The Nonprofit Guide to the Federal Budget: A Pre-budget Playbook

Print Share on LinkedIn More

Throw away the old playbook on what to look for in this year’s federal budget negotiations. This time the cycle is so dysfunctional, that Congress and the White House are still dickering over the content of fiscal year 2011, only recently set to soapstone as a result of a grand deal negotiated by President Obama and House Speaker Boehner. It certainly wasn’t a deal etched in granite, as Congressional Republicans continue to raise the ante asking for retroactive and future spending cuts.

Everything is in flux. Whatever we think we knew about federal budgets we seem to find that we don’t know. But here’s what nonprofits should think about and mobilize around as the fiscal year 2012 begins to take shape – here’s your pre-budget playbook.

Budgets are moral documents

One might expect to see the concept of a “moral budget” from Jim Wallis of Sojourners, but not from Ed Feulner of the Heritage Foundation. The morality debate is over entitlements—Medicare, Social Security, and perhaps in the wake of health care reform, the right to decent health care for all Americas. Feulner believes that restricting, reducing entitlements is not immoral, though he has no morality concerns about tax breaks for the super wealthy and big corporations.

But budgets are moral documents, as talk-show host Tavis Smiley has reminded politicians. That is underscored this year where one party threatens to shut down the federal government or cause a default on the nation’s indebtedness. Major choices are at stake that will describe what kind of country we are. You don’t need to be Catholic to appreciate the three moral standards proposed by Stephen Blaire, Bishop of Stockton, and Howard Hubbard, Bishop of Albany, on behalf of the United States Conference of Catholic Bishops that can be used to guide or evaluate budget decisions (PDF):

1. Every budget decision should be assessed by whether it protects or threatens human life and dignity.

2. A central moral measure of any budget proposal is how it affects “the least of these” (Matthew 25). The needs of those who are hungry and homeless, without work or in poverty should come first.

3. Government and other institutions have a shared responsibility to promote the common good of all, especially ordinary workers and families who struggle to live in dignity in difficult economic times.

Sometimes nonprofits get so deep into the arcana of federal programs, particularly advocating for maintaining or increasing programs that they specifically use, that the national (and nonprofit sector) dialogue around what should be in the federal budget gets lost. It might not hurt secular and faith-based nonprofits to be able to speak to broader principles that might unite people rather than pitching for line items that connect to narrow constituencies.

Former Republican Congressman and now television news pundit Joe Scarborough admitted in Politico that one of the “time-tested truth(s) of Washington is that policymakers skew the rules to ensure Wall Street always wins.” After dragging the national economy into ruins, “Wall Street stands stronger than ever.” By any evaluation of the actions of the Bush and Obama administrations, something is askew in the morality of a federal budget that serves Wall Street but leaves so many “ordinary workers and families” in economic peril.

Budget hypocrisy

Partisans of both parties tend to look the other way when it’s their power brokers are involved. Scarborough reminds his readers that the bipartisan bailout of the Mexican economy in 1995 was actually a bailout engineered by Democrat Robert Rubin on behalf of his highly at risk colleges at Goldman Sachs. We remember the high-minded Rubin, during his Citicorp stint, intervening to lobby the Bush White house on behalf of a Citi client—Enron—to authorize some of the now-proven shady practices of that thoroughly corrupt corporate behemoth.

It is time for nonprofits to take a stand for budget honesty and call out the all too common practices of budget hypocrisy. Without meaning to pick on Republicans, we see that the latest example is budget cutter, now presidential candidate Michele Bachmann, who has had to acknowledge that her family farm and her husband’s Christian counseling clinic benefited from subsidy programs that she would now cut. Her financial disclosure filings were a little short on accuracy regarding her interests in the farm and the clinic, much less their use of government funds.

This time around, nonprofits have to be budget truth-tellers, even if it means telling the truth about their potential benefactors on powerful Congressional committees who might not be all that excited about being called on the carpet for their big and little hypocrisies.

Crowdsourcing the federal budget

To Congressman Paul Ryan’s credit, he at least offered a comprehensive picture of a fiscal year 2012 budget. The president’s fiscal year 2012 budget, proposed before Ryan’s saw the light of day, couldn’t get a positive vote from anybody from his own party. But since then, the budget process has reflected the downside of crowdsourcing. Coherent proposals don’t seem to be emanating much from the Democrats who prefer to simply flagellate their opponents with Social Security and Medicare scares. And the conservatives, having already abandoned Ryan’s budget as too slow in reducing the deficit, are resorting to a lowest common denominator crowdsourcing, reflected in the plan of FreedomWorks, the national nonprofit brainpower behind many of the Tea Party policy prescriptions. FreedomWorks will form a Tea Party budget commission (with 18 members drawn from electoral swing states) that will solicit budget ideas in hearings around the country and have the specific budget provisions voted on at

The nonprofit sector has to be able to do better than this. It has to eschew the sloganeering of the left and the LCD mechanisms of the right. The budget debate should be elevated; it should boost the quality of the national debate.

A shortfall in budget leadership

President Obama and House Speaker Boehner may have played golf, but neither exudes a dynamic of budget leadership. President Obama appears to just now be ready to personally join negotiations surrounding the deadlock over the federal debt limit, since Republicans such as Eric Cantor and Jon Kyl have walked out of official negotiations and Tom Coburn bolted from the “Gang of Six” because they could not countenance even the mention that budget cuts will have to be accompanied by revenue raisers.

But Congressional Republicans walking out of negotiations hardly constitutes a Chris Christie moment, much less their incoherence about the budget. For example, Republicans such as Bachmann have been pooh-poohing the impact of a potential federal government default on the budget, despite the low-key but deadly serious warnings from the likes of Federal Reserve chairman Ben Bernanke. The most telling example is Bachmann’s analysis of how government would function if it fails to increase the debt ceiling in time, that there will be no default. "The Treasury secretary can pay the interest on the debt first and then, from there, we have to just prioritize our spending," she said.

In other words, the holders of U.S. notes would get paid in Bachmann’s scenario, but many critical government functions would be left on the sidelines. In a family’s calculation, it is the equivalent to paying interest on the credit cards but going without food and clothing. This isn’t leadership. It’s pandering.

Budget mythology

Both sides do it, and it makes the nation stupider. The Dallas Morning Newsrecently highlighted some examples of bipartisan mythmaking, most notably the AARP’s contention in an advertisement that “Congress should cut ‘a cotton institute in Brazil, poetry at zoos, treadmills for shrimp’ if lawmakers want to balance the budget.”  That’s the Feulner line, that the budget could be fixed by getting rid of wasteful spending, but the costs of these AARP targets are minimal: $560,000 for the shrimp-treadmill project, less than $1 million for poetry in the zoos, $147 million for the cotton institute. No, AARP, balancing the federal budget isn’t quite that simple. But ads like that perpetuate the myth that balancing the budget is pretty much just a matter of reconciling your checkbook.

Our personal favorite is the attack on foreign aid. Most people don’t know that much of foreign aid goes to U.S. firms that deliver the assistance or requires the recipients to purchase U.S.-made products, but the reality is, despite all the public debate, foreign aid is 1 percent or less of the federal budget. Nonprofits have to not only help educate the public about where the money really gets spent, but also, in contrast to the AARP ad, they have to remind Americans of the important “moral” choices that have to be made in crafting a new federal budget.

The war budget

You don’t have to become a Republican or Democratic isolationist to realize that, as Scarborough wrote, the federal government’s “political gears are always greased for war.”

“The most recent Republican administration showed an unnerving propensity for war, and the current Democratic White House has expanded troop levels, increased the Pentagon budget and made larger the percentage of the U.S. economy being spent on weapons systems and hot wars,” he said. If people don’t think that the war economy doesn’t have a big impact on the federal deficit, they are seriously misguided.

Many of us are still waiting for the “peace dividend” that was supposed to result from the reduction of hostilities after the collapse of the Soviet bloc. Rather than putting the dividend into social programs, our nation’s leaders of both parties seem to be reinvesting that dividend with interest into war expenditures.

Just say no

No one wants to give anything up. This is what is tying up reform of entitlement programs, for example, which everyone knows have to be altered at some point, probably with some form of means testing. But no one will give up anything that they currently possess as an incentive or resource for fear that any sacrifice, even if important and well reasoned, is a loss. “Make the other guy suffer,” is the name of the budget lobbying game.

We take heed in the examples of some farmers who have called for an end of federal subsidies for some farm products. The dairyman president of the Iowa Farm Bureau, whose state has received $22 billion in farm subsidies since 1995, has called for an end to direct payments to farmers for crops, saying “everyone has got to share in the pain, including farmers.” Longstanding programs and perks that various sectors—including the nonprofit sector—have gotten accustomed to should be reexamined and, with some courage about what works and what doesn‘t for a moral budget, eschewed if their time is over or if the public would be better served without them.

It’s the economy, remember

Political posturing aside, the federal budget can be thought of as an economic and employment stimulus. In all the debate about the deficit, our nation increasingly gives lip service to the challenge of one-eighth of the labor force, either unemployed, underemployed, or simply having given up on looking for a job. Our candid fear is that the unemployment rate is going to increase (even with temporary stimulative actions such as releasing some oil reserves), that we could be headed for a double dip recession, and that the economy has shown no ability to generate new jobs at a rate to make a significant dent in the employment shortfall.

Unless the budget acts to generate jobs that put people to work and transforms them from unemployment check recipients to taxpayers, it is difficult to imagine a feasible budget scenario. We have previously covered former President Bill Clinton’s forthright recommendations for generating jobs and take note of the recommendations of John Irons and Andrew Fieldhouse of the Economic Policy Institute. Going beyond ideas floated by Democrats of a payroll tax holiday of some sort, they make the budget connection straightforwardly:

“Economic policy must be focused on creating jobs and strengthening the economy, not counterproductively cutting spending or reducing the deficit. Without additional fiscal stimulus, it will be years before the stubbornly high unemployment rate returns to pre-recession levels; reaching those levels would require putting 11 million Americans back to work . . . If political circumstances require that additional economic support must come through the tax code, a payroll tax cut would help turn the dial on unemployment in the right direction, albeit insufficiently. Even better would be reinstating the targeted, refundable Making Work Pay tax credit, which was replaced by the flat payroll tax cut . . . Direct spending generates more economic activity per dollar than tax cuts, because tax cuts can be saved or used to pay down debts instead of increasing current consumption . . . If further tax cuts are coupled with spending cuts of equal magnitude, employment will also fall.”

Oddly, despite campaign stump pronouncements of jobs, jobs, jobs, job creation doesn’t seem much on the table.  Remember the president’s jobs council?  It just gave the president its preliminary job creation recommendations, including:

  • Form business partnerships with community colleges to train more workers for to-day's open jobs.
  • Streamline permitting processes to speed more construction projects.
  • Make it easier for foreign tourists to obtain visas to travel to the US.
  • Help small employers get more loans with help from the Small Business Administration.
  • Help construction workers pick up their tools again with a campaign to upgrade commercial and government buildings for energy efficiency.

While the president said some obligatory nice things about green jobs, the jobs council recommendations disappeared into the press netherworld. Why? Because creating jobs and stimulating the economy requires a judicious but sizable dollop of federal expenditures that the Republicans oppose on principle and the Democrats can’t seem to articulate as a priority.  

There can’t be real guidelines for a budget yet, because there is barely a budget in the works. What I’ve laid before you instead are guideposts for nonprofit action on the federal budget – the need to be involved and get engaged, or else the federal budget morality gets merged with national fiscal collapse.

  • Charles

    Nice article. The moral and ethical considerations of budgeting are just as important as the monetary considerations. I really appreciate the 3 proposed standards from the Conference of Catholic Bishops. Well said.

  • Brandon

    It’s not immoral to allow people to keep their own money is it?

    The federal government of the USA used to confine itself to governing as opposed to offering charity. History clearly illustrates that the former was vastly superior to the latter.

    As the US follows Europe on the slow road to weakness, that conclusion becomes clearer and clearer. We offer government benefits because we feel it’s necessary while acknowledging the costs. There are way too many people that minimize or refuse to acknowledge the cost, you included.

    Social Security, Medicare, Welfare, Unemployment, and all the rest do not create wealth in any way shape or form. One must accept that fact before we get into any debate on those programs. One must also accept the fact that these government programs replace individual solutions to many problems.

    My grandmother lives in a subsidized apartment that costs her $200 a month. That same apartment would probably be $1100 on the open market. She recieves $700 in social security, and her health care is entirely free. She’s been entirely dependent on the government for 23 years now.

    Like I was telling her last night. If you took all of that away, she would be living with me or her son. She would be fed. She would be taken care of. I work in geriatric care. When people are forced to privately fund solutions, you see people circling the wagons and banding together to find a solution. When the government handles everything, you see family and friends do absolutely nothing.

    We are quickly approaching a point where services will have to be capped. You can’t spend a million dollars on one person to be taken care of for 30 years. It’s simply not feasible.

    The entire income taxed at the top rate amounts to 630 billion dollars. There simply isn’t enough money to pay for all this anymore. Considering the fact that automation and free trade deflate wages and the necessary deficit spending will keep prices high, we see that these social welfare programs are a double whammy on our working population.

    I don’t think we should wait until the USA is in danger of imploding before we cap some of these benefits. Go ahead, raise taxes on the rich. It is only going to be a bandaid on a gaping wound. Then what will you propose?

    You also ignore the fact that budget projections with massive deficits already factor in an end to the recession so the reality is, deficit projections may well be overly optimistic. You’re also assuming that government spending will create enough jobs to offset the inflation that spending will create. The history of such things proves you entirely wrong.

    In the old days, wages would drop, prices would drop, and the process would begin anew. The deficit spending and massive debt cannot allow this natural process to occur and the resulting malaise is a result of continued belief in government intervention ala Keynesian stimulus.

    In conclusion, you’re wrong and unfortunately people like you are bringing the entire Western world down with you.