Our Economy, the Budget, and You.

03/25/2008

Paul Munnis


As gas prices rise then people redo their budgets and start to trim away the frills. Their wants are set-aside until better times and all unnecessary spending is halted. The results translate into a slower economy – a harbinger of recession.

A second budget blow is our rising food costs forcing people to cut out prepared foods and to choose cheaper cuts of meats and to concentrate on more veggies and less protein. Some families may be cutting out entire meals. It is not a consolation but all over the world the cost of food is climbing and the supply of food is at increased risk partly because of violent weather swings, partly because of the devaluation of the dollar, and partly because of world price inflation.

Dining out is less frequent for many people in the U.S. and is now directed towards places giving good value for the money.

Home repairs and improvements are deferred thus adding to the woes of an industry already in trouble because of a lack of new building.

With each increment in inflation the family and personal budget is forced to become leaner and leaner.

As recession happens the country feels the multiplicative results and it feeds upon itself eating us up.

Many hope that the infusion of cash into the economy via a stimulus package will do the trick. Others are praying for relief on their mortgages. Still others, watching their equity fall, are giving up their homes and going back to apartment living. Home prices are falling and equity is disappearing.

All the while people realize that their job is their lifeline and they sweat job loss. About one month’s worth of income lies between the middle-class and poverty. The middle-class is shrinking rapidly.

Should job loss come to a family then unemployment runs out after six months and a shrinking job market leaves a person facing homelessness. Economics under these circumstances is not a remote impersonal academic study. It is now a matter of survival in an economy that cannot support all of our citizens. During the last recession the GOP threatened filibuster and raised the devil because Democrats wanted the unemployment benefits extended.

That is when people look to the government for help. Unfortunately under Mr. Bush you will not get much help. If anything he wants to chop you off the social programs that the “No New Taxes” Republicans insisted upon and which became the rallying cry for shutting down much of our social safety net. That net is now pretty well gone and if you are forced onto welfare even that has a six month limit too.

Two income families are also not a salvation either. Often the income from one job is going to pay the mortgage and the other pays for utilities, food, and transportation. If one person loses their job then something major suffers.

It is during recession that Democrats get re-elected and for good reason. They bring common-sense rescue programs to help people, they dig our nation out from recession, they create new jobs, they restore prosperity to America. That is when the GOP comes back with its siren-song of “No New Taxes,” and other nonsense economics that destroy the programs that we so depend upon. They charge that Democrats don’t know how to manage money for efficiency. While laughable, people still fall for it and for the nonsense of “trickle down economics,” an argument that says that the rich should not be taxed and that as they spend their money we’ll all make out wonderfully. The reason they are rich is of course that tthey don't spend their money, they spend other people's money, like your tax money.

Leaving social programs in place during good times does little economic harm and does not translate into lower costs for the average person either. But it does cause a change of Political Parties and that means that once again the programs are gone missing when they are needed the most. Starting and stopping social programs time and again is also costly.

Part of the reason that we have problems in our economy is that so much of our national resources goes to maintaining the largest military force in the world. Our military budget takes up a lot of the cost of government. In all fairness it also creates jobs and subsidizes research and development costs, especially for aircraft. But now the Bush government is giving those jobs away to France and Britain by awarding them military contracts. Here is a pie-chart showing what the FY09 Budget will look like.




You should note that this pie-chart looks different than the one that the government normally gives out. They do a few things to obscure the facts and to create a distortion of how our income tax dollars are spent because it includes trust Funds (e.g., Social Security), and the expenses of past military spending and these are not distinguished from non-military spending. Here is what the government pie-chart looks like. The GOP uses this picture to argue that we need to get rid of Social Security - "it costs too much." That argument is intensifying as millions of baby-boomers are about to retire.




Here are some further specifics on how the FY09 money will be spent.

Current Military $965 billion:
• Military Personnel $129 billion
• Operation & Maint. $241 billion
• Procurement $143 billion
• Research & Dev. $79 billion
• Construction $15 billion
• Family Housing $3 billion
• DoD misc. $4 billion
• Retired Pay $70 billion
• DoE nuclear weapons $17 billion
• NASA (50%) $9 billion
• International Security $9 billion
• Homeland Security (military) $35 billion
• State Dept. (partial) $6 billion
• other military (non-DoD) $5 billion

“Global War on Terror” $200 billion [We added $162 billion to this t item to supplement the Budget’s grossly underestimated $38 billion in “allowances” to be spent in 2009 for the “War on Terror,” which includes the wars in Iraq and Afghanistan]

Past Military, $484 billion:
• Veterans’ Benefits $94 billion
• Interest on national debt (80%) created by military spending, $390 billion

Human Resources $789 billion:
• Health/Human Services
• Soc. Sec. Administration
• Education Dept.
• Food/Nutrition programs
• Housing & Urban Dev.
• Labor Dept.
• other human resources.

General Government $304 billion:
• Interest on debt (20%)
• Treasury • Government personnel • Justice Dept.
• State Dept.
• Homeland Security (15%)
• International Affairs
• NASA (50%)
• Judicial
• Legislative
• other general govt.

Physical Resources $117 billion:
• Agriculture
• Interior
• Transportation
• Homeland Security (15%)
• HUD
• Commerce
• Energy (non-military)
• Environmental Protection
• Nat. Science Fdtn.
• Army Corps Engineers
• Fed. Comm. Commission
• other physical resources

The Bush Administration often makes the point that we are taking the war to the terrorists and we are funding so as to defeat them. Here is the budget they are spending in the battle against terrorism and we hope that you see that the amount spent in fighting terrorism is going down, thus we are not safer, and we are not spending to become safer.





Please note that Mr. Bush has run our military into the ground. Military equipment is now outmoded, obsolete, and worn out from too much use in the deserts of the middle-east. We have to re-equip our military. The new jet fighters, new bombers, and the new missile defense shield, and the other modern armaments will cost a huge amount of money to taxpayers. How much is not yet announced.

You might want to take more interest in the U.S. budget this election year and communicate your thinking to candidates running for office. They need to hear your opinion and feel your pain. If they don’t then they will ignore you and deal with the next real or imagined crisis instead.

One look at the charts above show why we are having so much trouble affording health-care for our citizens. The military is eating up too much of the budget to permit guns and health to co-exist. Just the component cost we are spending on Iraq and Afghanistan would permit us to transition to a national health-care system.

You might also realize there is no such thing as a free lunch. No new taxes means a deteriorating nation. We are at the point where we are falling apart.

The GOP has created a disaster of our economy. It can be fixed but not without us feeling some pain. Try to remember the lesson when next the GOP sings their “No New Taxes song to you. It’s a catchy tune but it won’t pay the rent or feed your family.