The White House budget proposal for fiscal year 2012 (Oct 1,
2011 to Sept 30, 2012) came out recently, spawning comments from every
imaginable corner. So what does it mean? Let’s back away from the frenzy and
look at the process.
The President’s budget is really the first move in a
negotiation that the White House uses to publicize its goals and hopefully get
public and congressional support. Call it a proposal of what the president
wants to accomplish, what it would cost, and how we will pay.
Will this be the actual budget next year, and how do we pass
a budget? Well, it takes money to run a government, and all revenue raising laws
must start in the House of Representatives according to our constitution. In
reality, Congress will take what the president proposes and keep or discard
what they will. Finally, a budget that can pass the House and the Senate and be
signed into law by the president is the goal.
Does this mean we always pass a budget? No. In fact, 2011 never
brought a budget agreement, and the government is currently operating under
temporary measures. A new resolution must be approved by March 4 or the
government will not be able to act. Expect this approval, but expect it to be
temporary as debate continues. So really the president’s budget is like a serve
in tennis, so expect a return. Also, appreciate that the budget will frame
areas of debate about our current situation, the government’s role and the will
of the country to make prudent decisions.
Let’s look at what this particular budget does and doesn’t
do. ..
It sets out a number of proposed cuts in the area of
discretionary spending. Most lawmakers in Washington recognize that our
spending and deficits need to be addressed, but how? The President’s budget
only addresses cuts to the 36% of the budget that is not already obligated. The
President’s proposed budget addresses areas like defense, education, foreign aid,
the space program, research, highways and general infrastructure. It does not
address the entitlement programs, which include Social Security, Medicare and
Medicaid. Many Republicans call the failure of this budget to address the
entitlement programs a failure of leadership. For its part, the White House
agrees that the programs must be addressed, but believes the issue can best be
addressed in closed door sessions. Citing prior failures of published proposals,
the White House prefers to address this issue in private sessions with
Congress.
It is difficult to imagine meaningful and responsible
progress without soon addressing these programs that currently make up 64% of
our spending. The bipartisan debt commission gave some solutions. Let’s
encourage our elected officials to take a serious look at this issue sooner
rather than later. Now is the time.