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Is the Federal Budget a Moral Document?

by Rebecca Sager, ASA Congressional Fellow

It is simply immoral for this government to continue to mortgage our children’s futures through policies that lead only to growing deficits and deeper national debt. Tomorrow, we will strike a strong blow for fiscal sanity.
—Rep. Steny Hoyer, House Majority Leader

A recent New York Times article reported on new data about the widening income gap. According to economists Emmanuel Saez and Thomas Piketty, “The top 1 percent of Americans— those with incomes that year of more than $348,000—are receiving their largest share of national income since 1928.”1 In other words, the richest in America are now the richest they have ever been since immediately before the Great Depression. During the same week that this report was released, the U.S. House of Representatives passed its federal budget resolution for FY 2008, determining how much appropriating committees can spend in 2008. While many would consider the budget a purely fiscal document, there has been a renewed commitment on the part of some Democrats on Capitol Hill to think of the budget as more than just fiscal policy, but as a “moral” document that defines our national priorities through the investments made.

In the current 110th Congress, there were four budgets offered in the House for FY 2008. The Democrats introduced the Majority Budget, which focused on changing spending priorities and letting the tax cuts implemented in 2001 and 2003 expire. In addition to the Majority Budget, alternative budgets are offered on the floor of Congress: the Republican Caucus Budget, the Progressive Caucus Budget, and the Congressional Black Caucus (CBC) Budget. All four budgets in the House were designed to illustrate to the American people differences in how the government could spend its money and raise revenue. While it is unlikely that they will be adopted, their influence is reflected in the majority budget, which often takes into consideration the proposals made in these other budgets.

The Budget Process

As an ASA Congressional Fellow, I work in the Office of Congressman Bobby Scott who sits on the House Budget Committee and is also the Chair of the Congressional Black Caucus’s Budget Task Force. During my fellowship, I have become involved in both the CBC budget and Rep. Scott’s work on the House Budget Committee. Through this process, I witnessed how the budget is perceived as both a political and moral document; how we raise revenue, and how we spend that revenue, reflects the nation’s fiscal priorities.

In creating any congressional budget, there are two crucial aspects that must be reconciled. First, how do we raise the money to pay for government expenses? Second, how do we choose to spend the money we raised? How both of these are laid out in the federal budget points to what political leaders see as the top priorities for the nation at the time. In 2000, at the end of Clinton’s presidency, there was a budget surplus of $5.6 trillion. However, in the last six years of a Republican-controlled Congress and with President Bush in office, we have a $2.8-trillion budget deficit. This change in our nation’s fiscal security is due to a significant shift in both our spending priorities as well as how we raise revenue.

There are two main reasons for this change. First, under Republican leadership, in 2001 and 2003, a significant tax cut package was passed. Seventy percent of these cuts went to people with incomes in the top two income tax brackets, and averaged $103,000 a year to people with incomes over $1 million dollars. In comparison, the average American making $20,000 to $50,000 received only $704 a year. Additionally, increases in spending have resulted in an expanding national debt and its resulting interest payments, costing important programs valuable resources. For example, interest on the national debt will cost almost $300 billion in 2008 alone, enough to fund State Children’s Health Insurance (which provides health insurance to all low-income children) for the next six years five times over.

Black Caucus Budget

Contrary to past Republican budgets, as well as the current budget offered by the President, the CBC argues that the above problems can be remedied by significantly changing how we view the budget and federal spending. In its FY 2008 budget, the CBC priorities for where we get and how we spend our money focused on children’s health, education, and veterans benefits, among other priorities. In her statement on the CBC Budget, Congresswoman Barbara Lee (D-CA), First Vice Chair of the CBC, said, “A budget is a profound statement of national priorities, and in terms of balancing fiscal responsibility with an obligation to help all Americans to realize the American dream, the CBC budget is truly a moral document.”

While praising the Democratic budget, the CBC believes that its budget does a better job of meeting the needs of the American people while remaining fiscally responsible. According to Rep. Scott, “The CBC’s budget makes difficult choices. It chooses to fund programs and services important to the American people rather than provide tax cuts to those who need it least.” By repealing some of the tax cuts implemented under the Republican administration that primarily impact the portion of a household income over $200,000, the CBC budget generates revenue for much needed programs and services such as health care for all children in the United States, education and job training programs, veterans benefits and services, and homeland security. Even after funding these priorities, the CBC budget signifi- cantly reduces the deficit, and, in fact, reaches surplus in FY 2012, therefore saving money by reducing the national debt.

In comparison, the President’s budget continues tax cuts for the wealthiest Americans, and funds these cuts by borrowing $300 billion from foreign investors, while cutting funding from important programs in education, health care, and the environment. Finally, unlike the CBC budget, the President’s budget results in an overall budget deficit of $31 billion in FY 2012. The CBC budget failed by a vote of 115 to 312.

What Are Our Priorities?

As a nation, we often have to ask ourselves what are our priorities? In the New York Times article mentioned above on the U.S. income gap, researchers also found that per person, the top one percent of the American population earns 440 times the income as the average person in the bottom half earned, nearly double the gap in 1980. Why care? Income inequality has been demonstrated to influence rates of economic growth, health care, crime, and political conflict.

How does this relate to the budget process? The budget process reflects our investment priorities and what they should be. For example, are we going to use the budget to increase the living standard for all or only for a privileged few? The Majority Budget begins to change our national priorities, and moves toward reducing inequality. The Democratic budget passed in the House 216 to 210. As of this writing, the Senate passed its own version of the budget and is expected to be sent to the President this spring.

1 Johnson, David Cay. “Income Gap Is Widening, Data Shows.” March 29, 2007, Section C, Page 1, Column 6.