Wednesday, March 5th, 2008
As I suspected, the Presidential election is occupying much of the media attention now and much of the attention of members of Congress as well. Furthermore, the controlling Democrats are generally of the belief that their candidate (whoever that is) will win in November and then, if they hold Congress, they can do what they want without having to make deals with President Bush. So, I expect much action on things like energy, immigration, health care, etc to be held until at least after November and probably next year. There are a few things scheduled to expire this year, like farm subsidies, on which some action is expected. But, there is still no agreement in the House on the now expired Foreign Intelligence Surveillance Act which passed the Senate by a wide margin. So, even those items that are on a deadline of sorts don’t seem to be moving in this paralyzed Congress.
Federal Budget: One of the items that Congress is supposed to take up each year (but sometimes doesn’t) is a federal budget. By the Constitution, spending and tax bills must originate in the House. So, the House is beginning work on what looks to be a really ugly budget. After 3 years of declining budget deficits, this year the deficit being proposed will more than double from last year. The new budget deficit for the 2009 fiscal year is estimated to be $410 Billion on total spending for the first time exceeding 3 Trillion dollars. And that deficit number will undoubtedly rise because the income projections were made last year before it was widely accepted that we are in a period of declining economic activity. By the way, that is a code phrase for the word the "recession" in which I believe we entered last December. So, don’t be surprised if the deficit, at the end of the day, winds up being closer to half a trillion dollars, which would be the largest nominal federal deficit ever.
Wasn’t a balanced budget in sight a year ago? Yes. So what happened? Three things really. First of all spending keeps going up. Last year and this year, the President proposed an increase in spending and the Democrats countered by increasing it more. A deal was made somewhere in between, but we are still increasing spending faster than the growth rate of the economy. You cannot keep that up without increasing taxes, the deficit or both.
Second, the recession has caused the growth in revenues to decline, mostly from corporations so far. Economic cycles happen and budgetary planning should take that into account. But it seems the elected bodies never do, as we see in the State of California budget deficits now. Congress spends all the revenue in the good times, and then can’t seem to ratchet it back in the slow times. Note that so far, the growth in federal revenues has declined from the nearly double digit pace of the last few years but there has not yet been an actual decline in revenue.
And finally, $163 billion of your new deficit was caused by the ill-advised "stimulus package" about which I have written you before. (If you missed why I opposed this political stimulus package, click on the link below). This bipartisan mess is sacrificing fiscal and economic health in the future for a feel-good-do-nothing band-aid now.
Obviously, I will oppose this budget, although frankly, the alternatives available right now are not that great either because we can’t reverse the mistakes of the past year that lead us to this. This year will make it 43 out of the last 48 years that the federal government has run a deficit. So this is not a new thing, although the size of it is. We have run deficits with Republican and Democrat Presidents and Congresses and every combination thereof. In the end, we need a Constitutional Amendment to keep Congress and the President from increasing spending faster than the growth in the economy.
As you might have guessed, I will be introducing that idea soon.
Oh and you know what’s really scary? Much of the campaigning going on for president right now advocates spending more and more and more. Where are they going to get that money? From you, of course. (Heavy Sigh)
My Floor Speech on the Economic Stimulus Plan
Until next time, I remain respectfully,
Congressman John Campbell