"Federal Deficit 101" for Anxious Parents
The constant drumbeat in the news about the federal deficit and its potentially dire consequences for our country has parents like me nervous. The last thing I want is to leave my two precious children with a crippling debt that will limit their future security and prosperity.
I don’t have much time for new research projects (this is an understatement!) but I reached the point at which staying ignorant about our deficit – both what caused it and what we can do to get out of it – didn’t feel like an option any more. After putting aside the heated rhetoric from both sides of the aisle, I uncovered some useful, fact-based resources that are helping me get my head around this complicated situation.
For you fellow anxious, no-time-to-spare parents, I share the beginnings of my research.
Question #1 -- Are we broke?
This question requires a two-part answer. First, there is no doubt that every level of government – local, state and federal – has been cutting spending in response to a decrease in sales and income tax revenue during the economic downturn. According to the Center on Budget and Policy Priorities, the recent recession brought about the largest collapse in state revenues on record and for the upcoming fiscal year, 42 states and the District of Columbia are projecting a shortfall of $103 billion.
At the same time, we’re hearing a lot about our growing federal deficit. Interestingly, our federal deficit is a problem that pre-dates the economic downturn and isn't related to runaway federal spending on social or "entitlement" programs. In fact, a December 2010 report from the bi-partisan Congressional Research Service noted that in just a few short years, our country moved from having budget surpluses to increasing our debt as a result of spending $1 trillion on the tax cuts enacted in 2001 and 2003, the increase in defense spending for the wars in Iraq and Afghanistan, and the costs associated with the Medicare prescription drug benefit enacted in 2003.
No matter what the cause, our current deficit situation is indeed scary. According to the non-partisan Congressional Budget Office, the federal deficit is projected to hit $1.3 trillion this year.
If our deficit continues unchecked, we will spend more and more money just paying the interest on our debt, squeezing our spending in all other areas such as defense, education and Social Security. Addressing the consequences of a growing deficit, the bi-partisan National Commission on Fiscal Responsibility and Reform wrote in its December 2010 Report: “America cannot be great if we go broke. Our businesses will not be able to grow and create jobs, and our workers will not be able to compete successfully for the jobs of the future without a plan to get this crushing debt burden off our backs.”
Question #2 - Are proposed cuts to social programs actually going to reduce the deficit?
If we are even going to consider terrible cuts to important programs, I want to know they are actually going to work. My nightmare is that we’ll make drastic cuts to programs, people are suffer and the cuts don’t end up saving money at tall (or worse, it will cost us more in the end). Based on my research, there is reason to be concerned that unwise budget cuts would cause long-term problems.
Let’s consider the proposed cuts to Medicaid as an example. Currently, Medicaid provides health coverage for approximately 60 million people, including children from low-income families, adults with significant disabilities and the elderly who require long-term care. Some in Congress are suggesting dramatic cuts in Medicaid in next year’s budget, which could result in millions losing this coverage.
You don’t have to be a health policy expert to realize this means many people will not be able to afford preventive care and treatment in the future will be more costly for all. For example, research shows that children who have health coverage are 3 times more likely than an uninsured child to have seen a doctor recently and five times less likely to need to use the Emergency Room as a regular place of care.
Before we consider serious cuts to programs that provide health care, nutrition and education for people, it seems pretty important to make sure that we're cutting everything and anything that falls into the category of 'wasteful spending". Interestingly, the same political leaders who propose drastic cuts to helping families insist that our nation has enough money in our federal budget to spend billions to give tax breaks for millionaires, should ignore bi-partisan recommendations to cut nearly a trillion dollars of unnecessary defense spending, and should continue providing $40 billion in giveaways to Big Oil at a time when oil companies are making record profits on sky-high gas prices.
I certainly have a long way to go before completing my "Federal Deficit 101" course! Each "answer" only spawns more questions. Join me in this adventure and we'll learn more together.
What questions do you have?? Please share them now by adding a comment to this blog and we’ll have top experts address them during our Facebook chat on Thursday, July 7th from 12:00-12:30 PST on our MomsRising Facebook page.
Don't worry- your thoughts don't have to be the well-formed opinion of a full-time economic expert. Your experience as a caregiver (or child of a caregiver!) gives you the right to speak up and ask your questions. Share your thoughts below!