Rep. Ferguson: The Big Lie We Tell Ourselves in the Budget Process
The following is Rep. Drew Ferguson’s (GA-3) view on the Congressional budget process. It is posted with permission.
Rep. Ferguson:
“Like many Americans, before I ran for and was elected to Congress, I could not comprehend why our nation’s leaders could not seem to balance the federal budget. Any family or business owner must do this every year, so why was Congress failing?
When I became a member of the Committee on the Budget, I saw firsthand how the Congressional budget and spending process enables Congress to avoid the true drivers of our annual debt and deficit. No matter the party in the majority, the results always seem to be the same.
A budget resolution is essentially a blue print of how we determine our long-term priorities, while the appropriations process determines how those priorities are funded in the short term. Because of our mandatory spending obligations, automatic federal spending not subject to annual oversight, there is no vehicle to resolve our long-term priorities and our short-term necessities. Currently 70% of anticipated revenues must be reserved for mandatory spending programs like Social Security, Medicare and Medicaid. This leaves just 30% of the budget for the rest of our obligations like national defense, highways and education.
Because of this discrepancy, it is impossible to balance the federal budget in one year. Instead, Congress lays out a blueprint that shows the policies required to balance the budget in ten years. This plan can include a combination of cuts, revenue growth and mandatory spending reforms. Often, this is viewed more as a vision than as a concrete policy plan, and year after year, these policies are not enacted.
What we need is the legislation courage to follow through on a realistic policy plan to balance the budget and curb our out of control spending.
To solve this problem, the usual political rhetoric must be put aside if we are to avoid a fiscal crisis. Otherwise, any idea put forth by one side will be vilified by the other and we will find no middle ground. This solution will certainly be difficult and even politically uncomfortable, but the alternative is a string of broken promises and a burden on future generations.
Changing the Congressional budget and spending process is fundamental to addressing the potential fiscal crisis facing America. This is not ultimately a conversation about numbers and money, but one about the Americans who are relying on the commitments we made to them. As a member of the Committee on the Budget, I will continue to urge my colleagues to have the courage to change the tenor of political discourse and take action to keep our promises to the American people.”
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What we need are representatives with the courage to RAISE taxes on the wealthy to make up for all the red ink.
Yes, indypendant, what a brilliant idea—raise taxes on the rich—who already pay a huge share of our taxes. I mean, not like more tax revenue will lead to more spending, right?—certainly it would be used to cut the deficit? I like the old mantra about how the deficit exploded under Reagan because of his tax cuts—funny though, revenues were a lot higher when he left office than when he was sworn in—yet spending increased faster. Not like we can ever cut spending—or even just freeze it for a few years……
I will say that Buffett made this point recently: Since 1982, the total assets held by the Forbes 400 wealthiest Americans has increased 25 fold. In the same time-frame, the GDP of the US has increased roughly 4 fold. Clearly there’s a disconnect.
Add another bracket at $1M, or $5M and you can put it at 48%. The wealthy stay in dollars because we’re the reserve currency, and for too long that cost has been significantly under market.
“Because of our mandatory spending obligations, automatic federal spending not subject to annual oversight, there is no vehicle to resolve our long-term priorities and our short-term necessities.”
At least a couple of errors in this sentence (as in the meaning of “oversight”, and the lack of a vehicle for problem resolution). Those are also inconsistent with the rest of his message. More substantively, is there an actual plan on the budget or the budget process? All I see is “usual political rhetoric.” But at least it’s a warm fuzzy thought designed to momentarily placate somebody.
“Like many Americans, before I ran for and was elected to Congress, I could not comprehend why our nation’s leaders could not seem to balance the federal budget. Any family or business owner must do this every year, so why was Congress failing?
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That line right there tells you that this person lacks even a basic understanding of how our currency even works. Its really depressing that people who are in charge of this are so ignorant.
Again…for the 45th time…THERE IS NO FISCAL CRISIS
We are not placing any burden on our children (other than trying to balance the federal ‘budget’)
We are a sovereign currency nation with a fiat money system where the government is the sole issuer.
We owe all debts in the above currency
The problem is that people like the one mentioned in this article dont understand that the reason people are still hurting while the economy seems to be growing is that congressmen…himself included, have run from their responsibility to spend money. The Fed cant inject money directly into the economy. They can only recapitalize the banks, or as in recent years buy the toxic assets they hold and then write them off…with brand new money out of thin air! Thats great for banks, who it was thought would lend and get currency into the broader market. Well, in the age of computer trading its more profitable not to lend for the most part but play their odds elsewhere (btw…what got us into this mess but, yeah, remove what little regulation is left to make it happen again all the sooner)
It is breathtakingly stupid to even suggest balancing federal spending with some made up fiscal entity. Federal spending isnt budgetable. At least not when you create money out of thin air.
Even if you are one of these debt believers (and not so smart if you are…just suseptible to huge amounts of propaganda), increased spending would lower the deficit by
Increasing the tax base
by employing more people
and increasing monetary velocity.
Every time I read one of these pieces I feel like I am watching a slow motion disaster unfolding.
If Rep. Ferguson would like to be educated on the topic, perhaps he should do some reading other than that generated by the Peterson Hydra