Federal Budget and Congressional Spending


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Federal Budget and Congressional Spending

  1. 1. The Power of the Purse Federal Budgets and Congressional Spending
  2. 2. Budgeting Process <ul><li>Constitution: no money can be drawn from the Treasury except through appropriation laws </li></ul><ul><li>President sends budget to Congress </li></ul><ul><ul><li>Recommendations and priorities </li></ul></ul><ul><li>House and Senate pass budget resolutions </li></ul><ul><ul><li>Set spending limits </li></ul></ul><ul><li>Appropriations Committees and Subcommittees review and draft individual appropriations bills </li></ul><ul><ul><li>12 subcommittees, 12 appropriation bills </li></ul></ul><ul><li>Bills often combined into omnibus bills </li></ul><ul><li>Congress votes and sends budget to President </li></ul>
  3. 3. Money In… <ul><li>In fiscal year 2008, the Federal Government collected $2.5 trillion </li></ul><ul><ul><li>Individual income taxes: 45% </li></ul></ul><ul><ul><li>Social Security taxes: 36% </li></ul></ul><ul><ul><li>Corporate income taxes: 12% </li></ul></ul><ul><ul><li>Excise, Sales, Use taxes: 3% </li></ul></ul><ul><ul><li>Other: 4% </li></ul></ul>
  4. 4. …And Money Out <ul><li>In fiscal year 2008, the Federal Government spent $2.979 trillion </li></ul><ul><ul><li>How much was the 2008 deficit? </li></ul></ul><ul><ul><li>Since 1970, the US has run deficits all but four years (1998-2001) </li></ul></ul><ul><li>Total US debt is $10.6 trillion (as of 1/09) </li></ul><ul><ul><li>Your personal share is approx. $30,000 </li></ul></ul><ul><li>Where does the government get more money? </li></ul><ul><ul><li>Borrow </li></ul></ul><ul><ul><li>Print more </li></ul></ul><ul><ul><li>Raise taxes and/or lower spending </li></ul></ul>
  5. 5. Where does it all go? <ul><li>Mandatory spending accounts for over 60% of federal spending </li></ul><ul><li>Mandatory Spending </li></ul><ul><ul><li>Social Security and Medicare (entitlements) </li></ul></ul><ul><ul><li>Congressional salaries </li></ul></ul><ul><ul><li>Interest on the national debt </li></ul></ul><ul><li>Proportion of budget going to mandatory spending has increased on average </li></ul>
  6. 6. Where does it all go? <ul><li>Discretionary spending accounts for around 40% of federal spending </li></ul><ul><li>Discretionary Spending </li></ul><ul><ul><li>Defense </li></ul></ul><ul><ul><li>Environment </li></ul></ul><ul><ul><li>Science and Technology </li></ul></ul><ul><ul><li>Transportation </li></ul></ul><ul><ul><li>Education </li></ul></ul>
  7. 7. In Your Perfect World… <ul><li>National Defense </li></ul><ul><li>Administration of Justice </li></ul><ul><li>Veterans’ Benefits & Services </li></ul><ul><li>Income Security </li></ul><ul><li>Health </li></ul><ul><li>Science, Space & Technology </li></ul><ul><li>Education, Training, Employment & Social Services </li></ul><ul><li>Transportation </li></ul><ul><li>Natural Resources & Environment </li></ul><ul><li>International Affairs </li></ul><ul><li>Other (Energy, Agriculture, Community Development etc.) </li></ul>
  8. 8. In the Real World… <ul><li>National Defense: 59% </li></ul><ul><li>Administration of Justice: 4% </li></ul><ul><li>Veterans’ Benefits & Services: 4% </li></ul><ul><li>Income Security: 5% </li></ul><ul><li>Health: 5% </li></ul><ul><li>Science, Space & Technology: 2% </li></ul><ul><li>Education, Training, Employment & Social Services: 7% </li></ul><ul><li>Transportation: 2% </li></ul><ul><li>Natural Resources & Environment: 3% </li></ul><ul><li>International Affairs: 4% </li></ul><ul><li>Other: 5% </li></ul>
  9. 9. In the Real World…
  10. 10. Earmarks <ul><li>Earmark refers to any element of a spending bill that allocates money for a very specific thing </li></ul><ul><ul><li>Project </li></ul></ul><ul><ul><li>Location </li></ul></ul><ul><ul><li>Institution </li></ul></ul><ul><li>Ex. Congress gives $1 million to the National Park Service—not an earmark </li></ul><ul><li>Ex. Congress gives $1 million to the National Park Service for the restoration and preservation of Yellowstone Lodge—an earmark </li></ul>
  11. 11. Oink! Oink! <ul><li>Pork/Pork-barrel spending </li></ul><ul><ul><li>Earmark secured by a Congressperson to bring money to home state or district </li></ul></ul><ul><ul><li>Economic or service benefits are concentrated, but costs are spread among all taxpayers </li></ul></ul><ul><ul><ul><li>Requested by only one chamber </li></ul></ul></ul><ul><ul><ul><li>Not specifically authorized </li></ul></ul></ul><ul><ul><ul><li>Not competitively awarded </li></ul></ul></ul><ul><ul><ul><li>Not requested by the President </li></ul></ul></ul><ul><ul><ul><li>Greatly exceeds previous years’ funding </li></ul></ul></ul><ul><ul><ul><li>Not subject of hearings </li></ul></ul></ul><ul><ul><ul><li>Serves only a local or special interest </li></ul></ul></ul>
  12. 12. Earmarks and Pork in Reality <ul><li>In 2008, earmarks totaled $18.9 billion </li></ul><ul><ul><li>Less than 2 % of total budget </li></ul></ul><ul><ul><li>Approximately 10 % of budget deficit </li></ul></ul><ul><li>Pork is part of Congressional representation </li></ul>
  13. 13. Public Approval <ul><li>Public approval of Congress is only 30% </li></ul><ul><ul><li>Up 4 points over last month </li></ul></ul><ul><ul><li>68% of Americans believe “pork” is unacceptable </li></ul></ul><ul><ul><li>Only 15% believe the earmark system ought to be left as it is </li></ul></ul>
  14. 14. Congressional Re-election <ul><li>In 2004, 99% of sitting members of the House of Representatives were re-elected; 96% of Senators running were re-elected </li></ul><ul><li>Members of Congress are re-elected because constituents are often not provided with a compelling reason to vote for someone else </li></ul><ul><ul><li>Ex. Former Senator Ted Stevens </li></ul></ul><ul><ul><ul><li>Appointed to Senate in 1968; served 40 years </li></ul></ul></ul><ul><ul><ul><li>Received at least 66% of the vote until 2008 </li></ul></ul></ul><ul><ul><ul><li>Known for bringing home the bacon </li></ul></ul></ul><ul><ul><ul><li>Found guilty of 7 corruption charges </li></ul></ul></ul><ul><ul><ul><li>Lost by only 3,724 votes </li></ul></ul></ul>