The Art of Policy November 2004

A $2.4 Trillion Figure of Speech

The federal budget—an explanation

"The budget I am proposing for 2005 is a reflection of this nation's goals and purpose," President Bush has said. This is a worrisome statement. For one thing, the federal budget has a projected deficit of $367 billion or more. For another thing, the federal budget doesn't exist. Congress failed to pass it. And fiscal year 2005 began on October 1. Did Mom's Social Security check bounce? Have American soldiers been reduced to throwing stones at Iraqi insurgents? Are people with toenail clippers in their pockets walking straight onto commercial airliners?

I called the office of my congressman (Charles Bass, R—NH). I spoke to a legislative assistant (who chooses to remain nameless). It turns out that the federal budget is, the LA told me, something called a "concurrent resolution" that "doesn't become law" even when approved by lawmakers. Spending bills, you'll be relieved to know, are proceeding apace using last year's budget provisions and various parliamentary dodges.

Budgets weren't passed for FY 1999 and FY 2003 either, and no one much noticed. There wasn't a comprehensive federal budget at all until the Budget and Accounting Act of 1921, when President Warren G. Harding attempted to impose upon government the sound practices of business. (Write your own footnote below, citing Teapot Dome.) And the budget had no enforcement mechanism until the Congressional Budget Act of 1974.

"There are so many loopholes," the LA said. "One of the easiest ways to get around budget spending limits is 'emergency' spending. The definition of what constitutes an emergency is very vague."

Thus the federal budget is similar to the figures that many a young person has scribbled on the back of a first pay envelope—

net salary per year$22,380
rent per mo.   $1,900
 uh-oh

—the scribbles having little effect on that evening's emergency spending in bars.

However, we should get it out of our heads that a government budget is a kind of overgrown household budget. The government cannot move to someplace cheaper, such as Quito, Ecuador, or get a better job. (Pleasant as it is, sometimes, to imagine these things.)

The budget doesn't have much control over the government. Then again, the government doesn't have much control over the budget. About two thirds of the approximately $2.4 trillion federal budget is mandatory spending—Social Security, Medicare, and other payments guaranteed by law. Of course, the laws could be changed. And the President and everyone in Congress could start phoning law offices and lobbying firms looking for work. Of the remaining one third, almost half goes to defense and homeland security. Cutting these at the moment would be a way to become Dennis Kucinich. This leaves an amount not very different from the amount of the deficit for everything else. It will be a brave politician who announces that all the roads and post offices have been eliminated in order to balance the budget.

It's understandably hard to keep the government from spending money. What's less understood is that it's hard to keep the government from getting money to spend. Cutting tax revenues does not cut spending, as the Bush tax cuts have proved. The government can borrow. When the government runs out of lenders, it can do something that households are forbidden to do: print money. The goods and services provided by government will be paid for somehow, with taxes, debt, inflation. The wonder is not that the budget isn't balanced. The wonder is that "balanced budget" is a concept.

Yet it's a politically powerful concept, and has been since the founding of the Republic. Jeffersonian Democrats used balancing the budget as an argument to keep the federal government small. Post—Civil War Republicans used balancing the budget as an excuse to spend revenues from high tariffs and make the federal government large. Party positions have since reversed, but tactics continue in similarity. The FY 2005 budget stalled when "deficit hawk" Republicans joined "fiscally responsible" Democrats in an attempt to impose budget rules requiring that new spending be offset by outlay cuts or revenue increases. Republicans saw this budget-balancing, one of them told me, as a means of "keeping the size of the government down." Democrats saw it as a means of embarrassing the Republicans.

The budget is political noise and confusion. The attempt to balance the budget creates additional pandemonium. We become distracted from watching what the government actually does. We become muddled in our considerations of whether the value equals the cost. And we begin to worry that from the government's point of view, the budget is indeed "a reflection of this nation's goals and purpose." According to the Congressional Research Service, "Budgeting for the federal government is an enormously complex process. It entails dozens of subprocesses, countless rules and procedures, the efforts of tens of thousands of staff persons … [and] millions of work hours each year."

"But the day after the vote," said the legislative assistant in Congressman Bass's office, "you really don't think or hear about the budget until the next year."

Presented by

P. J. O'Rourke is a correspondent for The Atlantic. His most recent book is Peace Kills (2004).

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