Ending budget misconceptions

Last Monday, President Obama unveiled the 2011 federal budget.The budget process is important. It allocates huge sums of money to a broad spectrum of federal programs and agencies. It also gets less mainstream attention than, say, the Obama family dog.A lot of the apathy is probably due to the complexity of the process.But it’s important and, if you stamp out a few common confusions, understanding it is very manageable. So let’s tackle them.A common point of confusion is the debt-versus-deficit distinction. It’s actually very simple — the federal deficit is the yearly imbalance in the government’s funds.When the government spends more than it takes in, it has a deficit.The federal debt, however, snowballs across years of budget deficits. It’s the collection of all the debt that the government hasn’t fully paid back.Another distinction that confuses people is the difference between discretionary and mandatory spending. Mandatory spending is spending that has been explicitly ordered by law. In practice, this amounts to Social Security, Medicare, Medicaid and other entitlements and debt payments. This is the bigger portion of the budget — more than 60 percent of it. The other part is discretionary. This is the part we’re dealing with. The president and the Office of Management and Budget annually pull together information from across the federal bureaucracy into a neat, hefty package that gets sent to Congress to work toward confirmation.  This part of the budget includes programs within the federal departments and agencies. The president and Congress have increased discretion with its allotment.The discretionary part is dominated by military spending. If you’ve ever seen those pie-chart bumper stickers about military spending, now you know why they make America look like a fascist police state — they only show the discretionary budget.Another misconception — here’s the opinionated part — has to do with the actual politics.It’s conventional wisdom that Republicans are good for America’s fiscal strength. History — and the facts — suggest otherwise.For decades after World War II, America’s budget remained fairly balanced. Enter Ronald Reagan.Reagan liked tax cuts, but he didn’t like tackling any major parts of the budget — he also loved him some military spending.So, as would be expected, the debt and deficit trends got smacked off their balanced course.Bill Clinton — albeit with a Republican Congress — managed to get us back to a budget surplus for a short while.  Enter George W. Bush, exit budget surplus.Unfunded wars, large tax cuts and Medicare Part D — not a recipe for fiscal strength.The common conservative rebuttal is essentially, “well they were bad, but Obama’s much worse.”Obama tried to factually debunk that theory during his State of the Union address. The Republicans literally laughed at him. He said, “just stating the facts.” They laughed again.Ah, willful ignorance.Yes, the deficit has recently spiked to an unsustainable level, but when it’s actually broken down, Obama’s absolutely right. The recession is the primary contributor. Economic downturns hurt on both ends. They decrease tax revenue and increase spending on welfare-related programs. The Bush era tax cuts hurt much more than anything Obama’s done.Also, it’s important to realize that the Democrats’ health care proposal actually reduced the deficit. In contrast, the Republicans produced the totally unfunded Medicare Part D.    Recently, Republicans killed a proposed bi-partisan committee on the deficit.Democrats may be tax-and-spenders, but Republicans are just plain old spenders. People may disagree on which approach they prefer, but political reality is political reality. Those preconceived notions of Republican responsibility may just be the most damaging confusions of all.