The last chapter in the Wildavsky book I feel brings us to the current state of the economy. The book talks about how in the late 90's and prior to 9/11 how the country was steaming full speed ahead with surpluses at the end of each year. However and as we have mentioned many times in this blog and in our classroom discussions 9/11 changed all that. With the surprise attack and months which have now turned into years of war we have gotten deeper in debt. The book I believe only talks through 2002 so it leaves out the economic downturn of the past 2-3 years. Here we have seen the loss of millions of jobs, foreclosed homes, and the ups and downs on wall street.
In the past year we have seen actions in Congress to prop up the economy through Bailouts, and the extension of unemployment benefits. All of this aid related directly to the budget process and how much money we are spending. Our deficit is the highest it has ever been and with the cloudy forecast looming it doesn't look as if it will get better anytime soon.
I find it interesting that we get as much done as we do. The budget process as Wildavsky states is extremely complex and is all about process and institutions. Anytime a budget is introduced it has to make its way through committees and votes and re-writes and to the President/Governor's desk.
I think I will walk away from this class knowing that our system isn't perfect but after a while we eventually make progress. As far as the deficit and surplus spending, I think we could do alot better reigning control of how we spend our money and what we could do with the surpluses if we ever get to that point again.
Monday, March 1, 2010
Sunday, February 21, 2010
Chapters 8 & 9
In chapter 8 Rubin talks about Discretion and Abuse of funds. He mentions that the local government is actually watched closer than National and State levels of government. His reasoning behind this theory is because state governments are responsible for local governments and if the local government gets into trouble then its the states duty to bail them out. I find that to be interesting because some of the state governments can't even get their acts together let alone deal with the hassle of taking over a failing local government as well. I think people in general are more interested in their local government than they are in state and federal levels. My reasoning behind this is because they feel too far removed from the processes at state and federal levels. Now this is not to say that people don't care what happens at the state and federal levels but most people feel more comfortable dealing with their local government because it seems less political. For the most part local politicians know their constituents personally.
I personally pay very little attention to the dealing at the state level. I do pay more attention to the federal level because I am a U.S. government employee and budgeting and actions at this level affect me and the job I do directly. I do stay informed of what happens at the local level in my community but I don't get too involved. Do you agree or disagree that most people pay attention to only the local government?
In chapter 9 Rubin explains Real Time Budgeting. I think we started the era of Real Time Budgeting when 9/11 occurred. Obviously this attack was unexpected and we were unprepared to deal with the outcome and ramifications from such a national disaster and war. However Congress stepped in and approved funding for Defense and Security. Today, I see Real Time Budgeting in the US economy downturn. The budget had to be adjusted to deal with the loss of millions of jobs. Congress and the President approved a multi billion dollar stimulus package and have aided millions with unemployment benefit extensions. Another issue that Rubin talks about is secrecy in the budget. He states that many times politicians try to keep people out of the budget process because they simply get in the way. Do you think elected officials should keep us in the dark? My personal feelings are that if you have to go behind closed doors to pass a budget then something is obviously not legitimate about your proposal.
I personally pay very little attention to the dealing at the state level. I do pay more attention to the federal level because I am a U.S. government employee and budgeting and actions at this level affect me and the job I do directly. I do stay informed of what happens at the local level in my community but I don't get too involved. Do you agree or disagree that most people pay attention to only the local government?
In chapter 9 Rubin explains Real Time Budgeting. I think we started the era of Real Time Budgeting when 9/11 occurred. Obviously this attack was unexpected and we were unprepared to deal with the outcome and ramifications from such a national disaster and war. However Congress stepped in and approved funding for Defense and Security. Today, I see Real Time Budgeting in the US economy downturn. The budget had to be adjusted to deal with the loss of millions of jobs. Congress and the President approved a multi billion dollar stimulus package and have aided millions with unemployment benefit extensions. Another issue that Rubin talks about is secrecy in the budget. He states that many times politicians try to keep people out of the budget process because they simply get in the way. Do you think elected officials should keep us in the dark? My personal feelings are that if you have to go behind closed doors to pass a budget then something is obviously not legitimate about your proposal.
Saturday, February 20, 2010
Secrecy in Budgeting
As Rubin points out in Chapter 9, the openness of budgetary decision making is a subject that is frequently debated as to whether or not it yields positive results. Those in favor of openness argue that it helps to ensure government is accountable to the public for how tax dollars are spent. Others feel that too much openness leads to delay in budgetary decision making and an overload of information for the public.
It is easy to see how conflict arises because each side makes valid points. It seems to me that concern over transparency in budgetary decision making occurs when citizens are unhappy with how they perceive tax dollars spent, which is understandable. Political realities affect how much attention is paid to transparency in budgeting.
I agree with Rubin that every detail of the budget does not need to be parceled out to the public. It would have the opposite effect of bringing about accountability because most citizens do not have the time or the ability to analyze complicated budget processes. A minimal level of secrecy in budget making can exist without cause for alarm among the public. At times I think legislators are hindered by their concern that constituents will not agree with budget decisions and so they do not always advocate for initiatives they personally believe to be beneficial.
We spoke briefly about this in class last week when we discussed how legislators have staffers who advise them about budget shortfalls and offer recommendations for reform, but it is not always politically advantageous to adopt reform.
On the other hand, accountability is also incredibly important. I’m not exactly sure where the appropriate boundary is between openness and secrecy in budgetary decisions. A tilt too far to either side results in ineffective governance.
It is easy to see how conflict arises because each side makes valid points. It seems to me that concern over transparency in budgetary decision making occurs when citizens are unhappy with how they perceive tax dollars spent, which is understandable. Political realities affect how much attention is paid to transparency in budgeting.
I agree with Rubin that every detail of the budget does not need to be parceled out to the public. It would have the opposite effect of bringing about accountability because most citizens do not have the time or the ability to analyze complicated budget processes. A minimal level of secrecy in budget making can exist without cause for alarm among the public. At times I think legislators are hindered by their concern that constituents will not agree with budget decisions and so they do not always advocate for initiatives they personally believe to be beneficial.
We spoke briefly about this in class last week when we discussed how legislators have staffers who advise them about budget shortfalls and offer recommendations for reform, but it is not always politically advantageous to adopt reform.
On the other hand, accountability is also incredibly important. I’m not exactly sure where the appropriate boundary is between openness and secrecy in budgetary decisions. A tilt too far to either side results in ineffective governance.
Wednesday, February 17, 2010
These are some good posts. To some extent more to do with policy than budgetary processes but they do connect and Randy and Meghan have done a nice job laying out some issues.
The defense spending issue is usually a surprise to many. Given the size of some of our weapons programs you would think it would be much higher. Part of this is due to the fact that our standing army is not as large as it once was. Weapons systems are expensive, but personnel is even more pricey. I also think that some of the complicated nature of defense budgets is due to the procurement process and the length of time for building weapons. But you do bring up a good point, if the slice of the pie keeps getting smaller, why such and involved process.
Meghan's issues on entitlements also bring up a variety issues that have long been debated. A few points that might help. First, the level of corruption by beneficiaries in entitlement programs is actually pretty low, I don't have the research in front of me but the numbers are much smaller than we think. The problem is that when someone violates the public trust, we are rightfully more outraged than in private corruption. As you pointed out, entitlements often benefit the least well-off in our society (for whatever reason, whether a person has had a "difficult life" or they just did not act responsibly). In your scenario of the two people going into a skilled nursing facility you don't find the person who to private pay as often as one would think -- there is a whole industry of attorneys and accountants who specialize in "spending down" -- that is legally moving your resources to family members and to others sheltered accounts. It doesn't mean that it doesn't happen, but it can be controlled. But you are right, entitlements continue to grow and the health of many of these systems is on the verge of failure. What is it about our political system that makes it difficult to find the will to confront these issues? Do they simply need to collapse? Good job everyone.
The defense spending issue is usually a surprise to many. Given the size of some of our weapons programs you would think it would be much higher. Part of this is due to the fact that our standing army is not as large as it once was. Weapons systems are expensive, but personnel is even more pricey. I also think that some of the complicated nature of defense budgets is due to the procurement process and the length of time for building weapons. But you do bring up a good point, if the slice of the pie keeps getting smaller, why such and involved process.
Meghan's issues on entitlements also bring up a variety issues that have long been debated. A few points that might help. First, the level of corruption by beneficiaries in entitlement programs is actually pretty low, I don't have the research in front of me but the numbers are much smaller than we think. The problem is that when someone violates the public trust, we are rightfully more outraged than in private corruption. As you pointed out, entitlements often benefit the least well-off in our society (for whatever reason, whether a person has had a "difficult life" or they just did not act responsibly). In your scenario of the two people going into a skilled nursing facility you don't find the person who to private pay as often as one would think -- there is a whole industry of attorneys and accountants who specialize in "spending down" -- that is legally moving your resources to family members and to others sheltered accounts. It doesn't mean that it doesn't happen, but it can be controlled. But you are right, entitlements continue to grow and the health of many of these systems is on the verge of failure. What is it about our political system that makes it difficult to find the will to confront these issues? Do they simply need to collapse? Good job everyone.
Local impact of Federal Stimulus
This isn't related to our discussion this week on Defense spending, but an article in the Public Opinion ran today about local projects resulting from the stimulus package. I thought it was interesting to see how money was distributed locally and the impact it has had on local businesses. The Chambersburg Area School District superintendent expressed frustation over the restrictions on funds granted from the IDEA program.
Saturday, February 13, 2010
Defense Spending
After reading Wildavsky's chapter on defense it becomes clear that budgeting for defense is a separate entity that takes on a life of its own. I feel that national defense is the most important thing the federal government does and I have no problem spending money on this. I was shocked when I looked at Table 8.1 on page 155. In 1953 defense accounted for 69% of the budget. It has since dropped to about 17%. When adjusted for inflation there is only about a $50 billion difference. These numbers are really an eye opener for me. We are spending about the same on defense as we were fifty years ago but it accounts for so much less of the budget. I find myself wondering if the intricate and drawn out process Wildavsky discusses is necessary for something that seems to have a decreasing slice of the pie. Secondly, it seems interesting that the budget continually grows funding programs that did not exist fifty years ago. It seems that we have so much more that the federal government needs to pay for, but apparently not so much more to defend. On a final note it seems to me that spending on defense should be above the fray. Increases usually only take place after the need arises, such as 9/11. Honestly, who wants to be the guy arguing to cut spending on defense and then have things like that happen. Is there nothing sacred in politics?
Sunday, February 7, 2010
Entitlements
This weeks topic is entitlements. According to Wildavsky spending for entitlements and other mandatory programs has doubled since 1988. Most of this money set aside for entitlements goes to social security about one-fourth. However as many of us are aware social security might not be available when our generation is set to retire, even though we have paid in and will continue for years to come. There are many reasons that social security is set to go bankrupt including: the large baby boomer population who are set to retire in the next 10 years, people are living longer, and the cost of living keeps escalating.
Medicaid is also quickly exhausting its resources. We are all aware of the cost of health care and when people get to a certain age and income level they are eligible for this type of health coverage. But with the rising cost of health care and the fact that more people are living longer and exhausting their own resources quickly, medicaid is having to pick up the tab. I recently experienced something interesting and I am not sure how I feel about it. The scenario goes like this:
Two people enter a nursing home
Person A has saved money for years and has built up a $500,000 savings account
Person B enters the nursing home with little to no money
Person A now has to pay $6000 a month or $72000 a year out of their savings account to stay in the nursing home, while Person B who had no money gets to stay for free or on the governments dime (entitlement).
Should the government reward people like Person B? Should the government take all the money from Person A?
In my personal opinion I think something needs to be done with entitlement spending. For the most part I believe this is where people take advantage of the federal government. I personally have seen people abuse the welfare system. I feel that social security, medicaid, and welfare are all worth while programs they need serious reform. Too many people rely on these entitlement programs to see them through life or end of life. We must as a country become more fiscally responsible about not only our own money but about the way our government is managing our money.
Perhaps you could provide your thoughts on the case above? What is your opinion of entitlement spending?
I have attached an article that goes well with our chapters reading. If you click the "Entitlements" heading you will be directed to the article.
Medicaid is also quickly exhausting its resources. We are all aware of the cost of health care and when people get to a certain age and income level they are eligible for this type of health coverage. But with the rising cost of health care and the fact that more people are living longer and exhausting their own resources quickly, medicaid is having to pick up the tab. I recently experienced something interesting and I am not sure how I feel about it. The scenario goes like this:
Two people enter a nursing home
Person A has saved money for years and has built up a $500,000 savings account
Person B enters the nursing home with little to no money
Person A now has to pay $6000 a month or $72000 a year out of their savings account to stay in the nursing home, while Person B who had no money gets to stay for free or on the governments dime (entitlement).
Should the government reward people like Person B? Should the government take all the money from Person A?
In my personal opinion I think something needs to be done with entitlement spending. For the most part I believe this is where people take advantage of the federal government. I personally have seen people abuse the welfare system. I feel that social security, medicaid, and welfare are all worth while programs they need serious reform. Too many people rely on these entitlement programs to see them through life or end of life. We must as a country become more fiscally responsible about not only our own money but about the way our government is managing our money.
Perhaps you could provide your thoughts on the case above? What is your opinion of entitlement spending?
I have attached an article that goes well with our chapters reading. If you click the "Entitlements" heading you will be directed to the article.
Saturday, January 30, 2010
Spending Freezes
This week’s reading focused on the politics behind the desire to balance budgets which is particularly relevant in the wake of this past week’s State of the Union Address and our current economy which faces a budget deficit in the trillions. One of the proposed solutions to combat the growing deficit is to implement a three-year spending freeze. How will this affect companies that rely on federal spending or contracts to keep their doors open during the recession?
The federal government historically has been one of the remaining spenders or buyers of goods during economic hardship. Many of the contractors I deal with in my job are still operating due to federal government contracts for equipment and services that support national defense and security. JLG Industries, which has local manufacturing plants in both Shippensburg and McConnellsburg, has faced economic uncertainties over the last several years. However, for the time being, they are able to continue to manufacture products because of Department of Defense contracts and continue to provide jobs in their communities.
While the administration’s intent is to not freeze spending for defense and national security, I would imagine that other industries that rely on federal agency contracts will be negatively affected by the proposed spending freeze. The freeze will also likely impact educational programs that are already underfunded at the state and local levels.
I’m certainly not an economist and I can’t claim to understand exactly how the proposed budget freeze will affect the economy. And I understand the public’s perception is that government spending is out of control. Maybe we will be able to look back and say that it was the best plan of action for the nation under the current circumstances. I suppose I just don’t understand how a spending freeze for certain federal agencies will make much of a difference when programs that depend on federal spending will be adversely affected. Especially when we consider that the entitlement spending will continue to increase in the coming years. There is still a need to reform Social Security and Medicare spending, but very little attention has been given to those issues lately.
The federal government historically has been one of the remaining spenders or buyers of goods during economic hardship. Many of the contractors I deal with in my job are still operating due to federal government contracts for equipment and services that support national defense and security. JLG Industries, which has local manufacturing plants in both Shippensburg and McConnellsburg, has faced economic uncertainties over the last several years. However, for the time being, they are able to continue to manufacture products because of Department of Defense contracts and continue to provide jobs in their communities.
While the administration’s intent is to not freeze spending for defense and national security, I would imagine that other industries that rely on federal agency contracts will be negatively affected by the proposed spending freeze. The freeze will also likely impact educational programs that are already underfunded at the state and local levels.
I’m certainly not an economist and I can’t claim to understand exactly how the proposed budget freeze will affect the economy. And I understand the public’s perception is that government spending is out of control. Maybe we will be able to look back and say that it was the best plan of action for the nation under the current circumstances. I suppose I just don’t understand how a spending freeze for certain federal agencies will make much of a difference when programs that depend on federal spending will be adversely affected. Especially when we consider that the entitlement spending will continue to increase in the coming years. There is still a need to reform Social Security and Medicare spending, but very little attention has been given to those issues lately.
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