daily action 2.9

Warning: this action might call for 2 mugs of Fair Trade coffee and a danish—maybe two danishes—BUT you will be an ‘A’ student when you finish, unless you already passed FB 101, and then you get to clap erasers after class.

Federal Budget 101

The Federal Budget: The projected amount of money we need to run our country. The President’s budget for 2011 is $3.8 trillion dollars.

Surplus vs Deficit: We have a surplus when we bring in more than we spend. A deficit is when we spend more than we bring in. For 2011, projections show a $1.3 trillion deficit (not good.) This means that the US will spend roughly $1.50 for every $1.00 of tax revenues collected.

The Budget Process: The budget process begins when the President presents a budget proposal for the coming year by the 1st Monday in February. Based on input from the federal agencies, the budget proposal includes estimated spending, revenue and borrowing levels for the coming fiscal year (2011), beginning on October 1st. Congress puts together a budget resolution, they pass some laws and then they decide which laws they will fund during the appropriations process (when $ actually gets set aside.) The outcome is a bunch of appropriations bills, which need to be passed by both houses of Congress and signed into law by the President. Some laws get passed, but if money is not designated during the appropriations process, the program does not get funded (this happens a lot.)

Types of expenditures:

• Mandatory expenses: Social Security, Medicare and a few other items that are automatically appropriated. Although these items are important, citizens do not get to voice our opinion about whether they are funded (too bad.)
• Discretionary expenses: Many of the programs MAU cares about—including education, the environment, foreign assistance for health, education and safety—fall into this category. Congress must review and approve these expenditures annually during the appropriations process. This is the part of the process we can impact (yes, we love that.)

The President’s Proposal:
• To reduce the deficit: The President has made a commitment to pass along less debt to our children.
• Implement a pay-as-you-go, PAYGO, system: Congress can only spend a dollar on an entitlement increase or tax cut if it saves a dollar elsewhere. (This legislation has already passed. Amazing.)
• Pass fiscally-responsible health insurance reform. “All our steps to rein in the deficit will be for naught if we do not reduce the rate of health care cost growth over time.” —The Prez
• As the economy improves, the deficit will go down, but President Obama is implementing other changes to meet his goal of halving the deficit in his 1st term, including: calling for a three-year non-security freeze (there is some good news here, see below); ending subsidies for oil, gas, and coal companies; and putting in place a responsibility fee on the largest banks (considering we did help them out quite a lot; Go Barack Go!) NOTE: Mom Speaker of the House Nancy Pelosi believes defense spending should not be exempt from the freeze and MAU agrees. After all, our security budget is over half of our discretionary budget and is bigger than all other military budgets in the world combined. If we want to really impact the deficit, we must look where we spend the most money.

The Good News:
• There is an increase in the international affairs budget (the 150 account): $6.1 billion to be invested in global agriculture and a more comprehensive approach to improving global health—including efforts to fight neglected tropical diseases and improvements to maternal and child health (wild cheering commences.)
• Increased funding at the Department of Education by $2.9 billion—or 6.2%— with the largest requests going for Elementary and Secondary Education Act programs (while reforming them to be more effective), and more money for Pell grants and Race to the Top.
• $6 billion in funding for clean energy technologies, while also eliminating existing fossil fuel subsidies. And to continue our country’s innovative history, the budget invests $61.6 billion for civilian research and development—an increase of $3.7 billion, or 6.4%, over 2010 levels.

As President Barack Obama said, “Let’s invest in our people without leaving them a mountain of debt. Let’s meet our responsibility to the citizens who sent us here. Let’s try common sense.”

Ok. Class dismissed. You deserve a drink of any kind. A protein shake perhaps? And another danish.

Sources: Office of Management and Budget (www.omb.gov)

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