Federal Budget and Congressional Spending

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