Federal Budget Battles – Winners and Losers

By YeOldeScribe ~ April 14th, 2011 @ 12:02 am

Today is the 2nd installment of our three-part series taking a closer look at the Federal Budget and the battles it went through this year. Yesterday, we took a chronological look at the events surrounding the passage of the Federal Budget for 2011. Today, we’ll take a look at the winners and losers, given the final budget that was passed (and how it was passed). We conclude the series tomorrow taking a look at what’s in store for the future of Federal Budgets. We’ve really enjoyed putting this three-part series together, and we hope you’ll like it too.

LOSERS

Democracy/Americans

Easily the biggest loser in this debate. When both parties – Republicans and Democrats (but mostly Democrats) can’t agree on something as (relatively) simple as how to spend hundreds of billions of dollars, then something is deeply wrong with our system. We’ll even agree that the process isn’t simple; that it’s pretty complex. Fine. But it still needed to get done. Obama gave Congress his budget in February. The fact that they couldn’t come to an agreement on the budget before the start of the fiscal year is absurd. The idea that a temporary resolution had to be extended six times is laughable. And the fact that Obama had to release the FY 2012 budget before the FY 2011 budget was in place is downright scary. And the only group that loses when the Federal Government doesn’t do its job are the people it works for – aka us.

President Obama

At the end of the day, Obama had to agree to receive $79 billion less than he wanted. No matter what else happened during the budget debate, he has to make this side of the list for that reason. While generalizations are a bad thing, if you submit a budget and you lose $79 billion of it, one of two things has to be true: either a) It wasn’t really a “budget”, it was more of a “shopping spree”, or b) The President and his economic advisers weren’t competent enough to create a reasonable and sensible budget. Neither option is appealing, but one (or both) has to be true. We understand that all people have to be willing to compromise, and we’re certainly not criticizing President Obama for compromising. But cutting $79 billion out of a budget isn’t a compromise, it’s more like lopping off a foot when your big toe has a hangnail. Unless, of course, the money wasn’t needed in the first place.

Democrats

Make no mistake about it, the Dems were the ones on the defensive for the entire battle. This was all about placating Republicans, who attacked the budget with everything they had. The Democrats did their best to fend off the attack, but eventually, they had to make huge concessions. The Democrats originally said no cuts were needed. Then they said $6 billion. Then they said $33. Then they agreed to $39. Thirty-Nine billion dollars is a lot more than zero dollars. We’ll give the Democrats some credit because they stuck to their guns on women’s health care issues and a couple other sticking points at the very end of the debate, but they lost so much more. And let’s not forget this whole thing is their fault – had they just passed a budget when they had a clear majority in the House and a near super-majority in the Senate, this whole snafu never happens. We’re still scratching our heads on that one.

WINNERS

The Tea Party

It causes us great pain to write these words, but no one came out of the Federal Budget Battles a bigger winner than the Tea Party Movement. Ugh. Let’s be honest, on the whole, the Tea Party is not where the Progressive movement would like to see politics lean to. But on this one issue, they might have a point. Political Progressives is all about getting America’s financial situation under control, and we’d like to see the debt go down. So maybe this time the Tea Party wasn’t so bad. Let’s face it, the Republicans pushed on the budget because the Tea Party essentially made them. The Tea Party dictated the number ($61 billion) the House asked for in cuts. The Tea Party forced the two sides to not go for another extension of the continuing resolution after they said they wouldn’t support it. Not only did the Tea Party win – and win big – it’s actually a good thing they did, as we’ll see later.

President Obama

Wait, wasn’t he a loser? How can Obama be both a winner and a loser? If you want to be a real stickler, we’ll say that the 2010 Obama was the loser and the 2011 Obama was a winner. Yes, his budget got torn to shreds. But he also did everything he could – essentially playing mediator – to avoid a government shutdown. Considering where the two sides (represented by Democrat Harry Reid and Republican John Boehner) were before the mediation sessions (essentially mooning each other on the way into the White House) and where they ended up after them (agreeing on a Federal Budget for the rest of the year), Obama also won big. Without him, this deal doesn’t happen. And the Tea Party wasn’t the only entity that refused another temporary fix – Obama threatened a veto of such a proposal, essentially forcing both sides to figure things out. This, combined with the magic Obama worked in the lame duck session of Congress in 2010 has given us hope that not only can Obama get the job done when he’s got full support from Congress, he can also get things done when more than half of congress wants to do everything in their power to stop him.

America’s Future

We’ll take a closer look at this tomorrow for sure, but it’s clear to us that the Federal Budget that was passed last week is the first step twoards looking at and dealing with the massive debt we’ve complied over the last 30 years. As early as 1980, the United States Federal Government was less than a trillion dollars in debt. And, if you believe it, there once was a time when we weren’t in debt. Now we’re over 14 trillion in debt. That’s $14,000,000,000,000.00. The idea that we can just continuously raise the debt ceiling and pass budgets that plunge us further into debt is unsustainable at best and dangerous at worse. What happens when China asks for some of the money it’s lent us? What happens if we ever default on those loans? What happens when no other country wants to take on our debt? Those are all good questions with bad answers – at least for us. This budget is a small step twoards answering them. Let’s not go nuts over this – we agreed to $39 billion in cuts and we’re $14,000 billion in debt (and the cuts to the budget may not even equate to $39 billion in less debt), but it’s a step in the right direction – one that hasn’t been taken since the early to mid 1990’s. The Tea Party provided the government with the kick in the ass it needed to at least come closer to reality. Only time will tell how much closer we get.

Tomorrow we take a look at the Ryan plan for fixing the Federal Budget, and on Friday we’ll give analysis on President Obama’s speech made today on his Federal Budget plans over the next 12 years. Keep checking back!

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1 Response to Federal Budget Battles – Winners and Losers

  1. Chris McConaughay

    The issue I have with the budget can very well be encapsulated in the F2010 federal budget analysis that the white house put out a few months ago. The federal government spent $3.457 Trillion, while only collecting $2.163 Trillion. So, if you take $39 billion out of this you’re looking at expenses of $3.378 trillion…

    The way I like to look at it is, if you make $21,630/year, and spend $34,570/year, and after months of soul searching you manage to cut out $390/year… well, frankly, that’s not the path to fiscal solvency.

    The mess has gotten to the point that it can’t be handled with “pro-growth” policies alone. It can’t be taxed out of completely either. So, taxes are going up, growth is going to suffer, and federal spending is going to be slashed in several areas, so the poor are going to suffer.

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