Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts

Tuesday, May 31, 2011

Boehner’s Pork


If you are arguing with your friends about how John Boehner doesn't wield much power, here's some ammunition. When the Republican's took control of the House of Representatives last year, Speaker Boehner said he would put an end to all earmarks. Well, guess what? Lawmakers found a loophole for their own rule.

Instead of directly asking money from a committee, the committee members have set aside money for lawmakers where they can request money to be allocated for their district. Walter Pincus reported that the House Armed Services Committee reserved one billion dollars (that's twenty zeros) for what has been dubbed the Mission Force Enhancement Fund (MFEF). In this Fund, members of Congress could request money for projects in their districts through the appropriate federal agency within the Defense Department. Ironically, or maybe not, even before the bill could be passed half of the money within MFEF was already allocated for members who sit on the House Armed Services Committee.

This proves two things. First, Speaker Boehner can't handle his job. You don't run on reducing the deficit and the size of government, then allow your members to spite you on those very issues. In the 90's Tom Delay threatened to remove members of his own caucus of their chairmanship if he didn't like what they were doing. If Boehner had the same control like The Hammer once did, the Committee chairs would be afraid of applying this run around.

Second, the Tea Party doesn't have as much influence as they like to believe. If members really cared about reducing the deficit and America's debt, they wouldn't take place in this practice. Instead, Freshman members like Congressman Joe Heck walk a tight line between getting the funds their district needs, and making sure they don't get a primary challenge for doing so. Congressman Heck, who is a member of the Armed Services Committee, realizes if a terrorist attack does occur in the high tourist area of Las Vegas, it could be detrimental to the local economy. As someone who recently went there for the first time (I broke even), and wouldn't mind going back one day, I would like to know that I'm safe doing so. Also, as a tourist attraction for people and businesses around the world, you could give a good argument for why terrorists would want to attack the city.

If the Tea Party really had a major influence over what the Republicans were doing, these funds never would have been created. They only represent a tiny proportion of conservative Americans, and the GOP knows they can't retain their majority by exclusively pandering to them. The current speaker hasn't figured out how to handle either of these issues, and instead has let his caucus take votes that he knew would hurt them at the polls leading to its recent defeat in NY26.

Personally, I don't mind members of Congress asking for money. It is part of their job, and if they weren't their constituents would be asking them why they haven't been doing anything. Which happens to be the case for this Congress anyway.

Monday, January 3, 2011

The Politics of Budgets

Did you know that America doesn't actually have a budget? It's true. Congress does not pass one big bill where all the spending is voted on. Instead, all the appropriations are voted on separately and the Congressional Budget Office (CBO) adds them all up. There are so many convoluted ways in which Congress creates America's spending it is no wonder how it has a debt of thirteen trillion dollars.

Every year, the Office of Management and Budget (OMB) reports to the President on spending levels, the debt, and what economists are predicting for the coming year. After this analysis is complete, the President makes his priorities known. Decisions are made on what the tax levels should be, where spending should be cut, and where spending should be increased. Then the president starts pushing these ideas at the State of the Union address.

The CBO and OMB can sometimes come up with different numbers for how much a program can cost, how much the debt will be, or how much the economy will grow, but there usually isn't that big of a difference. The CBO is a non-partisan office, and because of that, their recommendations carry a lot of weight. During the healthcare debate, the CBO estimated that if the healthcare bill passed Congress it would reduce the deficit. The Democrats jumped on this and the Republicans had no reason or will to fight this fact. Of course, they still managed to find other things to complain about.

In Congress, the appropriations committees are filled with members who have a direct interest in seeing money going to their districts. For instance, the House committee on Science and Technology (which oversees NASA), had to deal with one of President Obama's priorities this past year. The president wanted to cut NASA's budget in order to reduce the deficit. But the members of that committee refused to let it happen, and it didn't. NASA was still fully funded for years to come, and for the members whose constituents didn't have a direct effect on the vote, they got a big IOU from those that it did. Needless to say, it is very hard to reduce the deficit this way.

One of the most effective ways the deficit was reduced occurred was when President Nixon was in office. When Nixon was living in the White House, he had the ability to cut spending that he did not think was necessary. Similar to a line-item veto but after the budget was passed. However, while he was in office Democrats controlled Congress, and eventually took this ability away from him, and claiming he wasn't cutting funding in Republican districts.

Before Obama introduces his budget and sets his priorities at the State of the Union, Congress is going to have to vote on its debt ceiling. A lot of pundits are making a big deal out of this because the debt was a big issue in the last election. But this same vote has happened every year for as long as there has been a deficit. And every year the minority party blames the majority party for increasing the deficit. But really, the ceiling is based on the coming years interest on what the government owns. So if a member voted for an appropriation last year that the CBO said would increase the deficit, they only have themselves to blame.

But that does not make it any less important for the debt ceiling to be raised. If it is not, the Treasury will be forced to default on the loans from China and other countries around the world. If you thought the financial crisis was bad, this will be one-hundred times worse. If the United States defaults (which amounts to claiming bankruptcy) the entire world economy will go into an unprecedented tail spin. It won't be just where people invested that will be hurt, this time it will be all the businesses that borrowed money from banks (which is all of them) from all around the world.

If John Boehner wants to give a fight about this, he will be playing a very dangerous game. I know he will be all high and mighty after Pelosi hands him the gavel, but unless he wants to be responsible for what I just described, he will raise the roof.