Budget Spending Essay Research Paper Budget SpendingThis

Budget Spending Essay, Research Paper

Budget Spending

This country has been dealing with a budget deficit for many years now. In an attempt to change this, on June 29, Congress voted in favor of HConRes67 that called for a 7-year plan to balance the Federal Budget by the year 2001. This would be done by incorporating $894 billion in spending cuts by 2002, with a projected 7-year tax cut of $245 billion. If this plan were implemented, in the year 2002, the U.S. Government would have the first balanced budget since 1969. Current budget plans are dependent on somewhat unrealistic predictions of avoiding such catastrophes as recession, national disasters, etc., and include minor loopholes. History has shown that every budget agreement that has failed was too loose. One might remember the Gramm-Rudman-Hollings bill that attempted to balance the budget, but left too many exemptions, and was finally abandoned in 1990.

So after a pain-staking trial for GOP Republicans to create, promote, and pass their budget, as promised on campaign trail 94, Clinton rejected the very bill he demanded. This essentially brought the federal budget back to square one. Clinton thought such a demand on Republicans to produce a budget would produce inner-party quarrels and cause the GOP to implode. Instead, they produced a fiscal budget that passed both houses of Congress, only to be deadlocked by a stubborn Democratic President Clinton. Meanwhile, Clinton bounced back with a CBO scored plan with lighter, less risky cuts to politically

sensitive areas like entitlements. Clinton s plan also saved dollars for education and did not include a tax increase, but most cuts would not take effect until he is out of office, in the year 2001. Although Clinton is sometimes criticized for producing a stalemate in budget talks, the White House points out that the debt has gone down since Clinton took office, with unemployment also falling. Republicans are quick to state that Clinton originally increased taxes in 1993 and cut defense programs, but his overall plan was for an increasing budget without deficit reduction.

Startling Facts about the budget:

As of 1996, the national debt was at an all time high of $5 trillion dollars, with interest running at a whopping $250 billion per year. This equals out to an individual responsibility of more than $50,000 per taxpayer. Nearly 90% of that debt has accumulated since 1970, and between 1980 and 1995, the debt grew by 500%. Currently, the debt grows by more than $10,000 per second, and at current rates, our government is about to reach its breaking point. If that s not enough to scare a taxpayer, by 2002, 60% of government spending will be for entitlements, and by 2012, these programs are projected to take up all government revenue. Not only economic development, but also family income is hurt by debt. With the cost of living going up, it becomes harder to find a job. According to the Concord Coalition, real wages peaked in 1973 and have gone down ever since. If the economy grew as fast as it did in 1950, without a debt, the median family income would be $50,000, compared to the present median of $35,000. As of current fiscal year s budget, the United States government spends $1.64 trillion yearly, $500 billion of that, or 1/3 of the total, is for discretionary spending. This discretionary spending is the target for most cuts, and seems to be the easiest to make cuts in. Overall, the difference between the two parties’ budget plans is only $400 billion. This could easily be trimmed by eliminating tax cut and adjusting the consumer price index to reality. Democrats say the GOP plan is too lopsided, and Republicans criticize the Democrat plan for being unrealistic. A study by the Urban Institute shows GOP cuts will be felt mainly by the bottom 1/5 of U.S. population. This should be more equally spread out across income brackets.

The GOP plan:

By fulfilling campaign promises made by freshman Republican Congressmen to cut government spending, the GOP managed to pass a $1.6 trillion budget resolution by a party-line vote, in both houses of Congress. This budget called for major cuts in education, environmental programs, discretionary spending, and the largest of all: entitlements. 70% of the money to balance the budget under the GOP plan would have come from entitlements. This is because entitlement programs currently take up $301 billion a year. Such cuts had already been partially implemented with the GOP cutting overall spending by 9.1% in 1996 alone.

First, in an attempt to stop the projected bankruptcy of Medicare in 2002, Republicans cut $270 billion overall from the program, with hospital reimbursement cuts being the deepest. Although stabilizing the fund is only expected to cost $130-$150 billion over 7 years, the GOP budget would reform the program to run better, and cheaper, by allowing it to grow at 6% yearly, instead of the current 10%. While both parties agree on premium hikes for beneficiaries, this is a touchy subject for the 38.1 million elderly voters on Medicare. Medicaid, another volatile program, would be cut $182 billion under the GOP proposal. This would entail placing a cap on the program s spending, and passing control of it to the individual state governments. For an estimated 39 million low-income people on Medicaid in 1996, the GOP plan cuts the program far more than Clinton s propose