October 15 2012
Don't Look Back
The Treasury announced Fiscal Year (FY) 2012 ended with a deficit of $1.089 trillion. As a result of temporary, last minute budgeting, partisan debates, and the constant looming threat of government shut down – the Congress and the President were only able to lower government spending by $207 billion from 2011.
MarketWatch reports last year’s deficits are 16% lower than the previous year. Are the deficit numbers to be praised? Despite “reductions” in the deficit, we still spent $1.089 trillion of borrowed money. At the same time, we drastically cut discretionary spending while ignoring the three drivers of our debt – Social Security, Medicare, and Defense. Was this a success?
We cannot look back at last year’s deficit as a triumph. Many experts agree at least $4 trillion in deficit reduction is needed in order to maintain stable borrowing and pay our creditors. Yet we can look to the last year as an example of how the next Congress should not move forward:
1. Temporarily funding agencies through continuing resolutions is costly to taxpayers and must be avoided.
Continuing resolutions have ashamedly become the norm. Congress’ duties to fund the federal government responsibly have been procrastinated, neglected, and left agencies using manpower to prepare for shutdown contingency instead of fulfilling their congressionally established duties. This wastes taxpayer dollars and weakens government efforts.
2. Lack of an agreed upon budget lengthens the appropriations process.
Congress failing to agree upon and pass a budget is often a symptom of a much larger problem: when budgets are placed on paper, they reflect long-term fiscal problems that require tough political decisions. Not only are budgets delayed because of political, “who get’s what” games, but because Congress refuses to make themselves vulnerable by placing a solution on paper. If they cannot settle on a budget, how will actual appropriations happen in a timely manner?
3. Partisan games lose friends.
It’s generally believed partisan games are played to win voters. But I believe voters are getting tired of Washington’s antics and will vote accordingly. Americans consistently link the economy and government spending as the most important issues facing America throughout this election year – yet Congress’ lack of politicking has lost the trust of voters. As such, I wager a bet you will see backlash at the polls.
4. Cutting discretionary spending is not enough.
Congress has cut discretionary spending over and over again. Indeed, it has received the majority of cuts placed last year. Yet Medicare, Social Security, and Defense, which make up 52 percent of federal spending, have yet to receive any meaningful reforms. As the drivers of federal spending, they must be included in any deficit reduction plan.
5. Tax code simplification should be a part of any solution.
Simplifying the tax code can allow businesses and individuals greater certainty regarding their financial capabilities and spur economic growth. As the economy grows, so does tax revenue, which will help ease our fiscal situation.
Seeing the failures of the last year, let’s require more of Congress this time around.