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An introduction to the federal budget’s past, present and future

Filed by KOSU News in Public Insight Network.
September 20, 2012

With the release of the new Budget Hero Election Edition game and the U.S. government facing a “fiscal cliff”, you might want more information about the federal budget’s problems, what the future of federal spending may hold and why it all matters to you.

So we’ve compiled some resources to help get you up to speed on the politics of government spending and the impact on you.

The budget now and then

At the end of September, the government’s fiscal year 2012 will end with a budget deficit of more than $1 trillion for the fourth straight year. The Associated Press reports:

“The White House in July forecast that the budget gap will total $1.2 trillion this year, down from $1.3 trillion last year. Next year, the administration expects the deficit to fall just short of $1 trillion, at $991 billion.

“This year’s gap is equal to about 7.4 percent of the U.S. economy, down from 8.2 percent in 2011.”

The New York Times created an interactive graphic to help people explore President Obama's 2013 budget proposal. Congress has not yet passed a full 2013 budget.

In February, The New York Times created an interactive graphic to help people explore details President Obama’s proposed 2013 budget. Congress has not yet passed a full 2013 budget. (Screenshot from The New York Times website)

How exactly does the government spend those trillions each year? This New York Times interactive lets you explore the details of President Obama’s 2013 budget proposal of $3.7 trillion in spending with a budget deficit of $901 billion. (But Congress failed to agree on a budget, opting instead for a deal this summer to keep the government operating through March, long after the general election.) Also from the Times, you can see the details of Republican vice presidential hopeful Paul Ryan’s House Budget Committee budget proposal from earlier this year as well.

Federal budgets have a long history of running a deficit. In this graphic from 2011, National Journal compared government spending going back to the Kennedy administration. For a closer look at the last dozen years of federal spending, The Washington Post’s Ezra Klein illustrates how the country went from budget surpluses during Bill Clinton’s tenure in the White House to deficits in the administrations of George W. Bush and Barack Obama.

In an article recommending two good reads on the politics of federal spending, Rob Cox of Reuters’ Breakingviews noted:

“While nobody loves the cost of government, everybody cherishes the things it specifically does for them — sending 11 aircraft carriers to ply the seas, putting a man on Mars or providing medical care to the poor and elderly. The last, along with the cost of Social Security and Medicaid, should be of greatest concern to future generations. At $555 billion, Medicare is already costs more than the Federal government spent in 1951 budget, adjusted for inflation. This reflects the wastefulness of the system rather than a doubling of the population. Last year this health insurance for the elderly consumed 21 percent of America’s total budget. If recent health care cost trends continue, the bill will rise by 75 percent over the next decade.”

And this infographic from the Third Way think tank shows how Social Security is headed toward insolvency.

Heading for the cliff

You might also have heard about the fiscal cliff that the U.S. economy and political leaders face. In January, more than $300 billion in tax cuts are set to expire and another nearly $200 billion in automatic spending cuts are slated to take effect, as a result of a deal reached last year to raise the country’s debt ceiling. In a PBS NewsHour discussion on the economic dangers of going over the cliff, Maya MacGuineas of the Committee For a Responsible Federal Budget summed up the risk to the economy:

“[W]e do need to cut spending, but this probably is not the right way to do it, abruptly and across the board.

“And likewise, on the tax side of the budget, we keep extending the tax cuts without offsetting the costs and really thinking about how to reform the tax code and raise revenues. Now they’re going to expire. And, together, those things would hurtle us off the fiscal cliff and likely put us in a recession. And we shouldn’t make the decisions that way. We need to do them thoughtfully and gradually.”

Budget Hero is an online game that lets anyone try their hand at balancing the federal budget, using real proposals and real dollar amounts as determined by the Congressional Budget Office and other non-partisan sources.

Budget Hero is an online game that lets anyone try their hand at balancing the federal budget, using real proposals and real dollar amounts as determined by the Congressional Budget Office and other non-partisan sources. Click the seal to play, then tell us what you learned.

Congress is expected to wait until after the November election to begin negotiations in earnest on avoiding the fiscal cliff (read more about the consequences of going over the cliff in this PDF document from the administration’s Office of Management and Budget). Those negotiations would take place during the lame duck session before new senators and House members are sworn in. But The Wall Street Journal warns that another close election (as we saw with the presidency in 2000 and 2004) and any sorts of legal challenges (like the lawsuit delaying the Democrats’ filibuster-proof 60-seat super-majority in the Senate in 2008), could put the economy at great risk while the incoming political power gets sorted out:

“Here’s the nightmare scenario: The Presidential results can’t be certified in one or two states. Three of four Senate seats are also up in the air. Recounts or court challenges to voter-ID laws mean Congress returns for its lame-duck session uncertain which party will control the White House or Senate in 2013.

“Democrat and Republican leaders become long on rhetoric, short on negotiations.”

>> If you were in charge of the federal budget, what programs and taxes would you keep? Which would you cut? Give the new Budget Hero: Election Edition a try, and then tell us about your experience.

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