Thursday December 02, 2010
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FY2010 Budget
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In March 2009, high school students and mayors from Caldwell and Nampa presented me with a petition signed by over 400 Treasure Valley students, indicating support for a balanced budget. They talked about the problem of high school dropouts and the unsustainable national debt. I’m impressed with these students’ interested in the state of our economy and the actions or inactions of government. However, it’s troubling that these young people, who are just embarking on the journey of adulthood, rich in promises of education, job opportunities and a family, have to worry about the egregious and irresponsible behavior of those a generation ahead. I sit on the Senate Budget Committee and we are reviewing the President’s budget. Congress needs to be very careful about using that budget for any type of guideline.
The Senate has yet to begin work on a Fiscal Year 2011 budget, but you can view the President's budget request through the Congressional Budget Office. In the meantime, here are some thoughts about the FY10 budget (last fiscal year) and the process that Congress undertakes each year.
First, a visual: one trillion one-dollar bills laid end to end would stretch from earth to the moon and back about 200 times. The President’s budget proposal contains an estimated tax increase of at least $1.4 trillion over ten years. Many of us believe that it’s well over $2 trillion. The budget proposal increases mandatory spending by $1.2 trillion and discretionary spending by $700 billion over ten years. [To link to a graphic that illustrates this, please click here.]
Tax increases: the Administration claims that tax increases won’t affect 95 percent of taxpayers. This number is only accurate when looking at income tax. No matter what verbiage you choose to use, revenue collected for the federal treasury is tax. Taxes in the proposed budget will raise revenue by increasing the cost of doing business, costs that will affect consumers in the form of higher prices for goods and/or services. It’s disingenuous to pretend otherwise. One proposed new tax on energy, couched in the term “cap and trade,” will impose taxes of almost $2 trillion on carbon-emitting entities: electrical, gasoline and natural gas to name a few. These costs will end up in your home energy bill and transportation fuel expenditures.
Budget spending is mandatory and discretionary. Mandatory spending is essentially automatic and includes Medicare, Medicaid, Social Security and interest on the national debt. This amounts to almost 2/3 of all spending in the Fiscal Year 2009 budget. Discretionary spending is spending on everything else. Discretionary spending includes national defense, homeland security and non-defense discretionary spending. This budget grows our government by nine percent in non-defense programs, and cloaks an actual reduction in defense spending by projecting spending for Iraq that is counter to Administration stated policy.
Finally, public debt numbers are frightening. Debt is the accumulation of deficits over time, and 2009 numbers suggest a debt of about $7 trillion. With the spending implemented and proposed over the past six months, the debt held by the public will double in five years (when high school seniors today graduate from college) and triple in ten. The wall of debt is growing; the response, more taxes and zero spending restraints (except, dangerously, the military). Treasury Secretary Geithner defended the tax cuts’ expiration in 2011 as happening when the economy will be better. I asked the Secretary if tax increases were contingent on a strong economy. He ducked the question, which says to me that taxes are scheduled to increase regardless of the state of the economy.
What Congress and now the Administration have imposed on Americans over the past six months spends too much, taxes too much and borrows too much—high school students understand this, so should Congress! In New York City, a famous debt clock (billboard showing the national debt) is expected to be redesigned this year to allow for a quadrillion—that’s 200,000 times to the moon and back!
Other Resources on the FY2010 Budget:
Congressional Budget Office Report on FY2010 Budget, released March 20, 2009
FY 2010 Administration Budget Request and Accompanying Documents
Senate Budget Committee Budget Bulletin on the Administration's discretionary and transportation budget, March 17,2009
Senate Budget Committee, Republican Analysis
FY2010 Budget Impacts On Small Business, prepared by Senate Budget Committee, Republicans, March 17, 2009
Quotes regarding federal deficit and reduction, March 19, 2009