The Looming Federal Budget Crisis - Again

The federal budget process is a complicated affair but usually begins with a proposal sent to Congress by the president. Lately, however, that process has been anything but usual. As September approaches we once again face the twin issues of authorizing federal spending and raising the debt limit to pay for it.

Contrary to popular opinion, President Obama has proposed a budget, albeit sometimes late, for each year he has been in office. All of those proposals, however, have been rejected by Congress. Having refused his suggestions, the House, for most years, has then drafted its own version of the budget. Those House-originated budgets have been rejected in the Senate.

To keep the federal government functioning, Congress, with House approval, has regularly passed legislation known as a Continuing Resolution which says, in effect, “we approve budget authorization for this year at last year’s levels.” However, a continuing resolution grants only budget approval. It's not a funding mechanism. Because those resolutions approve budget amounts at current levels, which exceed current federal revenue, they also continue the budget deficit, requiring an issuance of federal debt to cover the shortfall.

Lately, this process has produced a strange result, particularly in the Republican-controlled House of Representatives. Conservative House members regularly approve continuing budget resolutions – supposedly to keep the government open – but balk at raising the debt to cover the resulting deficit created by those resolutions. This practice of saying yes on the one hand and no on the other makes for a confusing situation, one that adds a measure of uncertainty to our economy and regularly roils world credit markets. It's a dangerous situation, and one created solely by Congressional action, but I think I’ve figured out why this happens.

Members of the House of Representatives stand for re-election every two years. Most Republican seats in the House are safe from Democratic challenge. However, any budget plan that would stand a chance of gaining Senate approval would increase the debt. Voting in favor of a budget that increases the public debt would make a Republican Congressman, even from a safe district, vulnerable to attack from the right. Supporting a continuing resolution, though also increasing the debt, is a stop-gap, short-term measure that puts House members in a much more defensible position - that is, saving the government and fighting the good fight. Defunding or re-purposing programs – the real budget solution - poses a much greater risk. (Ask someone over the age of 50 about means-testing Social Security retirement benefits and you’ll see what happens when you touch a constituent's favorite program).

So, when a conservative member of Congress votes in favor of a continuing resolution, he's not thinking about sound public policy. He’s thinking instead about the next election and about protecting himself from voter backlash over cutting a constituent's favorite government program.

When he votes against an increase in the federal debt limit - an increase occasioned by the continuing resolution he just approved - he’s not taking a stance for smaller government. He's actually only protecting himself from the accusation of a challenger (a fellow conservative) who could say “you aren't conservative enough." That is, his stance on either topic - budget authorization or debt limit increase - isn’t really a substantive position. It’s actually a campaign event.

Statesmanship – taking a course of action with the good of the people in mind – is no longer a motivating factor for House members (if it ever was). Getting elected and staying in office is the sole goal. That they gamble with their personal reputations for self-aggrandizement is one thing. But risking the national credit rating for the sake of gaining re-election shows just how small-minded politics has become.

Capitalism's Forgotten Moral Responsibility

Communists forgot that economies rest on individual choices. Forgetting that one simple truth left Communism relegated to the trash pile of socioeconomic theories.

In the United States, Capitalists gloated over Communism’s demise and spent the last two decades touting the power of individual choice and the wonders of economic freedom. And along the way, the Capitalists became forgetful, too.

Capitalism’s advocates have forgotten that no individual choice stands alone but rather stands in relationship to every other choice by every other person. Taken together, the individual choices that drive economies form communities. The freedom to attain wealth of immeasurable portion carries with it the moral obligation to address the needs of those who cannot succeed in a system in which success is the product of competition. At its heart, Capitalism produces great wealth, but it also produces an inherent economic disparity between those who thrive on competition and those who don’t.

The American economy moves on two trends. On one track, the trend is toward greater and greater efficiency, empowerment, and access. Yet the same things that promote those qualities – technology, information, and complexity – take the economy on a second trend toward exclusion of those with less skill, less ability, and limited access to education. The kind of Darwinian Capitalism promoted today would see no problem with grinding up those who cannot or will not pull themselves up to the required level of competition. That lack of moral imperative will be the end of our capitalist system.

In the 19th Century, pro-slavery advocates used state sovereignty arguments in an attempt to defend the immoral practice of slavery, and sacrificed the Tenth Amendment doing so. Segregationists of the 20th Century used a similar argument to defend the equally immoral American Apartheid, and sacrificed what remained of state sovereignty in that effort. Now, Darwinian Capitalists are sacrificing the remains of American Capitalism to defend their devotion to materialism. Capitalism can rouse itself to remember its moral obligation, or it can die. The liberty that grants to some the means of attaining great wealth comes at the price of caring for those who cannot, for whatever reason, exercise that liberty.