Though I’d rather pursue thoughts about more general concepts of life, religion, politics, family, etc. I cannot help but be intrigued by the U.S. Budget and how it has all affected us these past few years. Indeed I have found that life, religion, and so forth has actually found its way into the budget, and many societal phenomenon are at play. So here I present to you a story, filled with actual events, actual data, and mingled with some thoughts that you can agree or disagree with, or even offer up your own theories. I will try to be as to-the-point as possible, and I welcome any comments or criticisms.

The U.S. Budget Fundamentals

Both the Executive and the Legislative branches of Government are involved in the budgeting process and therefore share equally a burden of blame or praise for the expenditures and revenues of the government. Therefore I rebuke those who would say the President, whoever that person may be, is a singular culprit of irresponsibility.

Executive Branch: Each year, with the assistance of the Office of Management and Budget (OMB), The President, by law under 31 US Code sections 1105, 1106, and 1109, is required to submit a budget to Congress for approval. The same laws mandate what should be found in that budget. The budget submitted is to be used the for the following Fiscal Year which begins in October of the year it is submitted. So for example, The budget for FY 2014 begins October 2013.

Legislative Branch: Following the submission of the President’s Budget, Congress, with the assistance of the Congressional Budget Office (CBO) and the Senate, with the assistance of the Senate Budget Committee, review the budget, submit changes, and ultimately approve, deny, or recommend an amended budget back to the President for final signature. Usually the Congressional Budget Act of 1974 is cited as the enforcement behind this part of the process, indicating that Congress should have their version or comments ready by early March. The Act, however, has no repercussions given in the event that deadline is not met and therefore is rarely achieved.

You can probably already see how complicated this can get especially when different parties hold different parts of the government at any given time.

Inside the Budget

A typical budget presented by the President will have the same elements every time as outlined by the U.S. Code. Summary statements are given, figures and tables made, and plans outlined for future spending changes. What the public generally sees however is the breakdown by department of how much each will be losing or gaining, usually accompanied by some sort of “why” statement. This summary is often mistaken as the real budget. The actual, complete data is available, however, via the Government Printing Office (GPO). That data is the functioning budget, with all data recorded (I have tested the numbers found in the data sets against CBO numbers to verify this).

The budget, in its pure data form, is actually separated into two documents: Outlays, and Receipts. Outlays are the expenditures such as Medicare, usually divided again into mandatory or discretionary outlays. Receipts are the income such as Taxes. These documents are each broken down by department, agency, general purpose, and specific purpose, and then given a dollar amount either positive or negative (both documents generally use positive numbers, where a negative number indicates money shifts contrary to the nature of the document, i.e. a negative number in the receipts data indicates money is actually being lost). Conveniently, each also displays the values from 50 years ago.

With some minor Microsoft Excel data manipulations, you can easily put to two data sets together and start making some interesting discoveries. This I have done, somewhat to see what the money was being spent towards (a difficult analysis since it’s over 40,000 lines of data), and also check the numbers to see if everything is being reported.

The Budget Culture: Are there real expectations?

Few venues so vividly portray the antics of politicking than budget debates. Before a President even takes office, He or She is planning the apparently saving agenda that is very much dependent on a friendly budget. We all know the problems that plague the budget, and yet little is done to change it. What we don’t consider often is what our society has made us into. In most respects, each of the ideas surrounding the budget makes sense to some degree or another, but not all can happen at the same time, and in fact may conflict.

This is both the blessing and curse of our Democratic Republic. While we are so grateful for the freedom to speak our mind, suggest our ideas, and so forth, so many competing interests make it impossible to support them all. Indeed, conflicting interests put a politician in a position where they must choose based on a combination of moral preferences and constituent desires – also not easy. All of this comes to play in the U.S. Budget.

So the question is, do politicians really intend to only spend money on the things we need? Should we expect a pure and efficient budget? I would conclude that no, that given the nature of what the budget does for a free country, it can never be tamed. I find it therefore not surprising that many fall to the temptations of manipulating the budget or budgeting process for their own gains (often genuine, regardless of party), and others are left to fight strongly against unnecessary appropriations. No party is pure. And this was never more evident than in the years of 2004-2013.

The Story: How all this information contributed to the U.S. Budget from FY 2004 – FY 2013.

During the years of 2004-2013, party ideologies clashed, control over Congress, the Senate, and Presidency changed hands more than once, and external influences radically shook previous predictions. So why start with 2004? Basically, FY 2004 was the last primary threshold necessary for President Bush to cross that would reasonably allow him to spend more if that was his intention. Also, it is necessary to point out the trend leading up to the clinch years of 2008 and 2009.

To try to be somewhat concise about this and lay it out somewhat coherently, I will share this in the form of a timeline. Mind you I will have to back track at times to make some connections for you, but this is the best way I could come up with for explaining what found through my examination of the present budget and various other forms of information.

2004: President Bush – Dream Government

Republicans had wrested control of the Congress and Senate from the Democrats in 2002. With control of all parts of Government, President Bush was surely capable of anything he wanted. The budget for FY 2004, which was enacted a month prior to the election between Bush and Kerry reflected this possibility, then reaching an all time low of 412 Billion deficit. What is interesting, however, is that this would not continue.

2005: President Bush – Breaking Tradition

President Clinton only a few years earlier showed it was possible to balance the budget safely. President Bush, when preparing the FY 2005 budget apparently longed for a similar reputation and shed 100 Billion from the budget bringing the deficit back to 318 Trillion. By all means, with control of Congress and the Senate, Republicans either didn’t realize the fiscal power they had, or they didn’t actually care to increase funding.

2006: President Bush – Divided we Conquer.

Congress and the Senate switched hands to the Democrats and fairly dramatically so. Notwithstanding this occurrence, the budget deficit continued to decline, reaching 248 Billion. It should be noted that both parties were still interested in eliminating wasteful spending even with what we would not consider a small deficit. This was very evident in the Coburn-Obama bill (Barack Obama was a Senator then) which promoted transparency and accountability. Both Bush and Obama made statements on this:

President Bush today signed into law the Federal Funding Accountability and Transparency Act (S. 2590). The bill creates an easy-to-use Web site that will allow citizens to track the recipients of all federal funds. Most commonly, federal funding takes the form of grants and contracts, which are often awarded with very little transparency. This new tool will provide for accountability and transparency at all levels of government. Following the bill signing, Dr. Coburn and Senator Obama released the following statement: “This legislation marks a small but important step in the effort to change the culture in Washington, D.C. American taxpayers soon will be equipped with a significant tool that will make it much easier to hold elected officials accountable for the way taxpayer money is spent. The army of bloggers, editorialists and concerned citizens who worked diligently to see this bill pass deserve all the credit and praise today,” the senators said.^ President Bush said this today in his remarks on the legislation: “This bill is going to create a website that will list the federal government’s grants and contracts. It’s going to be a website that the average citizen can access and use. It will allow Americans to log onto the Internet just to see how your money is being spent. This bill will increase accountability and reduce incentives for wasteful spending. I am proud to sign it into law and I am proud to be with members of both political parties who worked hard to get this bill to my desk.”

2007: President Bush – It’s working

The first real budget that Democrats and Republicans work on together is the FY 2007 budget. Though they had different approaches for eliminating the deficit (this is best seen in the debate regarding energy and environmental conservation), they still effectively chopped off another 80 Billion, bringing the deficit down to about 160 Billion.

2008: The Last Hoorah

Typically FY 2009 Budget would be the last hoorah for President Bush, but as I’ll explain shortly, this was not entirely true, since the 2008 budget was the last budget that President Bush actually carried through to the end. President Bush, being at the end of his second term, had every reason to spend more. Indeed, when observing the Budget data available, just about every department and service received some increase in funding. No program or department received the bulk of the additional funding. What really changed in 2008, however was not the spending. Rather, revenue began to plunge as the economy slowed. This can be seen in the S&P 500 Stock tickers. What you don’t usually see however, is that this happened previously in 2002, to near the same level. Indeed,

though President Clinton has balanced the budget, the economy recoiled, and then recovered.

So this major economic recoil was not necessarily new, and given that it was Bush’s last year, it could be somewhat reasonable to expect these levels. It should also be mentioned that the Democrats were still in control of Congress and the Senate at this time; a necessary barrier against spending that was not agreed upon. Therefore, given Democrats had a perfect chance to thwart any over-spending, we can conclude that spending was a bipartisan agreement at the time, while revenue was out of the hands of both.

Frankly, as I understand it, the dramatic increase was permissible to some degree. Had the revenue increase been constant, as you can see on the chart provided, the increase in spending would have been negligible to the Budget and the deficit would have still decline. As most will say, the 2008 “Downturn” was generally a surprise occurrence, having just gone through this in the early 2000’s and most indicators pointing otherwise, or at least a manageable recession (See this great article by Sher Verick, and Iyanatul Islam, pages 8 and 9).

2009: The Clinch Year

Many problems contributed to the incredible deficit spike in 2009. It’s nowhere near as clean-cut as most say. To try to help make this as clear as possible, I’m going to break this up into two parts, the Government, and the Economy.

Government: Delays, Deficits, and Dual Responsibility

The FY 2009 Budget was initiated by President Bush. He carried out his part of the process by providing the President’s proposed budget actually early in the year, only initially maintaining the 400 Billion dollar deficit. And then…Politics happened. Despite the earlier cooperation, great disputations erupted that resulted in a 535 Billion dollar increase in spending. What is interesting to note is that Bush did not want to spend that much according to an article found here. On the other hand, a year later, President Obama would desire to spend more than what 2009 saw.

So what were the great increases found in the new 2009 Budget? According to the actual Budget, most of the increases came as gradual funding increases for various departments. Two other large players however were the TARP program (it was estimated this would increase the budget deficit by 750 billion, but in 2009, only about 160 Billion was actually a factor), and the Recovery act, adding nearly another 150 Billion. Recall that the Recovery Act was signed into law by President Obama. But how is this possible, isn’t it Bush’s budget?

What many forget is the politics that occurred with this budget. Normally the budget would be completed and implemented by October 2008. However, this particular year, Congress and the President were fighting over 13 appropriations bills, all of which would increase spending. Using the power of the veto, President Bush only signed into law the increases in defense spending in October, preventing the full passage of the budget. For the rest of the Government, a continuance measure was in effect, keeping spending the same. Effectively the passing of the bill had been put off and the new budget was not in effect as it normally would have been.

It wasn’t until March 11, 2009 that the final spending bills for the Budget for FY 2009 was passed. This is how the Recovery Act made it into the 2009 budget. It should be noted that spending did go up on a number of programs promoted by Bush, especially defense. What saw the largest increases however were programs such as Medicare and so forth. Further, President Bush had persisted with more tax cuts which only deepened the revenue loss during the recession. Therefore both parties are responsible (Congress fully capable of denying large spending increases if so desired), and technically, President Obama signed the major spending bills, as well as put the FY 2009 Budget into effect, though likely unsure of the ramifications that would follow given the state of the Economy.

Economy: A perfect storm

While Congress, the Senate, and the President debated about spending, revenues continued to plummet. President Bush had authorized a 120+ Billion dollar stimulus a couple of years earlier to prevent such a crisis, but a number of factors came together to ultimately cause a loss in $419 Billion dollars in lost revenue according to budget data. This means that revenue and spending were nearly equally the cause to the sudden increase in the deficit.

There are many ideas that arise as to how the revenue was depleted so fast, but a few hold strong with more supportive evidence: Economic downturn lowered tax revenues, the tax cuts from Bush further lowered the tax revenues in the immediate term, and the Recovery act contributed to a some further economic pull back as some businesses tried to boom from it but failed, and others were hurt by some of the restrictions it imposed. NBC news is quoted as saying back in 2009:

“For 2009, the government collected $2.10 trillion in revenues, a 16.6 percent drop from 2008. The plunge reflected declining income tax collections as millions of Americans lost their jobs or saw their wages cut. Corporate taxes also plummeted as the recession squeezed companies’ profit margins.”

Put the increase in spending and the loss of revenues together and you get the sudden deficit increase of $954 Billion dollars.

2010-2013: Since Then



As seen in the provided chart above, President Obama has had a tough challenge. He has had to do two things that are very hard: raise revenue (which is usually done by tax increases), and find what can be cut. Drawing the line of what spending is necessary is no easy feat. While spending did go up a lot and it would seem simple enough to simply hit the “undo button”, spending would have necessarily gone up anyway because of inflation and other actual needs. Therefore, deciphering what the actual spending amount should have been isn’t clear, and therefore, what should be cut?

Since 2009, however, much of it has been out of the hands of President Obama. Though his budgets clearly state he foresaw continuing high deficits, he did also project methods for corrections which ultimately did not occur. Even with both Congress and the Senate in control of the Democrats like President Bush had in 2004, rather than using the time to save money which Democrats anticipated doing a few years earlier, spending was indeed reduced on many fronts, but greatly offset by higher spending in other programs.

Additionally, President Obama has done his part in actually submitting a budget over the past few years. The Senate, on the other hand, has never actually approved a budget, and consequently much of the spending goes on as a continuing resolution. So this raises the question of why the Senate does not pass a budget that will alleviate these concerns. There are numerous theories, and I’d rather not get into them since this article isn’t about conspiracy or what not. The point being, there is still a lot of work to do, but it is possible to resolve.

Conclusion

I’m sure that most of us would rather politics was not a part of the Budgeting process of the United States Government. However, as mentioned before, given our wonderful freedoms and our human nature to accomplish something, sometimes anything, we are constantly seeking for more money and using the Government as our means of influence for better or for worse. Neither President Obama or President Bush are solely responsible for the great deficits we are experiencing. The Budget isn’t a simple process and involves all segments of Government.

It’s important to remember that why people do what they do with the budget is not always in hostility towards “the other side”. As discussed in my post regarding “Progress”, moral ideals vary wildly and issues arise consequently. Even Harry Reid shares the same religion as I and yet we have very different ideas about Government. Considering he must have good reasons, I can make assumptions that either he believes the President needs to spend money unchecked to accomplish anything anymore, or not passing a budget actually prevents the President from authorized spending increases that would likely result from a budget development.

Whatever the case, I offer up this citizen’s analysis of what has occurred with the U.S. Budget as reference for you. I urge you to not draw quick conclusions with this issue, to not throw around blame, but instead contact your representative, the President, or what have you, and actually share with them what you are most interested in funding. I honestly believe that the 40000 lines of data is not just overwhelming to me, but to the OMB, CBO, and any Government official tasked with choosing the excess. Also understand the need for tax increases for the time being. Though I do not believe that taxes should be continually raised, as it would seem President Obama is doing, instead of bringing down spending and bringing up taxes, revenue is still a major contributor to what has happened. Do not fall for the over-simplified analogies, but find ways you can contribute.

I hope this was helpful.