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