Send up a flare! The 2011 United States federal budget has sprung some leaks in
the midst of a storm. Not sure there's enough money for life rafts! Forget
women and children first!
Buffeted by economic hard times, the 2,585-page, US$3.8 trillion document is
taking on water, though this won’t be obvious to you if you're reading the
mainstream media. Let's start with the absolute basics: 59% of the budget's
spending is dedicated to
mandatory programs such as Medicaid, Medicare, unemployment insurance, Social
Security, and now Pell Grants [1]; 34% is to be spent on "discretionary
programs", including education, transportation, housing, and the military; 7%
will be used to service the national debt.
A serious look at this budget document reveals some "leaks" - two in actual
spending practices and two in the basic assumptions that undergird the budget
itself. Ship-shape as it may look on the surface, this is a budget perilously
close to an iceberg, and it's not clear whether the captain of the ship will
heed the obvious warning signs.
Whose security is this anyway?
In his State of the Union Address, given several days before the 2011 budget
was released, President Barack Obama announced a three-year freeze on
"non-security discretionary spending". This was meant as a gesture toward
paying down the looming national debt, but it should also be considered an
early warning sign for leak number one. After all, the president exempted all
national-security-related spending from the cutting process.
Practically speaking, according to the National Priorities Project (NPP),
national security spending makes up about 67% of that discretionary 34% slice
of the budget. In 2011, that will include an as-yet-untouchable $737 billion
for the Pentagon alone.
Within the context of the total budget, then, so-called non-security
discretionary spending represents a mere 11% of proposed 2011 spending. In
other words, Obama's present plans to chip away at the debt involve leaving 89%
of the budget untouched. Only the $370 billion going to myriad domestic social
programs will be on the chopping block.
What's in that $370 billion? Well, for starters, programs that focus on the
environment, energy, and science. In the 2011 budget, these categories combined
are projected to receive $79 billion or 6% of total domestic discretionary
spending. Though each of these areas could actually use a significant boost in
funds, that's obviously not in the cards, and this will translate into less
money at the state level. New York, for example, is projected to receive $247
million in home-energy assistance for low-income folks, down more than $230
million from 2010. These funds mean an energy safety net for our communities,
and also warmth and jobs in a cold winter, which looks like "security" to most
of us, no matter what our captain says.
Asking for disproportionate cuts and efficiencies in programs in only 11% of
the overall budget might perhaps be slightly easier to stomach if military
spending wasn't allowed relatively free rein in 2011 (and thereafter). The NPP
estimates, in fact, that aggregated increases in military spending over the
next decade will exceed $500 billion, drowning twice-over the projected $250
billion in non-security discretionary savings from the president's cuts over
the same time period. Consider this visible unwillingness to control
military-related spending leak two in our budgetary Titanic.
By now, danger flags should be going up in profusion because the second leak is
so familiar, so George W Bush. With each new bit of information, in fact, it
sounds more and more like the same old song, the last guy's tune. It's clear
that, as soon as the stimulus bump wears off later this year, we're in danger
of falling back into exactly the same more-money-for-the-military,
less-federal-aid-to-the-states rut we've been in for years, despite strong
statements from both Obama and Defense Secretary Robert Gates decrying Pentagon
waste.
Speaking of waste, the Department of Defense is currently carrying
weapons-program cost overruns for 96 of its major weapons programs totaling
$295 billion, which alone are guaranteed to wipe out any proposed savings from
Obama's non-security discretionary freeze, with $45 billion to spare. That's
only to be expected, since neither the Pentagon nor any of the armed services
have ever been able to pass a proper audit. Ever.
If they had, what would have become of the C-17, the Air Force's giant cargo
plane? With a price tag now approaching $330 million per plane and a total
program cost of well over $65 billion, the C-17, produced by weapons-maker
Boeing, has miraculously evaded every attempt to squash it. In fact, congress
even included $2.5 billion in the 2010 budget for 10 C-17s that the Pentagon
hadn't requested.
Keep in mind that $2.5 billion is a lot of money, especially when cuts to
domestic spending are threatened. It could, for instance, provide an estimated
141,681 children and adults with health care for one year and pay the salaries
of 6,138 public safety officers, 4,649 music and art teachers, and 4,568
elementary school teachers for that same year. Having done that, it could still
fund 22,610 scholarships for university students, provide 46,130 students the
maximum Pell Grant of $5,550 for the college of their choice, allow for the
building of 1,877 affordable housing units, and provide 382,879 homes with
renewable electricity - again for that same year - and enough money would be
left over to carve out 29,630 free Head Start places for kids. [1] That's for
10 giant transport planes that the military isn't even asking for.
Domestic-spending freeze proponents demand that our $13 trillion national debt,
accumulated over seven decades, be turned back, starting now. Critics of
Obama's freeze remind us that, while the C-17 flourishes, cutting into that
domestic 11% is like trying to get blood from a stone. They argue that what we
need in recessionary times is an infusion of strategic domestic spending. They
tend to cite Mark Zandi, chief economist for Moody's Economy.com, who has noted
that, for every dollar in stimulus aid directed toward the states, $1.40
returns to the economy, while every dollar invested in infrastructure spending
yields $1.60.
Freeze critics are acutely aware that, by December 31, 2010, most of the
American Recovery and Reinvestment Act (ARRA), that Obama stimulus package,
will expire, and states will face a remarkably bleak future. By then, they will
also have spent the bulk of their education-relief funds, even as they grapple
with a projected 48-state 2011 budget gap of $180 billion. Last year, despite
the infusion of stimulus money, the same 48 states were already experiencing
significant budget gaps and so cut a cumulative $194 billion or 28% of their
total 2010 budgets.
Having already imposed deep program cuts, governors in almost every state will
have to make even more excruciating choices before July 1, the beginning of
their next fiscal year. In Massachusetts, officials are considering eliminating
funding for a program providing housing vouchers to homeless families.
California is facing $1.5 billion in reductions to kindergarten through 12th
grade education and community college funding, while New York State may have to
reduce payments to health-care providers by $400 million.
On the eve of the annual gathering of governors in Washington DC, Ray
Scheppach, executive director of the National Governors Association, told a
Washington Post columnist that he anticipates states needing to do far more
than just institute program cuts, layoffs, and benefit cuts. Governors will
have to permanently sell off assets like roads and office buildings, or
implement a host of other previously "off-limits" changes.
Afloat in an ever harsher world
Having looked at two obvious leaks in the upper hull of our budgetary ship of
state, it's time to move deep underwater and examine the weak spots in two of
the basic assumptions that undergird the new budget. The first deals with an
issue on everyone's mind: unemployment.
The 2011 budget numbers are based on a crucial projection: just where the
unemployment rate will be in 2012. Revenues available at the federal and state
levels will depend, in part, on how many people go back to work and once again
begin paying taxes on their wages. For the pending and projected federal
budgets to have a shot at panning out, unemployment must decline, as the budget
predicts it will, from the present official rate of 9.7% to 8.5% by 2012. That
doesn't sound like much of a drop, especially when Americans are in job pain.
But there's a strong likelihood that even this goal is unattainable.
In reality, the US needs to generate an estimated 1.5 million new jobs each
year simply to keep pace with the arrival of newcomers on the job market.
That's before we talk about knocking down the present staggering unemployment
rate. In this case, however, one set of budget projections (that three-year
domestic spending freeze) might work against the other (that modest decline in
unemployment). Fewer federal stimulus dollars will be available to offset
onrushing shortfall disasters at the state budgetary level, which means a
potential drop in jobs. And, thanks to that domestic freeze, more pain is in
the offing, with fewer services available, for those out of work. Even if the
new senate jobs bill makes it to the president's desk, it's unlikely to go far
enough to make a real difference. All of this means that an 8.5% unemployment
rate in two years is, at best, an optimistic projection.
Even if that figure were hit, however, Americans still wouldn't be celebrating,
in budgetary terms or otherwise. At 8.5%, we're only back to an unemployment
rate not seen in more than a quarter of a century, and keep in mind that a
one-dimensional unemployment figure can't begin to capture the complexity of
what the Bureau of Labor Statistics describes as "alternate measures of labor
underutilization". In other words, it doesn't count everyone who is
underemployed, employed only part-time, or discouraged and so considered out of
the job market. At 16.5% as of January 2010, this measure tells a very
different story.
Nor does that 8.5% figure capture the disproportionately terrible employment
situation faced by young people or people of color who are distinctly
over-represented on the unemployment rolls. And if you happen to live in
certain metropolitan areas, 50% of you can kiss your chances of a quick
recovery goodbye. According to the projections of a US Conference of Mayors
study titled "US Metro Economics", Dayton, Ohio, is not expected to see a
significant employment bounce until 2015; Hartford, Connecticut, not until
2018, and Detroit, Michigan, not until after 2039.
As Atlantic magazine deputy managing editor Don Peck noted recently, it will be
a long time before we dig ourselves out of this current job crisis. "We are
living through a slow-motion catastrophe," he wrote, "one that could stain our
culture and weaken our nation for many, many years to come."
That projected 8.5% figure and all the projected freezes and cuts that go with
it, don't begin to address this reality. Think of that as leak three.
Then, consider this little tidbit from the 2011 budget, hardly noted or
discussed in the news, even though it has the potential to punch a hole in the
budgetary hull: the document projects a zero percent cost of living adjustment
(COLA) for food stamps through 2019.
To understand just what this means, it's necessary to step back for a moment.
According to the Department of Agriculture (USDA), food-stamp usage is
remarkably widespread and growing. Thirty-six million Americans, including one
out of every four children, are currently on food stamps. An estimated monthly
food stamp benefit for a family of four is $321 (approximately 89 cents per
person per meal), which already falls significantly short of what the USDA
considers a "thrifty" family's grocery receipts, estimated at roughly $513 per
month.
If the COLA for food stamps is frozen over the next eight years, NPP analysts
project a 19% erosion in the buying power of those stamps due to inflation.
This means that, by the end of 2019, a similar family of four, eating at
exactly the same level, would be paying $611 a month for its food, or $100
more, while still receiving that same $321.
In other words, if the 2011 budget and its projections proceed as planned, a
great many Americans will be hungrier and still jobless in a harsher, meaner
world, while what budgetary savings are achieved on the backs of the poorest
Americans will be gobbled up by wars, weapons, and other "security" needs.
Ordinary Americans will largely be left in a sink or swim world and the waters
will be very, very cold.
Tell the radio operator. It's none too soon. Start sending out the signals. SOS
... SOS ... SOS ...
Note
1. Pell Grants provide need-based grants to low-income undergraduate and
certain post-baccalaureate students to promote access to post-secondary
education.
Jo Comerford is the executive director of the National Priorities
Project. Previously, she served as director of programs at the Food Bank of
Western Massachusetts and directed the American Friends Service Committee's
justice and peace-related community organizing efforts in western
Massachusetts.
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