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