 |
 |
| Login | Register |
Federal Budget Deficits - Does our country’s budgetary process need fixing?by Robert ParkerThe looming Baby BoomersThe early 1990s had been marked by ever increasing concerns over unbalanced budgets and increasing national debt in the face of the looming retirement years of Baby Boomers and the expected subsequent drain on pension funds and Social Security. In fiscal year 1998, however, the federal budget (not the national debt) crossed over from deficit to surplus for the first time in nearly three decades. Attributed my many economists to the strong tax revenue generated by the then-booming economy, plus significantly reduced defense expenditures, the surplus looked set to run through budgets for many years.
Sudden reversalThen, along came the economic downturn, the dot-com debacle, and 9/11. The new Bush administration promised, and implemented, tax cuts and a tax rebate in 2003, while simultaneously embarking on a massive increase in expenditures for the War on Terrorism, primarily to put armed forces into action in Afghanistan, then Iraq. Current budget wrangling now projects this fiscal year's budget to be some $500 billion in the red, as various economists argue over the actual number. Meanwhile, the Baby Boomer bulge in the pipeline - with all its associated expenses - still lies before us.
Constitutional amendment and other proposalsA proposed balanced budget constitutional amendment was fought over in Congress throughout the mid-1990s. It finally passed the House of Representatives, but failed to pass in the Senate in 1997. Since that time talk of such an amendment has mostly been quiet, but the reality of the latest budget and deficit figures has begun to cause some stirring again. Another idea debated before, and now again, is a so-called balanced budget veto, which would allow the President to strike items from a budget only in fiscal years following those in which a deficit budget was run. Both ideas focus on keeping the yearly budget balanced or in surplus with current-year revenues.
Many aspects to considerCritics of such tools argue against them on several grounds: Much research seems to support the idea that moderate budget deficits have historically resulted in as sound an economy as balanced or surplus budgets, especially when the economy is growing. Constitutional amendments can be difficult, expensive and time-consuming things to get passed. They could also give our courts the authority to make tax decisions in some cases - taking the responsibility away from the legislative branch. Vetoes can become partisan political tools for abuse. The national debt as a percentage of GDP is a very small fraction. Real world budgets - such as the family budget - are often spread out over many years, with some years in the black and some in the red as finances dictate. And many, of course, argue that it's simply a matter of the political will - or lack of it - to control spending in Congress that needs to be addressed.
For more information on Federal Budget Deficits , check
out these links:
|
| Issues | Weblog | Forums | Bulletins |  |