It’s almost spring, and that means … time for another federal budget showdown.
Yay!
President Trump has already proposed a new budget plan, which he outlined in his maiden address to Congress on March 1. The White House released a partial outline on March 16.
In keeping with his campaign promises, Trump is pushing for drastic changes in how much money the government spends and what it spends it on.
Most notably, Trump wants to increase the military budget by 10 percent — a whopping $54 billion — and beef up Homeland Security spending to pay for more border agents and fund that “big, beautiful wall” you may have heard of. The money to pay for all of this would come from major cuts to most other government agencies and services. The State Department, foreign development programs and the Environmental Protection Agency would be among the hardest hit, with budget cuts of roughly 30 percent.
Under the proposal, nearly 20 smaller agencies would also be completely stripped of funding, including the National Endowment for the Arts, the National Endowment for the Humanities, the Corporation for Public Broadcasting (that helps fund NPR and PBS) and the Legal Services Corporation, which supports legal aid organizations.
The plan only applies to discretionary spending: the funds appropriated each year by Congress. Discretionary spending makes up less than a third of all federal spending. The remainder of the budget consists of so-called mandatory spending on major programs like Social Security, Medicare and Medicaid. A significant chunk of the budget is also reserved for interest payments on the federal debt.
How does the basic budget process work?
There’s actually nothing basic about it. Keep in mind that the president’s proposal is merely that: a proposal. Typically delivered to Congress in early February (except for first-year presidents who get a few extra weeks), the budget recommendation is no doubt influential; it kicks off the formal budget process and sets the terms of the debate to come.
But ultimately, it’s up to Congress to pass an actual budget. And that’s typically a months-long process of often agonizing deliberation. This is the time when members of the House and Senate separately decide on spending levels for a vast number of government agencies and eventually agree on a joint House-Senate budget resolution that can be passed in both houses (although usually not without any number of last-minute deals and shenanigans). And because it’s considered a resolution and not a law, it doesn’t require the president’s signature. For more on the nitty-gritty of how the process works, Vox has a good explainer.
Bottom line: The president almost never gets the exact budget he asks for. President Obama certainly didn’t, especially with Republicans controlling both houses. And even though Trump’s budget is likely to have some strong and powerful allies in Congress, it’s already gotten a somewhat cool reception, even among some members of his own party. In other words, there’s little guarantee that some of Trump’s most dramatic proposals will actually see the light of day when the final product emerges.
Funding for the current fiscal year expires on April 28 (a deal made to give Trump greater influence over the FY 2017 budget), which technically means that Congress needs to pass its budget before then in order to keep the government running. The typical fiscal year runs from October through September, and if everything goes according to the official timetable — which it almost never does — the process is wrapped up by the end of June.
How much does the government spend, and on what?
In fiscal year 2015, the federal government spent $3.7 trillion (that’s with 12 zeros), according to the Center on Budget and Policy Priorities. Of that, more than $3.2 trillion was financed by federal revenues, with the remaining amount ($438 billion) paid for by borrowing. Keep in mind that each year’s spending gap (the deficit) gets added on to the nation’s ever-growing overall debt, which is fast approaching $20 trillion, according to the Treasury Department.
The majority of the government’s spending falls into three areas: in 2015, 24 percent ($888 billion) was spent on Social Security, 16 percent ($602 billion) on defense, and a jaw-dropping 25 percent ($938 billion) on four health insurance programs — Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) and the Affordable Care Act (Obamacare) marketplace subsidies.
About 10 percent ($362 billion) was spent on safety-net programs and 6 percent ($223 billion) toward interest payments on the national debt. The remaining fifth of government spending in 2015 supported a huge array of public services – from education and transportation, to benefits for veterans.
Why do budget negotiations seem to get so bitter each year?
The very broad answer is that Republican and Democratic leaders have very different ideas about what government is for and how much it should spend on public services. Republicans typically support military spending, and to some extent infrastructure spending, but consistently push to decrease spending on social services, known as entitlement programs, that Democrats generally support.
In recent years, budget negotiations have been a tortuous process. Bitter disagreement between Democratic and Republican leaders is so common that yearly threats of a government shutdown — if no budget is approved before the deadline — have become routine.
In fact, the government did briefly shut down in 2013 —from Oct. 1 to Oct. 16 — because an agreement couldn’t be reached before the deadline.
What is the debt limit?
Running a nation (as it turns out) is really expensive! And the federal government’s revenue stream, which it largely collects through payroll and income taxes, simply doesn’t cover the vast amount it spends.
Again, it’s Congress that ultimately approves the annual budget and determines the federal taxes that will pay for it. The president is legally required to spend the money in the budget using the revenue from those taxes. But the budget is almost always higher than tax revenues. And so when the Treasury Department reaches that limit, the president asks Congress to increase the amount the government is allowed to borrow in order to pay off its expenses and, literally, keep the government running. This is called the debt limit, or the debt ceiling.
How long have we had a debt limit?
The debt limit was established in 1917 to address concerns over the nation’s borrowing so it could pay for America’s involvement in World War I. It was also intended to give the Treasury Department greater autonomy in deciding how that borrowed cash could be spent.
In line with many other Western European and North American nations, indebtedness has been a constant throughout America’s financial history. In fact, the only year in our entire existence that we’ve been in the black was 1835, during the extreme small-government reign of President Andrew Jackson.
Our process, though, is somewhat distinct — and idiosyncratic — in that Congress typically approves more spending than it has income to pay for, but doesn’t also automatically approve the necessary borrowing.
Weird, right?
The debt ceiling has been raised more than 100 times since 1917, but until the mid-1970s it generally didn’t spark much political controversy.
In the early 1980s, though, federal spending rose significantly, and so did the debt. By 1981, Congress had passed a $1 trillion debt ceiling, (prompting a 16-hour filibuster by Wisconsin Democratic Sen. William Proxmire, an outspoken critic of government excess). By the end of the 1980s, the federal debt had risen to $2.8 trillion.
Interestingly, the Reagan administration — certainly no fan of big government — raised the ceiling a total of 18 times, the most of any president, according to a Guardian analysis. And every president since — both Democrats and Republicans — has raised it no less than six times.
(Figures compiled by The Guardian Datablog; sources: BEA, U.S. Treasury, White House)