Wednesday, April 06, 2011

The Government Budget & Government Borrowing

Congressman Ryan unveiled his proposed U.S. budget yesterday, and of course there has been much recent talk in politics about taxing, spending, budgets, deficits, and debt.

There is even a lot of political theater these days over whether to continue to fund government in the current fiscal year since the last Congress failed to pass a budget. Well, I write "failed," but I suspect the people in charge of the last Congress, for whatever reasons, may simply have chosen not to pass a budget.

It seems Congressman Ryan is trying to lead Congressional budget choices in the direction of balancing the U.S. government budget some time in the future. I suppose that may seem a worthy goal for the government's future, but I'm wondering what sense it makes for government to routinely run a deficit?

When the President and members of Congress choose to run a government deficit it means that the President and members of Congress are choosing to spend more in any year than the government takes in through taxation in that year. This means the President and members of Congress are choosing to borrow at least some of the money they spend "on our behalf."

Well, how often have the President and members of Congress chosen to borrow money? When the President and members of Congress choose to borrow money, how much do they borrow?

To answer these questions I went to the web page for the President's annual budget, and I downloaded the historical tables in spreadsheet form. It turns out that in only 6 years in the last 50 years have the President and members of Congress chosen not to borrow money to spend on government projects and activities. It seems rather routine for the President and members of Congress to borrow money for the things they do "on our behalf."

To get a sense of how much the President and members of Congress choose to borrow when they borrow I used the spreadsheets to calculate how many cents of every dollar spent by the President and members of Congress in any year come from borrowed money. In 1980 for example the President and members of Congress borrowed 20 cents of every dollar they spent, and back in 1970 they borrowed only 1 cent of every dollar they spent.

The two largest years for borrowing by the President and members of Congress over all of the last half century have come in the 2009 and 2010 budget years. In 2009 the President and members of Congress borrowed 40 cents for every dollar they spent that year, and in 2010 they borrowed 42 cents on every dollar they spent. The next largest amount borrowed was in 1983 when the President and members of Congress borrowed 26 cents on every dollar they spent.

In the current budget year the President offered to Congress a budget proposal that apparently proposed borrowing 33 cents for every dollar they would spend in the 2011 budget year. I see from today's editorial in Investor's Business Daily that the President and members of Congress are finding it difficult to agree to cutting $33 billion from the 2011 budget. In other words, the President and members of Congress are arguing over whether they should borrow 33 cents or only 32 cents on every dollar they spend during the 2011 budget year. No, I'm not kidding.

Once again I wonder why the President and members of Congress want to borrow money at all, much less 40 cents or even 30 cents for every dollar they spend on our behalf. I understand Congressman Ryan, as well as many other republican members of the House, are proposing that the U.S. budget return to 2008 spending levels, and this is like proposing to return to a year in which the President and members of Congress chose to only borrow 15 cents on every dollar they spent that year. Why not propose a return to 1970 when the President and members of Congress chose to only borrow one penny for every dollar they spent?

I don't think it is easy to pick out the specific things the President and members of Congress borrow money for. So, I think it is acceptable to conceptually frame their choices as borrowing money for every government policy, action, and activity. Recently Senate Majority Leader Reid appeared on YouTube lamenting the idea that some members of Congress had proposed no longer funding a government program that subsidized the annual Cowboy Poetry Festival in Elko Nevada.



No, I'm not kidding. The President and members of Congress borrowed about 40 cents in 2009 and 2010 for every dollar they spent on this Cowboy Poetry Festival. Imagine that. I recently borrowed money to purchase a home, and the President and members of Congress are borrowing 40% of the money they spend to fund this Cowboy Poetry Festival.

Honestly, I can't imagine how anyone could justify using Congress's constitutional power to tax to gain the money to fund a Cowboy poetry festival, much less borrow 40% of the money from our future incomes and from the future incomes of our kids to fund such an activity. Of course, I even suspect that such programs as these should be declared unconstitutional because I simply can't find "Congress shall have the power to subsidize Cowboy Poetry Festivals" in the list of enumerated powers in Article 1, Section 8 of our Constitution.

But, then again, I might change my tune if I thought, as Senator Reid seems to think, that ending the government program in question would mean that the tens of thousands of people who attend the Cowboy Poetry Festival each year "would not exist." Maybe the President and members of Congress should borrow money so that these people can continue to live, eh?

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