Time for a New Budget Process: Tiered Spending -- How to avoid being bullied over gov't shutdowns

American Thinker ^ | 09/15/2017 | Mike Razar

[SeekAndFind]

t is high time that conservatives reform the budget process.[i] In theory, Congress should prioritize expenditures to achieve the greatest public good with the available funds taxpayers and lenders provide. But in practice, not only are tradeoffs not made, there is no visible mechanism for identifying levels of priority.

The absence of such an analytical tool seems to have bullied President Trump into an unnecessary fear of defaulting on the debt. So much so that he has made a devil’s deal with Nancy Pelosi and Chuck Schumer. Doesn’t he know that they hate him and want him to fail or even die? Perhaps he did what he thought was necessary for the good of the country facing the aftermath of two killer hurricanes. The pathetic Republican Senators could have saved him from dealing with Nancy and Chuck, but the GOP Senators couldn’t pass a stand-alone disaster relief bill. President Trump looked like a statesman among a bunch of petty politicians. Time will tell how costly this episode will prove to be.

In previous versions of the phony default scare tactics, I and many others have pointed out that every month there are ample federal receipts to cover the interest on the debt (well under 10% of the annual budget), as well as other high priority outlays. Yet the fear mongers seem to carry the day every time. Maybe some politicians are just lying about their commitment to balanced budgets.

To be fair, the way the budget is designed, it is difficult to prioritize spending. The federal budget is divided into overlapping categories. The various categories and sub-categories often obscure clear understanding. This article contains a proposal to simplify and regroup the spending categories and suggest how to prioritize them.

[SeekAndFind]

PROPOSAL:

Instead of a unified federal budget, divide it into two or more tiers. Call the top tier “Tier 1 Spending.” Think of these as the outlays which must be made before any others. They need not be 100% of any program. Some programs might be funded with multiple tiers. The categories suggested here seem likely to be part of anyone’s top tier, but politics will surely play a big role. That would require legislation, but absent that, they still make it easier to understand the budget. Just regard tier definitions as informational. Table 1 gives the broadest categories of two tiers of spending for FY 2015 (actual) and FY 2021 (projected).

Instead of a unified federal budget, divide it into two or more tiers. Call the top tier “Tier 1 Spending.” Think of these as the outlays which must be made before any others. They need not be 100% of any program. Some programs might be funded with multiple tiers. The categories suggested here seem likely to be part of anyone’s top tier, but politics will surely play a big role. That would require legislation, but absent that, they still make it easier to understand the budget. Just regard tier definitions as informational. Table 1 gives the broadest categories of two tiers of spending for FY 2015 (actual) and FY 2021 (projected).

The data sources are OMB Tables 3.1, 3.2 and 2.1: https://obamawhitehouse.archives.gov/omb/budget/Historicals

The numbers in parenthesis next to various spending categories refer to the federal accounting system. The column labelled “Mean %” is the implied annual compounded rate of growth for each line.

Table 1: Tiered Spending (Billions of Dollars)

Fiscal Year	2015	2021	Mean%
Tier 1: Core Spending	2717	3740	5.47%
Net Interest (900)	223	574	17.07%
Defense (050)	590	612	0.61%
Earned Benefits (not means-tested)	1741	2357	5.18%
Primary Functions	163	197	3.21%
Tier 2: Other Spending	1127	1496	4.83%
Unearned Benefits (means-tested)	808	1089	5.10%
Secondary Functions	319	407	4.14%
Credits (370, 950)	-154	-117	NA
Total Spending	3690	5119	5.61%

Tier 1 outlays account for around 70% of current annual spending. Two major sub-categories, interest and earned benefits, are contractual liabilities. Defense and Primary Functions are necessary core functions of any government. There may be other priorities that deserve Tier 1 funding. If I had more detail, some of Tier 2 spending on children’s health and nutrition could be transferred to Tier 1. Part of the Medicaid budget goes to recipients of Medicare. I would transfer these to the Medicare budget on Tier 1.

Table 2 is an expanded version of Table 1. It contains more detailed categories and more years.

I had to infer some of the details from overlapping information and I rounded off liberally. There is no separate category for Homeland Security because the outlays are spread out over multiple categories. The expenditure called “Miscellaneous ACA Outlays” under Tier 2 health is an estimate reflecting the need to reconcile multiple federal sources.

It would be helpful if there were a single document published by the federal government that contained clear and unambiguous non-overlapping categories. Perhaps there is, but I haven’t found it. The OMB tables I refer to are as close as I have found to that ideal. The main classifications these OMB tables use are by “function” and “superfunction.”  This is a more informative way to look at outlays rather than by agency or even by federal accounting system numbers.

With the exception of 2015, all the numbers in Table 2 are subject to uncertainty. Anyway, for purposes of discussion, the numbers are probably close enough to reality to give a fair picture. Only by looking at actual numbers can one get an idea of what is at stake in governing.

It is especially distressing when highly educated citizens shun the math. Simply trusting bureaucrats to do the math for us is a step on the road to tyranny. Yes, it is that important. So please be patient with the numbers. Many discussions of the budget employ pie charts. I have chosen to display the raw numbers so that actual calculations can be made.

Table 2: Tiered Spending (Billions of Dollars)

Fiscal Year	2015	2016	2017	2018	2019	2020	2021	Mean%
Tier 1: Core Spending	2717	2884	3023	3144	3368	3554	3740	5.47%
Net Interest (900)	223	240	303	385	460	523	574	17.07%
Defense (050)	590	604	617	599	600	606	612	0.61%
Earned Benefits (not means-tested)	1741	1853	1908	1966	2112	2228	2357	5.18%
Social Security  (651)	888	929	973	1,031	1,100	1,162	1229	5.57%
Medicare (570)	546	595	605	608	663	703	751	5.46%
Veteran Benefits (700)	160	178	181	179	192	200	209	4.55%
Federal Pensions (601,602)	147	151	149	148	157	163	168	2.25%
Primary Functions	163	187	195	194	196	197	197	3.21%
Admin. of Justice (750)	52	64	64	63	62	63	64	3.52%
General Government (800)	21	24	29	28	31	32	29	5.53%
Public Health (552,554,304)	42	46	49	50	51	50	51	3.29%
Science & Technology (250)	29	31	32	32	32	33	34	2.69%
Foreign Affairs (153,154)	14	16	15	15	14	13	13	-1.23%
Agricultural Research (352)	5	6	6	6	6	6	6	3.09%
Tier 2: Other Spending	1127	1201	1257	1331	1397	1441	1496	4.83%
Unearned Benefits (means-tested)	808	866	914	964	1018	1049	1089	5.10%
Health Services (551)	446	489	527	567	607	632	664	6.86%
Child Health Insurance Program	9	13	13	12	6	6	6	-6.53%
ACA Insurance Subsidies	38	49	59	69	76	81	86	14.58%
Miscellaneous ACA outlays	49	56	62	71	88	86	88	10.25%
Income Security (600, not 601, 602)	362	377	387	397	411	417	425	2.71%
Secondary Functions	319	335	343	367	379	392	407	4.14%
Foreign Aid (151, 152)	37	39	41	40	39	39	40	1.31%
Environment (300, not 304)	29	34	35	36	36	37	37	4.14%
Transportation (400)	90	92	100	108	116	124	130	6.32%
Education, etc. (500)	122	114	108	120	128	135	139	2.20%
Energy (270)	7	7	7	7	7	9	10	6.12%
Agricultural Subsidies (351)	13	19	20	20	15	14	18	5.57%
Community  Development (450)	21	28	21	19	18	16	14	6.53%	4
Allowances (920)	0	2	11	17	20	18	19	NA
Credits (370, 950)	-154	-128	-131	-124	-117	-116	-117	NA
Total Spending	3690	3957	4149	4351	4648	4879	5119	5.61%

[ClearCase_guy]

I’d probably just cut everything in Tier 2.

I’d also just cut some of what is in Tier 1.

[plain talk]

That’s fine but what if Congress decides everything is Tier 1.

[shanover]

My eyes glaze over from tier to tier. All I can input is to promote a balanced budget of a government that runs within the original/textual framework and interpretation of the Constitution. What a fantasy that is.

[Pearls Before Swine]

Let’s also get rid of baseline budgeting, where absent specific action, program budgets are automatically increased upwards at the rate of inflation.

[Neidermeyer]

Let’s also get rid of baseline budgeting, where absent specific action, program budgets are automatically increased upwards at the rate of inflation.
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That can be accomplished today.... if we had a conservative Congress..

[scrabblehack]

This already exists to some extent. “Entitlements” don’t have to go through the authorization process.

The problem is that whatever lock boxes you set up, Congress knows they exist in the back of their minds and can equal or exceed that amount.

I think spending should be based on the previous year’s revenue. A lot of high dollar man hours are wasted trying to predict how much money a certain tax bill will bring in. If Congress were told “This is what we brought in last year, what do you spend it on?” it might help, but then again it might turn into another lock box.