Budgets as Moral Documents

 For a long time, I've heard the phrase "budgets are moral documents." It means that how we spend our money--whether we're a family or the federal government--shows what's important to us.

With that idea in mind, I've been paying attention to the recent budget debates in Congress. This is not my favorite stuff to think about. I got a C in economics at Yale. I resent having to balance a checkbook. But as a young pastor, with a lot invested in the future implications of decisions that our government makes now--because let's be honest, removing the social safety net will likely result in broad-scale human suffering like this nation hasn't seen since the accomplishments in the early War on Poverty, here are some things I think are worth paying attention to:

1) Good budget information:  without good information, this budget stuff is impossible for mortals to understand. The National Priorities Project has the best breakdown of the federal budget that I've yet seen.  So bookmark it.

2) The basics:  we've all got to understand the basics of this conversation.

• Let's begin with the size of government's annual budget--about $3.5 trillion dollars. I can't comprehend how much money that is. It's a lot. The most important thing to realize is that when politicians are arguing about cuts that are in the "billions" of dollars--they're talking about a relatively small portion of the budget. Those dollars are still meaningful (they matter to the people who receive them), but even budget discussions that focus on revenues or cuts in the low billions will still not address the biggest budget issues...
• Mandatory vs. discretionary spending:  this was my big learning about the budget.  2/3 of all money the government spends every year is "mandatory," which means that existing laws require the government to spend this money. It's not up for debate or discussion. This money is frequently referred to as "entitlement" programs, because once eligibility standards are determined by law, any person who meets those criteria is entitled to the money. Mandatory spending on entitlement programs is where our biggest budget problems lie (by definition, because it's the biggest part of our budget). Specifically, our government spends most of our tax money on two things:  Social Security and Medicare/aid. Those two programs alone make up 80% of all mandatory spending. So if my math is right (and it's not always), about 55% of all government spending (about $2 trillion) is on Social Security or Medicaid. What do we get for that money? Arguably, we get a lot of people who have access to the basics of what they need to survive.
• The deficit and the debt:  governments run deficits when they spend more money in a year than they receive (mostly from taxes); the debt is the accumulation of annual deficits. All of the recent uproar about budgets comes from concern about BOTH deficits and debt. Basically, some people are afraid that the government is borrowing too much money every year (and that if our lenders ever tried to collect on their loans, the US government would be really screwed). By that way of thinking, our budget problems are a national security issue. And because the borrowing trend has grown worse in the recent recession and threatens to increase dramatically because our aging US population will put severe cost pressures on Social Security and Medicare entitlements, some have decided that now is the time to restructure our government's budget in order to eliminate deficits and reduce our debt. A second concern after national security is that our government pays interest on our debt (ie, we pay for the privilege of borrowing money). Those annual payments have reached $250 billion. That's a lot of money! That money could be doing lots of other good things for people, instead of being locked up in interest payments. Those are the two biggest reasons (national security and interest payments) that the deficits and the debt are considered a problem that needs fixing. However, it's important to note that not everyone feels the current deficit/debt issue is an urgent crisis. Some economists argue that the key number with respect to debt is its relative amount against the Gross Domestic Product (GDP). In the 1940s, for example, the debt was a much higher percentage of GDP than it is even today, and the sky didn't fall. This kind of analysis is above my pay grade, but it's worth saying that not everyone believes we're in an emergency--some economists would say the patient is sick, but the solution is behavioral modification, not operating table surgery.

So with all of that said, let's step back for a second and think about what to do now.

Is the deficit and debt a pressing, current moral problem that demands an answer?

1. I think it is. It's basic stewardship to keep a balanced budget. You don't spend more than you make. That's prudent. That's wise. That's right behavior. Democratic and Republican administrations and Congressional majorities are all to blame for the rise. We've been budgeting and spending with the short term (next election cycle) in mind, not budgeting and spending like wise people do--looking toward the future.
2. Our debt is a national security concern, given the crises that have recently afflicted places like Greece and Ireland.  Add to that we're spending a ton of money ever year on interest payments on the debt; that's taxpayer money that doesn't go to concrete goods and services. We're not gaining a competitive advantage with our borrowing (like when you borrow to get a college education--and even the wisdom of that can be argued these days). We're just borrowing to fund expenses that will only grow larger, and doing so without an expected increase in revenues (although you can argue that we're pulling out of the recession, and revenues will increase in the next few years).
3. BUT--and this is a big but (you could tell by the capitals)--because the biggest spending concerns are Social Security and Medicare/aid and both are key programs that provide for basic human welfare, this process of re-framing our national budget has grave moral implications. Have you ever spent time with a senior who lives on social security and medicare? You know these programs literally keep people alive. Therefore, cutting them is a profoundly challenging moral dilemma. Basically, if you want to fix the debt, you're talking about reducing government programs that real, flesh-and-blood people currently depend upon.

So, what should we do to address the problem?

That's where I'll begin tomorrow--looking specifically at Rep. Paul Ryan's plan, and its alternatives.