American Society of Military Comptrollers Professional Development Institute

American Society of Military Comptrollers Professional Development Institute Pat Condon 26 March 2013

Outline • Federal budget process: How it is supposed to work • Frustrations • Test questions for federal spending • What you can do

Federal Budget Process • First Monday in February – President submits budget for coming FY to Congress • 15 February – CBO submits budget outlook to Congressional committees • Spring and summer – House and Senate agree on modified budget • Early fall – President signs authorization and appropriation acts • 1 October – Fiscal year begins

Federal Budget Process • How does it really work? – Never like the previous chart describes • Continuing Resolutions have become a way of life – Incredibly inefficient – Inconsistent with good planning and execution • What do you do when the House and Senate pass budgets before the President submits his?

Frustrations • Process does not work as laid out • Lack of honest discourse • Unwillingness to address real financial issues facing our country • Disagreement on the role of the Federal Government

Lack of Honest Discourse • Definitions – Spending Cut Webster: Reduction in amount previously allocated and used for a specific purpose Washington: Decrease in the increase planned for a specific purpose

Lack of Honest Discourse • Definitions – Loophole Webster: Ambiguity or omission in the text through which the intent of a statute may be evaded Washington: Provision in tax law intended to encourage or incentivize investment in America

Lack of Honest Discourse • Definitions – Entitlement Webster: A right to benefits specified especially by law or contract Washington: Belief that one is deserving of certain privileges

Lack of Honest Discourse • Definitions – Fair Share Webster: Free from favor toward either or any side. Proper balance of conflicting needs. Washington: If you are wealthy, whatever you are paying is not enough.

Unwillingness to Address Real Financial Issues • Look at national financial situation on a household basis (2012 data) – Annual income: $50, 000 – Annual spending: $76, 873 – Amount owed to creditors: $332, 786 • Would your solution be to continue to spend more than you make? • And we have politicians saying we do not have a spending problem?

Unwillingness to Address Real Financial Issues • Social Security – Enacted in 1935 – Never intended to provide all funding needed at retirement – 1935 life expectancy was 62 years; 2012: near 80 – 1940: 42 workers per retiree; 2012: 2. 8 per retiree • Surplus loaned to Federal Government, to be paid back with interest – SS Trust Fund • Social Security began drawing money from the Trust Fund in 2010 • SS Trust Fund projected to be empty in 2033 • SS will operate at a deficit from 2033 and beyond

Unwillingness to Address Real Financial Issues • President Herbert Hoover faced serious financial problems • His solutions? – Dramatically increased federal spending – Raised taxes on the wealthy – Created government programs to aid those less fortunate • Result: The Great Depression

Role of the Federal Government • U. S. Constitution, Article I, Section 8 “The Congress shall…provide for the common Defence and general Welfare of the United States…. ” • “Common Defence” is fairly easy to understand • But what does “general Welfare” mean? – Basic infrastructure to allow commerce to thrive? – Government programs to ensure that no one goes without food and shelter? – Government programs to ensure that every human need is cared for?

Test Questions for Federal Spending • Is federal spending for this program authorized under the U. S. Constitution? • If we are authorized to spend taxpayer money for this program, should we? • Are we treating a symptom or the root cause? • What are the unintended consequences and how do we mitigate them? • What measures of merit need to be established and how do we evaluate the results to ensure they are what we intended? • If the results are not as we intended, how do we make corrections?

Frustrations • One could list many more that we have not covered here • There are three fundamental questions to be addressed – What do we want to be as a country? – What can we afford to be as a country? – What actions do we need to take to make that happen?

What You Can Do • Be informed – Use several sources – look at all sides – Understand what is within the realm of the possible – Separate emotion from fact and logic • Be engaged locally and nationally • Interact with your elected officials and hold them accountable