Page Two: Budgetary Fantasies

Given the current political atmosphere, it is hard to tell who is more out of touch with reality: a good chunk of the American people or the media pundits who analyze the public's political behavior in order to explain what those actions mean.

Or at least what it is the pundits think they mean. The latter, in assessing the former, have lent a far greater depth of meaning to the tea party movement as well as imbued the recent elections with far more ideological motivation than either merits. Since political pundits' partisan prejudices seem to be the most important factor in their analyses, they offer up a widely disparate range of suggested meanings, from insisting that the vote was against those in power regardless of party or that there is a right-wing resurgence to maintaining it was a repudiation of Democrats in general and of President Obama in specific or that it was a demand for lower taxes and smaller government ... and so on.

It seems far more likely that the recent elections evidenced neither great ideological depth nor votes based on long-held, rock-solid political beliefs. Instead, it seems more reasonable that the major motivating factor was the short-attention-span frustration of people who are angry at the government. Sometimes this anger is due to very specific actions, but often it represents a far more general dissatisfaction. In their indignation and even genuine anger, they've ignored any positive contributions from the government in addition to their own roles and responsibilities as citizens. Ordinarily I would shy away from such generalizations, but there is no other way to talk clearly about the current state of the nation.

Let me put this out there right away: As I've said before, I think the overwhelming problem is not overtaxation but that most U.S. citizens don't want to pay for the quality of government that they expect and require.

They deny, of course, that they want anything from the government. What they insist that they want, in fact, is less government – much less government. They want to cut the budgetary fat and stop the corruption and expensive inefficiencies that plague every federal program. The worst indignity that these taxpayers face is that honest, hardworking American citizens are heavily taxed in order for the government to support their lazy, unproductive, welfare-cheating neighbors. Not only that, but they claim that the government treats illegal immigrants better than American citizens.

The reality is very different. Many who are dependent on the federal government either don't realize it or don't think about it. The government serves all of us in one way or another, even if we aggressively deny it. Government activities include everything from a broad range of safety regulations, such as those ensuring the country's food supply is healthy, to defense and transportation. In the recent indignant outcry over Obama's health care legislation, it was not uncommon to find out that one enraged protester was on government disability while another was carried on her husband's government health care coverage.

Any serious budget-cutting is going to hurt, because there is not a lot of loose flotsam and jetsam to be easily skimmed. It is easy to talk about cutting government spending, but actually finding cuts – especially ones that yield substantial savings – is not easy at all. Further, it can be guaranteed that some of the most militant anti-big-government activists will be unimaginably outraged when cuts that are made end up directly or indirectly affecting them.

During media coverage of the recent campaigns, any number of Republican members of Congress were asked how they reconciled their demand for cutting government spending with their insistence on extending the Bush tax cuts for all taxpayers. A common question was along the lines of: "What specific federal programs would you cut to pay for keeping those tax cuts in place, estimated at around $700 billion over 10 years for the richest Americans?"

Almost no one answered that question directly. Rather than face the difficult question of what to cut, many instead attacked the premise: that these tax cuts were awkwardly large, especially for the highest-earning Americans. Arguments frequently insisted that it would not be "reinstating tax cuts," but since the lower rates are currently in effect, it would instead be "raising taxes."

Without embarrassment, many cited the most bogus arguments in favor of keeping the cuts. The first was the typical misleading feint – eliminating the tax cuts would do the most damage to small businesses. As William G. Gale wrote in the Aug. 1 Washington Post: "As Sen. Orrin Hatch (R-Utah) recently put it, allowing the cuts to lapse would amount to 'a job-killing tax hike on small business during tough economic times.'

"This claim is misleading. If, as proposed, the Bush tax cuts are allowed to expire for the highest earners, the vast majority of small businesses will be unaffected. Less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets – individuals earning more than about $170,000 a year and families earning more than about $210,000 a year.

"And just as most small businesses aren't owned by people in the top income brackets, most people in the top income brackets don't rely mainly on small-business income."

The other argument is that getting rid of the cuts would effectively raise taxes, which would hurt the already weak economy. During most of the Bush administration, many of the long-offered Republican bromides for the health of the economy were put into practice. These included tax cuts for the very wealthy, less regulation, and even less enforcement of existing regulation. The driving idea was the less government is involved in the economy, the better it is for everyone. Unfortunately no one told the economy – because despite many Republican legislative triumphs, it tanked in a major way during the last two years of the Bush administration.

In the two-step shuffle over tax cuts, usually specific cuts aren't mentioned, but there are two notable exceptions – congressional earmarks and federal farm subsidies.

The swirling controversy over earmarks is low-budget political theatre. Some of those earmarks do represent hard-to-defend projects or disguised political paybacks that legislators are trying to slip through. Many of the earmarked projects, however, would still get fully funded even without them; the "earmarks" are simply spending that has already been approved (e.g., for roads) and is being directed by legislators to specific projects. Keep in mind that all earmarks do not represent unnecessary spending; often they're in place simply to get the legislation passed quickly. Calling me all kinds of names while insisting every earmarked dollar emanates from the most corrupt motives doesn't actually change much and saves essentially no money.

Government farm subsidies are nearly impossible to defend in any imaginable way.

Even granting all this, in 2009, earmarks were about $15.3 billion and farm subsidies were about $15.4 billion. Combined, that's a bit more than $30 billion – or roughly 1% of the federal budget.

The 2011 federal budget is three trillion eight hundred billion dollars ($3,800,000,000,000).

Most of that goes to entitlements: 20% to Social Security, 19% to Medicaid, another 17% in mandatory spending, and 4% for TARP; 5% goes to pay interest.

The 2011 federal budget kept discretionary funding flat from the 2010 budget. Discretionary spending accounts for only about 37% or 38% of the overall budget. In 2011 that will add up to about one trillion four hundred billion dollars ($1,400,000,000,000).

This amount, however, includes the military/defense/security budget, which at $895 billion is far more than half of all discretionary funding. Whereas overall discretionary funding remained flat, the budget for military/security was increased. Nonsecurity spending had been about $553 billion in 2010, but that amount was cut to $520 billion. The most significant portions of that funding go to health and human services ($84 billion), transportation ($76 billion), education ($46.8 billion), housing and urban development ($43.6 billion), and agriculture ($25 billion).

Discretionary nondefense spending makes for good sensational headlines, but there really is precious little of it being done.

The mandatory spending is not for education or extensive social programs. It is money for you and me, for our families and our children. Money paid in over the years. During the Bush years, much of the budget that went to the social safety net was slashed. Yet the amount was relatively insignificant, neither affecting the growing debt nor helping balance the budget. The cutting was a political gesture by Republicans ideologically opposed to social programs.

In sum, overall discussion over taxation, the budget, and the deficit is a shadow-puppet play in which those complaining the loudest deny any culpability for the problem. The out-of-control spending by Republicans during the Bush administration, the still-costly involvement in two wars, the overly generous tax cuts, as well as strong pro-business policies, long crucial planks in the Republican platform – that left the economy devastated – are almost never brought up. Sorry, but the current horrendous deficit and accompanying tax burden is at least partially due to the way more-conservative, often Republican, citizens of the republic voted during the last decade. Blaming it all on liberals and/or illegal aliens is really just fantasy.