13, 2011) Reduces Debt held by Public as a percentage of GDP to 64.7% - calls for a big, growing, controlling government that oversees the people and the economy.

The Black Caucus (Apl 14, 2011) Balances Budget by 2018 - again believes in a big government that redistributes from producers to non-producers, ultimately at the expense of the economy.

Which Budget?  Which Vision?:

What is important and what is really up for grabs in this budget process is the Vision we have for America – where do you want it to go, because that’s the big differences in these budgets.  Between the President's budget, the Progressive and the Black Caucus budgets they all want to spend more and redistribute money by taking it from and limiting the producers, de-incentivizing the private sector while expanding the public sector in hopes of stimulating the economy or at least, maintain the status quo.  The House budget and the Republican Study Group budget both want to limit spending and reward producers with incentives to spur the private sector thus increasing job formations, while shrinking the public sector resulting in a growing economy for all.  So, are your beliefs more like the Ryan's (House) Vision in his “Path to Prosperity” seeking less government spending, less government regulation and a overall smaller, less intrusive federal government much as our founders intended.  Or, is your Vision like the path the President and the liberals, socialists, progressives, etc. see for America, a big federal government that is involved in the peoples’ lives from cradle to grave and dictates most everything in it by controlling the private sector from top down and bottom up? 

Do you still champion individual rights, individual responsibility and liberty fostered by a private sector that creates jobs and economic growth with a small federal government like the House plan or something like the President’s plan or the “People’s Budget” that believes in the collective and big government stimulating the economy, providing jobs and primarily imposing programs and reforms on the people because well, we just aren't smart enough to know any better. 


What do you want from your government?  Is it there, in the background, taking care of the security of the country and offering a safety net for those individuals on the fringes of society allowing individuals to do as they best see fit for themselves and their families while keeping the vast majority of the money you earned or is it a behemoth that is everywhere taking and spending your money trying to provide services to everyone whether they want them or not?  Is it there to run you, to impose its values and its beliefs on you or are you free to live within your own set of morals, values and beliefs within the confines of our founding documents: The Declaration of Independence, proclaiming that the Laws of Nature and of Nature’s God hold these truths to be self-evident, that All Men are Created Equal, that they are Endowed by their Creator with certain Unalienable Rights; the Constitution that lays out the laws of the land and how we the people are self ruled, not by elites within an authoritative government; and the Bill of Rights granting us free speech, freedom from an imposed religion and the free practice thereof, freedom of assembly, a free press, the right to petition the government, etc?

One Vision, my Vision, is that the American Dream is real, alive and available to all citizens that work hard while the other is one of denial in ones own worthiness and that there is no way to prosper without government intervention while those who have achieved have somehow done it at the expense of those who have not and thus, their wealth should be taken and redistributed.  Remember, throughout history and right through today, the bigger the government grows with continuing control at the top by an "elite" class the less freedom and prosperity for the people.

How do you see Yourself and Your Country?

Which Budget?  Which Vision?