What the President’s Budget Really Need(s/ed) To Do

By Watson Scott Swail, President & CEO, Educational Policy Institute/ EPI International

The pundits are now coming out of the woodwork to discuss the President’s budget, which is unlikely to even remotely pass the way it is currently packaged, and as House Republicans plan on cutting much more liberally (no pun intended) than the President.

In total, the President’s budget cuts approximately $1 trillion over the next 10 years (understanding that this budget does not begin until October 1, 2011). To put this in perspective, this is about as much as the President gave to the wealthiest Americans in the extension of the Bush tax cuts less than two months ago. So, in reality, the budget is a zero gain for the deficit unless either greater cuts are made or tax revenues are increased.

The President’s budget comes in weighing a healthy $3.7 trillion, with an operating deficit of $1.1 trillion (yes, simple arithmetic suggests that only 2.6 trillion is funded; one third is deficit financed). That deficit number is actually down from FY2011’s $1.6 trillion.

If one wishes to take a hard look at the US federal budget and revenues, we quickly understand two things: education doesn’t really matter, with regard to the big picture; and entitlements and defense funding combine to make one very fat, overweight, out-of-shape elephant, who is sitting in front of our TV tray so we can’t see Steven Tyler try to pick up new American Idolettes.

On the revenue side, 82 percent of funds come directly from taxpayers: 42 percent from income tax, and 40 percent from Social Security payments. The remainder comes from corporate taxes and various other mechanisms.

On the spending side, Medicare and Social Security eat up the greatest slice of the budget pie, at 43 percent; the Defense Department 20 percent; and Discretionary Programs at 19 percent. Other mandatory payments control 12 percent of the budget, and 6 percent pays for the deficit financing (interest payments).

The story is three-fold. First, Medicare and Social Security payments need to be controlled, if not reduced. The problem with the President’s budget is that it says nothing about these issues. Even the bi-partisan Deficit Commission said that any budget needs to deal with these issues. In 2010, Social Security paid out more than it collected in tax revenues for the first time ever. In 2019, Medicare will do the same. The advancing age of the US population presents a serious burden to this and the next generation. But the President punted on it, in an effort to force Congress to deal with it (i.e., let them do the hurting work and take the blame for it; good political policy; bad federal policy).

The second story is Defense funding, constituting 20 percent of the federal budget. The problem with this figure is that the Defense budget increased 81 percent since 2001. The Defense budget is simply way too high in relation to the security needs in the US. The military is too big, too bloated, and focused still on too many traditional military scenarios. There will be no significant deficit reduction until we see the Defense budget slashed by at least one third, if not one half. And that is unlikely to happen.

The third story is the discretionary spending, which the Department of Education falls within. Representing one-fifth of the US federal budget, this is the only area that is really tinkered with in the President’s budget. This is what every administration has defaulted to: playing the discretionary portion that contains many important social programs, like Pell Grants.

Discretionary spending is deeply impacted by the deficit. To put this in perspective, by 2014, more taxpayer money will go to pay off the interest on our deficit than for all the discretionary programs combined. By 2018, interest payments will outstrip Medicare payments.

Education did OK, by and large, by the President’s Budget. It actually received an increase of $13 billion. The Chronicle, InsiderHigherEd.com, and Education Week have documented the potential changes in program funding. But in the end, it was also tinkering: more payments for Obama-type programs—investments for the future; research projects, like additional Race to the Top programs; and more money for Pell Grants.

But it still comes down to this: the federal government’s role in education is limited, and, by the constitution, should be limited. Sitting at the National GEAR UP Conference in Orlando, I see that everyone wants more money for GEAR UP, TRiO, and other outreach and access efforts. But the money isn’t there. Those programs will likely be cut by about 5 percent each in the end. And there won’t be major increases for at least five years.

So it gets tiring every year when we talk about the federal budget and people wanting more for education. If you want more money for education, talk to your governor and your state representatives. That’s where the money is (and isn’t). The deficit will put an incredible crunch on the federal budget for the next several years.

We often talk about education being the mechanism to protect the future of our children. But out of the other side of our collective mouths, we keep putting more financial strain on them through poor legislative guidance. Our politicians are unwilling and unable to make tough decisions because, well, they may not get reelected.

Do what you were elected to: make tough decisions that improve the country for tomorrow, not just today. We can’t put this weight on our children any more.

 

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About Educational Policy Institute

The Educational Policy Institute is a Washington, DC-based research think tank on education and the social sciences. EPI conducts evaluation and policy studies on various educational issues from Pre-K to workforce outcomes in the United States, Canada, and beyond. Visit us at educationalpolicy.org.
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