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Government Spending

The Late Edition: October 2, 2013
Posted By: Curtis Kalin - 10/02/13

Today’s Taxpayer News!

Low Voltage: General Motors reported that the brand’s much hyped and subsidized Chevy Volt continued its dismal sales pace in September. Volt sales saw a 38% decline from year to year. Taxpayer funded credits for September were over $13 million. The National Legal Policy Center has more details.

Corruption crackdown: After more than 30 lawmakers from New York State have been embroiled in ethics issues over the last seven years, a commission appointed by Gov. Andrew Cuomo has proposed new rules that would strip corrupt politicians of their taxpayer funded pension. Read more from today’s New York Times.

Taxpayer toilet: The Federal Bureau of Land Management used spent over $98,000 for a single outhouse on a park trail in Alaska. CNSNews has more.

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Government Shutdowns Then And Now
Posted By: Michael Tasselmyer - 10/01/13

As the clock struck 12:01 this morning, the federal government found itself in a situation we haven't seen since 1996: a shutdown. Because Congress was unable to come to an agreement on how to fund certain federal agencies whose budgets depend on annual appropriations, they've been forced to "shut down", and in some cases completely halt all activity.

While the term does sound dramatic, this is actually the 18th time since 1976 that the government's been forced to temporarily shut down. The other 17 episodes have lasted anywhere from a single day to nearly three weeks, stemming from political squabbles over issues like abortion to budgetary debates that simply couldn't be settled in time.

So what will happen until Congress is able to pass a budget or agree to a short term fix? Under federal law, all government agencies are required to have official contngency plans that specify which employees and duties are "essential" and "non-essential" (or "excepted" and "non-excepted"). This ensures that the government will still act in limited ways to protect public health & safety, and it continues benefits like Social Security and certain types of assistance for veterans. The Congressional Research Service has an excellent overview of the legal issues the government must consider during a shutdown, as well as examples of how certain government services and functions were affected. Some 800,000 federal employees are likely to feel the effects of the latest shutdown either in the form of furloughs or unpaid leave. The Departments of Health and Human Services, Commerce, and Interior are expected to be among the hardest hit.

While the last shutdown in 1995-1996 may offer some precedent when it comes to how the current one might play out, there are contextual differences to consider.

  • For one, federal employment has increased substantially since then: in 1996, there were a little less than 1.9 million full-time civilian employees in the Executive branch. In 2012, that number was closer to 2.1 million, which means an additional 200,000 federal workers and their families could be affected this time around.
  • President Clinton's 1996 budget request, over which the disagreement began that ultimately lead to two government shutdowns in late 1995, included $1.6 trillion in outlays and a $196.7 billion deficit. President Obama's latest budget request, submitted in April, consisted of $3.03 trillion in outlays and a $744 billion deficit.

The charts below (using Office of Management and Budget data) illustrate U.S. spending on mandatory & discretionary programs in 2012 compared to 1996:

fy96spendingfy12spending

A major point of contention in the most recent budget battle that caused today's shutdown was how (and whether) to fund the President's health care reform law. Mandatory spending -- which includes funding for entitlement programs like Social Security, Medicaid, and Medicare -- has increased dramatically in recent years, and will likely remain a primary focus of budget debates as long as it makes up the majority of federal spending.

There is also growing concern over the amount of funding required to keep up with interest payments on America's debts. As the government borrows more to finance its existing programs, interest payments have increased significantly. So far, the government has spent about $396 billion on these payments in Fiscal Year 2013 alone, not including the month of September. In 1996, that total was $344 billion.

While the debate over budget priorities and even the shutdown itself aren't new on Capitol Hill, this time around, the fiscal trends framing the discussions are.

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The Impact of Past Government "Shutdowns"
Posted By: Curtis Kalin - 09/30/13

The federal government officially runs out of funding at midnight tonight.  While a good amount of attention will be devoted to political blame, it’s helpful to understand what a shutdown really means and what will actually happen in its wake.

First, the name, “shutdown” is not entirely accurate.  The situation can more cogently be described as a funding gap.  Between which one stream of funding ends before another is approved.  The drastic nature of these once normal bureaucratic snafus were exacerbated in 1980 when President Carter’s new Attorney General, Benjamin Civiletti issued a couple legal opinions interpreting the obscure 1884 Antideficiency Act: One saying the work of government cannot continue through a funding gap, and another modifier saying that only essential government services and personnel could legally remain working.  To allow non-essential government employees to work without being paid meant they would be “illegal volunteers”. 

After the consequences of funding gaps became clear, politics gradually asserted itself.  Throughout the end of Carter’s term and on through the Reagan and Bush terms, temporary shutdowns of anywhere between one and five days were commonplace and were precipitated by an outside political issue.  The gap and the subsequent standoff between President Clinton and House Speaker Newt Gingrich in 1995, which dragged on 21 days, holds the modern record.  Due to the political backlash that engulfed Washington in the months following the ’95 shutdown, America has not seen such an event since. 

Another note about the term “shutdown”: Civiletti’s second legal opinion allowing “essential” workers to remain on the job means many impactful government services will continue.  Medicare and Medicaid reimbursements will not stop.  Social Security checks will continue to be mailed. There is also a current statute stating that military personnel will continue to accrue pay which will be reimbursed after funding is restored.  However, the term “essential” does not apply to national parks, zoos, and museums like the Smithsonian.  They will close if there is a funding gap. 

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The Late Edition: September 30, 2013
Posted By: Curtis Kalin - 09/30/13

Tweet tutoring: The Food and Drug Administration is paying over $182,000 of taxpayer money to an outside group for the expressed purpose of “better understanding” their social media. The agency is currently far behind other agencies in the number of Facebook “likes” and Twitter “mentions”. Read more at the Washington Free Beacon.

Paycheck hypocrisy: An Illinois judge ruled that members of the general assembly will indeed get their taxpayer funded paychecks after Illinois Gov. Pat Quinn forced members of the state legislature to forfeit their salaries until they solved the state’s unfunded pension liability crisis. On top of that, the back pay will have to come with interest.  The Herald Review has more details.

Paper waste: The staff of Florida Rep. Alan Grayson used a bit of their time on the job to pull a prank on a fellow employee.  A member of Rep. Grayson’s district office staff posted a picture of a chair wrapped I toilet paper and a note admitting the deed on an office phone on Facebook.  Presumably, all of this occurred during business hours. Bizpac Review has more.

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States' Dependence on Federal Spending: Historically High
Posted By: Michael Tasselmyer - 09/24/13

Whenever the national economy takes a turn for the worse, states' tax revenues tend to fall, and policymakers at the federal and state levels often try to fill the budgetary gaps with an influx of federal tax dollars. These sorts of "stimulus" measures are pitched as ways to keep important public services operating until the economy recovers. In 2009, the President's signature stimulus bill -- the American Recovery and Reinvestment Act (ARRA) -- pumped massive amounts of public dollars into states' coffers, which went towards infrastructure construction, teacher and emergency personnel payrolls, and other projects.

This budgetary trick isn't new. What is unique when it comes to states' budgets in recent years, however, is just how much they depend on federal funding. According to new research from the Pew Charitable Trusts' Fiscal Federalism Initiative, more than 1 out of every 3 dollars states spend comes from a federal fund or grant. Even in past recessions -- indicated by the grey shading in the chart below -- that ratio tended to hover closer to 1:4.

statefedspending

Source: Pew Charitable Trusts

In the wake of sequestration, these findings mean that some states will undoubtedly be sitting a little closer to the edges of their seats as Congress begins another round of contentious debate on the budget and how it might avoid a government shutdown. States in the national capital region such as Maryland and Virginia will obviously be affected by any reduction in federal spending: more than 20 percent of the area's GDP consists of federal spending.

However, there are also some states that are more geographically removed from Washington but still have plenty of skin in the game -- in Kentucky and New Mexico, 35 percent of GDP comes in the form of federal spending, and there are 6 states total that depend on D.C. for more than 30 percent of their economic productivity. The Washington Post has a helpful breakdown of some of these figures here.

There are some signs of improvement: as the economy (slowly) recovers, states' tax revenues have steadily begun to increase. However, economists seem to agree that those numbers are heavily influenced by higher tax rates overall, such as recent rate increases in California.

For more on Pew's study, including plenty of helpful charts and deeper statistics, take a look at their Fiscal Federalism Initiative here.

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The Late Edition: September 18, 2013
Posted By: Curtis Kalin - 09/18/13


Today’s Taxpayer News!

Another “green” bust: An electric car charging company in Phoenix which was sponsored by the Department of Energy is considering bankruptcy after admitting the stations they installed are not making a profit and disclosing that DOE’s “EV Project” spent almost $100 million of taxpayer money to help prop up the fledgling company.  Read more here.

Tattoo stamps? A Raleigh, NC tattoo parlor has been accepting SNAP cards (a.k.a. food stamps) totaling hundreds of dollars. Read more at Red Alert Politics.

HipsterCare: Watchdog News highlights a new, and quite psychedelic, ad from Oregon’s state agency administering the Affordable Care Act (Obamacare).  The ad, part of a longer campaign to enroll Americans, costs taxpayers almost $10 million.  The TV ads themselves total $3.2 million in taxpayer funds.

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Congressional Franking Spending on Decline
Posted By: Dan Barrett - 09/17/13

With public approval of Congress at a consistent low, it's hard to give Members a complement or, rather, a comment on them doing something less badly. However, when it comes to their decreasing mail costs, some credit may be due.

In the first 6 months of 2013, House Members spent significantly less of their office allowances on franked mail (official letters that are permitted to be sent without postage), $8.8 million less than the same period in 2012. There are a few reasons for such a change, including:

The Interwebs: Politico reported that direct mail is being replaced with online communications (email and web ads). Comparing 2012 to 2013, Congress is following the mass migration of advertising dollars from print media (newspapers, magazines, and mailers) to social media (Facebook, Twitter, Google ads, etc.). The average Member who spent $2.2 million last year is now spending $3.6 million now and the reasoning is simple: online targeting is cheaper (if it costs anything at all) in reaching a larger audience.

Legislative Action and Sequestration: That same article cited an 18 percent cut in Members' Representational Allowances (annual budgets of Congress' office space, travel, salaries, and franking). Congress itself has passed legislation that has cut their own office benefits by at least 11 percent (via the Congressional Research Service (CRS)). And, yes, the automatic across-the-board cuts (sequestration) that big spenders are preaching will bring about Armageddon are forcing Congress to further cut their own allowances like the rest of the government. Millions of tax dollars have been saved and millions more will not be spent if this trend continues.

The Election Cycle:  However, there is a factor that Politico does not address: getting reelected. Another CRS report delved into the limits of franking in relation to election season. If a Representative is a candidate in a primary or general election, they are prohibited from sending out official mail 90 days in advance. The Members then avoid violating the regulation by sending out more mass mailers in the first 6 months of the election year. No rules are broken but mail volumes for Quarters 1 and 2 spike, as seen in 2012 as opposed to 2013. One other thing to note: CRS believes mail volume between non-election and election years does not significantly change and, while I can agree with their research, I'm making more of a point on the timeliness of franked mail, not the quantity.

So what should taxpayers expect in 2014? My money is on registered voters getting more franked mailers in the first half of the year and a steadily increasing amount of emails and online ads as we get closer to November, compared to 2013. As far as federal spending, franking costs should be expected to further decrease as Hill offices discover that online communications produce better results at a much lower (if any) cost. This issue is also divided by political parties in that Republicans tend to send out more franked mail than Democrats. This too will likely decrease as technology gets better at delivering Members’ messages in better ways online.

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George W Bush's Retirement Benefits
Posted By: Dan Barrett - 09/13/13

Below is the final NTUF infographic on Presidential Perks. Today's focuses on George W. Bush, who has spent $7.1 million of public money (so far) in six years. Like the other Chief Executives, there is no overall cost figure for Secret Service protection and the numbers are based on budgetary requests of the General Services Administration.

Be sure to check out the other Presidents' retirement costs and be on the lookout for more retirement analysis from NTU Foundation!

Other Infographics:

A summary of what former Presidents is available in an edition of The Taxpayer's Tab.

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Bill Clinton's Federal Retirement Benefits, an Infographic
Posted By: Dan Barrett - 09/12/13

How much do you think that former Presidents get from taxpayers each year? Bill Clinton gets an average $1.09 million and that's not including his Secret Service protection or any trips that might come up (like state funerals or any international negotiations that he might be a part of). In this week's third infographic, NTU Foundation took a look at exactly what Clinton spends his retirement perks on and how that compares to the other three former Commanders-In-Chief.

Like our other infographics and a recent edition of The Taxpayer's Tab, we used the budgetary requests from the General Services Administration, which is the agency in charge of disbursing the Presidents' benefits. However, the requests do not necessarily translate to actual spending. GSA does not release the actual figures of how much Presidents really cost taxpayers each year. This is the most complete information that is publicly available.

Do you think that former Presidents need public dollars? Should something be cut or increased? Let us know in the comments!

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Taxpayer Benefits for President George H.W. Bush
Posted By: Dan Barrett - 09/10/13

In this week's second infographic, we look at former President George H.W. Bush's annual office and pension allowances. These benefits are funded by taxpayers and there is still some question on exactly how much America's ex-Commanders-In-Chief are recieving eaxh year. The General Services Administration only releases Presidential retirement spening in the form of budget requests, which are not exact in what eventually is spent.

Taxpayers are also not able to see how much it costs to protect the four former Presidents. While it should not be expected to get detailed information on exactly how they are escorted and guarded by Secret Service personnel, an overall cost figure ought to be available so taxpayers can understand the full costs of Presidents after their tenure in office.

Besides the graphic below, check out a recent Taxpayer's Tab that examined the broad spending points and total costs of ex-Presidents.

Do you think that former Presidents need public dollars? Should something be cut or increased? Let us know in the comments!

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