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Debts, Deficits and Why You Should Care

Numerous projections from different sources, including the Congressional Budget Office (CBO), Government Accountability Office, and Office of Management and Budget signal that absent changes in current policies, federal deficits and debt in coming decades will grow to unprecedented levels that will threaten serious harm to the economy.  One of the best recent reports outlining the issues can be found at the Center on Budget Policies and Priorities site -- www.cbpp.org, “The Long-term Fiscal Outlook is Bleak: Restoring Fiscal Sustainability will Require Major Changes to Program, Revenues and the Nation’s Health Care System,” written by Richard Kogan, Kris Cox and James Homey (December 16, 2008). www.cbpp.org/12-16-08bud.pdf

If you feel the pain associated with the economic crunch, you are not alone.  Other reports published by CBPP reveal that states are facing a great fiscal crisis.  At least 44 states faced or are facing shortfalls in their budgets for this and/or next year, and severe fiscal problems are highly likely to continue into the following year.  Combined budget gaps for the remainder of this fiscal year and state fiscal years 2010 and 2011 are estimated to total more than $350 billion. Consequently, many states and local governments are cutting services and programs, increasing risk and harm to the most vulnerable populations for many months to come. 

<For more Budget Basics, click here>

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: “Earmark”

Earmarks do not constitute as much of the federal spending pie as some would lead you to believe.  In fact, such designated funding represented less than one percent of the overall federal budget in 2008.  That year, they only constituted .59 percent of federal budget expenditures.  While not a whole lot in comparison to other activities receiving federal support, these dollars are put to good use more than they are wasted, and play an important role in getting funding to worthy, but under-resourced programs and communities.  Let’s take a moment to review one agency definition of “earmark” – please note the use of words  “circumvents” and “curtails” which make the definition implicitly biased against the inclusion of almost any congressional language targeting specific dollars for specific purposes not identified by the Executive branch.  Arguably, such an interpretation is a contradiction of the U.S. Constitution, which gives Congress, under Article I, Section9, the power to tax and spend.  Nonetheless, here is what the President’s budget office has to say.  Whether the Obama-Biden Administration will modify this Executive branch guidance remains to be seen.  Let’s hope so. 

As of December 2008, the U.S. Office of Management and Budget defines earmarks as funds provided by the Congress for projects or programs where the congressional direction (in bill or report language) circumvents Executive Branch merit-based or competitive allocation processes, or specifies the location or recipient, or otherwise curtails the ability of the Executive Branch to manage critical aspects of the funds allocation process – http://earmark.omb.gov/.

<For more on Earmarks, click here>

RELEVANT & PUBLICATIONS

The Center on Budget and Policy Priorities – www.cbpp.org

The Plan, by Rahm Emanuel and Bruce Reed (Public Affairs, 2006)

Supercapitalism: The Transformation of Business, Democracy, and Everyday Life, Robert B. Reich (Knopf, 2007)