Dr. David Mielke is the Retired Dean of the School of Business at Eastern Michigan University
Without much fanfare last week, we read once again that a budget deal has been passed overwhelmingly by both the Senate and House. Didn’t we also have the news in December that a budget deal was passed? What budgets are we talking about? Can the press do a better job of reporting the information? Was the budget passed this time the “Right Thing to do?” Let’s look at some issues:
1. The federal budget was supposed to be passed by October 1, 2013 because the government’s fiscal year runs from October 1st through September 30th each year.
2. Congress did not pass a budget bill for the current year, we experienced a partial government shutdown last fall, and then Congress passed a continuing resolution to keep the government running with the same budget as the year before. There was no budget agreement the year before either and the only change from that year were the infamous sequester cuts.
3. In December there was an agreement to increase some revenues, cut some expenses, and to reduce some of the second round of sequester cuts that were to kick in January 15th. The government is still operating on a continuing resolution—that is same budget as the year before with modified sequester cuts.
4. Last week both houses of Congress passed a $1,012 trillion up from $986 billion in 2013, what was called a budget bill and a continuing resolution to keep the government running with the same spending as last year with the modified sequester cuts. Confused yet?
5. Here is a suggestion that the press might consider when reporting on this type of news. The federal budget is composed of a number of different spending bills–actually 7. The bill passed last week was just one of them, the discretionary budget that includes defense spending, and all other discretionary spending such as health and human services, education and the justice department. There are still other parts of the government that are operating on a continuing resolution, same as last year, because Congress can’t agree on any changes to those budgets. A very important example is the farm bill. There is still no agreement on any changes to that bill and no bill has been passed for his year. The disagreement centers on cuts to food stamps.
6. Key components and the majority of total government spending are items called mandatory spending that includes Medicare, Social Security, Medicaid and Obamacare. That portion totals $2.3 trillion. So the total spending for the year—total budget is about $3.312 trillion. Congress has agreed to that number and to a total number for next year without the specifics of the components. That is why we hear Republicans asking where the money will come from to fund for example, extending unemployment benefits. If we increase spending in one area, we have to decrease spending in another so the total does not go beyond $3.312 trillion.
7. What did they pass in the discretionary bill? The discretionary budget passed the $1 trillion level for the first time in history. Defense received $526 billion, all other discretionary spending got $492 billion, including HHS $78 billion, Education $78 billion and the Department of Justice $27 billion. It targeted increases for biomedical research, including $29.9 billion for the National Institutes of Health, pre-school education including Headstart getting $1 billion more and some infrastructure programs, but overall provided far less than President Obama requested and kept spending lower than levels that prevailed in 2009. Other examples include no money for enforcing the ban on incandescent light bulbs, the IRS was cut over $11 billion, no increase in funds for Obamacare, but no reductions either and no funding for high speed rail.
How can we keep things straight when we hear so much about budget deals and budget changes and we never seem to get the whole picture? It seems the press could include a short paragraph about what budgets and bills they are reporting on and how they fit in the whole. How can we keep informed unless we get better quality information? As far as the specifics of the Discretionary Budget Bill, it was the “Right Thing to do.” It is a compromise. Both sides had wins and losses. We now have had two compromise deals in a row. Can we keep it going? Stay tuned for the next round of budget proposals–when President Obama presents his State of the Union address he will talk about new spending starting in October 2014 as the new budget year starts. Remember however, that Congress has already agreed to a total for all 2014-2015 spending, so wherever he wants increases, he will have to find the money somewhere else in the budget.