The Power of the Purse

Federal Budgets and Congressional Spending

Budgeting Process

Constitution: no money can be drawn from the Treasury except through appropriation laws

President sends budget to Congress Recommendations and priorities

House and Senate pass budget resolutions Set spending limits

Appropriations Committees and Subcommittees review and draft individual appropriations bills 12 subcommittees, 12 appropriation bills

Bills often combined into omnibus bills Congress votes and sends budget to President

Money In…

In fiscal year 2008, the Federal Government collected $2.5 trillion Individual income taxes: 45% Social Security taxes: 36% Corporate income taxes: 12% Excise, Sales, Use taxes: 3% Other: 4%

…And Money Out

In fiscal year 2008, the Federal Government spent $2.979 trillion How much was the 2008 deficit? Since 1970, the US has run deficits all but four years

(1998-2001)

Total US debt is $10.6 trillion (as of 1/09) Your personal share is approx. $30,000

Where does the government get more money? Borrow Print more Raise taxes and/or lower spending

Where does it all go?

Mandatory spending accounts for over 60% of federal spending

Mandatory Spending Social Security and Medicare

(entitlements) Congressional salaries Interest on the national debt

Proportion of budget going to mandatory spending has increased on average

Where does it all go?

Discretionary spending accounts for around 40% of federal spending

Discretionary Spending Defense Environment Science and Technology Transportation Education

In Your Perfect World…

National Defense Administration of

Justice Veterans’ Benefits &

Services Income Security Health Science, Space &

Technology

Education, Training, Employment & Social Services

Transportation Natural Resources &

Environment International Affairs Other (Energy,

Agriculture, Community Development etc.)

In the Real World…

National Defense: 59% Administration of

Justice: 4% Veterans’ Benefits &

Services: 4% Income Security: 5% Health: 5% Science, Space &

Technology: 2%

Education, Training, Employment & Social Services: 7%

Transportation: 2% Natural Resources &

Environment: 3% International Affairs:

4% Other: 5%

In the Real World…

Earmarks

Earmark refers to any element of a spending bill that allocates money for a very specific thing Project Location Institution

Ex. Congress gives $1 million to the National Park Service—not an earmark

Ex. Congress gives $1 million to the National Park Service for the restoration and preservation of Yellowstone Lodge—an earmark

Oink! Oink!

Pork/Pork-barrel spending Earmark secured by a Congressperson to bring

money to home state or district Economic or service benefits are concentrated,

but costs are spread among all taxpayers Requested by only one chamber Not specifically authorized Not competitively awarded Not requested by the President Greatly exceeds previous years’ funding Not subject of hearings Serves only a local or special interest

Earmarks and Pork in Reality

In 2008, earmarks totaled $18.9 billion Less than 2 % of

total budget Approximately 10 %

of budget deficit

Pork is part of Congressional representation

Public Approval

Public approval of Congress is only 30% Up 4 points over last

month 68% of Americans

believe “pork” is unacceptable

Only 15% believe the earmark system ought to be left as it is

Congressional Re-election

In 2004, 99% of sitting members of the House of Representatives were re-elected; 96% of Senators running were re-elected

Members of Congress are re-elected because constituents are often not provided with a compelling reason to vote for someone else Ex. Former Senator Ted Stevens

Appointed to Senate in 1968; served 40 years Received at least 66% of the vote until 2008 Known for bringing home the bacon Found guilty of 7 corruption charges Lost by only 3,724 votes