Obama's 2012 Budget was proposed this week. Nothing is set in stone yet, as Democrats and Republicans will fight one another over the next few weeks to see what gets funding and what gets cut.
The Process:
The President submits a detailed budget request to Congress outlining how much funding programs and agencies will need for the following year. Obama is currently in this stage with Congress. Included in the request is a detailed argument on why a agency needs more funding, or why it is getting less to try to persuade Congress to approve the proposal. The House's and Senate's Committee on the Budget each come up with their own resolution on the budget, which much be done by early April. The bill is then submitted to the respective floor for debate and passage.
Once each chamber passes their own budget resolution it must be reconciled between both chambers, meaning both budget resolutions must match each other word for word. This process is done with representatives from the Senate and the House- where some changes are usually made to both. Once both resolutions have been reconciled, the representatives release a conference report stating the finalized version of the budget. Both the House and Senate must vote on that version for it to become binding. Once approved, money is then appropriated, or set aside, for the each agency that is supposed to receive funding.
The News:
One thing the President has proposed is cutting Pell Grants. These grants provide a payment of $5,550 to lower income individuals to help aid in the cost of college tuition. Pell Grants are the main source of aid for lower and middle-class families sending their kids to college with over 9 million students using them a year.
Currently a student is eligible for two of these grants a year. One during the traditional school year and another if a student takes summer classes. Obama wants to cut payment for the summer term Pell Grants citing that students who use these summer grants do not graduate any faster. This is expected to save $8 billion next year and $60 billion over 10 years. In addition, Obama proposes cutting graduate level loan subsidization for a total of $2 billion savings next year and $29 billion over the decade.
The Interpretation and Opinion:
The biggest blow seems to come to the graduate students. Most are working individuals who decided to go back to school because they want to become more productive at their jobs. The more productive a worker is, the more productive society becomes. This policy will deter individuals considering pursuing a higher degree. This is a major setback for stimulating education and also reduces the human capital value of the United States making it even harder to compete with foreign nations.
Only time will tell what the effects of cutting summer Pell Grants will have, but it seems that if a student is enrolled in a summer class, then the grant has done its job to foster education. The job market in this nation is extremely competitive, so I'm not sure that Obama taking aim at higher education is the right place to start slashing the budget.
In addition the President has proposed to cut services that help assist the working poor and programs that help families heat their homes.
Still, even with all these cuts to the lower and middle-class programs the GOP is still not happy. They think that there needs to be more cuts to "help ease the deficit". This seems a little ironic after the Republicans blackmailed Obama by withholding unemployment compensation extensions until he passed tax cuts extensions for the rich. These tax cut extensions instantly added $858 billion to the national deficit, which by the way is more than the cost of the stimulus package.
So will the cut happy, fiscal hawk GOP want to slash away at larger, more burdensome strains on the budget like business subsidies or defense spending? NO. They think even more needs to be slashed from education and college financial aid.
How about slashing some military contracts? For example, GE Aviation is lobbying Congress not to cut their engine deal for the Joint Strike Fighter Jet. This deal contracts GE to build an extra engine for each Joint Strike Fighter Jet. The real killer is that the Pentagon says they don't need or want the motor. So why would would the government continue to pay $250,000 a motor? The manufacturing of this motor has supplied 1,000 jobs in Ohio for the last 15 years.
Maybe we should ask Speaker Boehner why he is maintaining such a socialist stimulus package to his state. Funny how something is socialism only when you don't benefit from it. The free market and the Pentagon has decided. So Obama and Congressional Democrats and Republicans, I think we have a line in the budget to slash.
Why is it that only the middle-class and poor programs have to make sacrifices. Shouldn't the Speaker and his state also bear some of these growing pains?
Obtaining the American Dream and having a chance to compete in our capitalistic system starts with having an education. Yet the government wants to put up more hurdles to gain a degree for the lower and middle classes while fighting tooth an nail to make sure the rich get tax cuts and big businesses get subsidies.
All this talk of budget cuts is a joke anyway. Even under this new budget the national debt is expected to increase from $14 trillion to $21 trillion by 2016 because no one has the backbone to cut anything real. Cutting education is just a costly lip service that cripples the future of this nation.
Voting against extending the $858 billion deficit causing tax cuts for the rich would have been much more effective at reducing the national debt than cutting $60 billion over a decade that goes fostering education. (Not to mention what it did to the U.S. loan rating) The thing is, the $60 billion it costs to to send 90 million productive, college educated, tax paying, consumers to school pays for itself. This number doesn't even include how many graduate students will be dissuaded from school.
Now here is some dirty math, that is doesn't figure out all the interest rates, or when each student graduates but it gives a good ballpark number:
If you take the average salary ($42,000) in the United States and figure out the progressive income tax rate for that bracket you get $5,570 payed to the government. If you then multiply that by 90 million educated kids that will loose the Pell Grant incentive over the next decade, the government will collect an average annual revenue of $501 billion in taxes. That means even with interests over the time it takes for these kids to graduate and work their way up, the government will make more back on their investment than they put in, not the mention the businesses and inventions some of these 90 million people will add to America's technological knowledge. Thats good business. Building motors we don't need is not.
Education is a human capital investment. Tax cuts for the rich, quite simply make the rich richer.
The Process:
The President submits a detailed budget request to Congress outlining how much funding programs and agencies will need for the following year. Obama is currently in this stage with Congress. Included in the request is a detailed argument on why a agency needs more funding, or why it is getting less to try to persuade Congress to approve the proposal. The House's and Senate's Committee on the Budget each come up with their own resolution on the budget, which much be done by early April. The bill is then submitted to the respective floor for debate and passage.
Once each chamber passes their own budget resolution it must be reconciled between both chambers, meaning both budget resolutions must match each other word for word. This process is done with representatives from the Senate and the House- where some changes are usually made to both. Once both resolutions have been reconciled, the representatives release a conference report stating the finalized version of the budget. Both the House and Senate must vote on that version for it to become binding. Once approved, money is then appropriated, or set aside, for the each agency that is supposed to receive funding.
The News:
One thing the President has proposed is cutting Pell Grants. These grants provide a payment of $5,550 to lower income individuals to help aid in the cost of college tuition. Pell Grants are the main source of aid for lower and middle-class families sending their kids to college with over 9 million students using them a year.
Currently a student is eligible for two of these grants a year. One during the traditional school year and another if a student takes summer classes. Obama wants to cut payment for the summer term Pell Grants citing that students who use these summer grants do not graduate any faster. This is expected to save $8 billion next year and $60 billion over 10 years. In addition, Obama proposes cutting graduate level loan subsidization for a total of $2 billion savings next year and $29 billion over the decade.
The Interpretation and Opinion:
The biggest blow seems to come to the graduate students. Most are working individuals who decided to go back to school because they want to become more productive at their jobs. The more productive a worker is, the more productive society becomes. This policy will deter individuals considering pursuing a higher degree. This is a major setback for stimulating education and also reduces the human capital value of the United States making it even harder to compete with foreign nations.
Only time will tell what the effects of cutting summer Pell Grants will have, but it seems that if a student is enrolled in a summer class, then the grant has done its job to foster education. The job market in this nation is extremely competitive, so I'm not sure that Obama taking aim at higher education is the right place to start slashing the budget.
In addition the President has proposed to cut services that help assist the working poor and programs that help families heat their homes.
Still, even with all these cuts to the lower and middle-class programs the GOP is still not happy. They think that there needs to be more cuts to "help ease the deficit". This seems a little ironic after the Republicans blackmailed Obama by withholding unemployment compensation extensions until he passed tax cuts extensions for the rich. These tax cut extensions instantly added $858 billion to the national deficit, which by the way is more than the cost of the stimulus package.
So will the cut happy, fiscal hawk GOP want to slash away at larger, more burdensome strains on the budget like business subsidies or defense spending? NO. They think even more needs to be slashed from education and college financial aid.
How about slashing some military contracts? For example, GE Aviation is lobbying Congress not to cut their engine deal for the Joint Strike Fighter Jet. This deal contracts GE to build an extra engine for each Joint Strike Fighter Jet. The real killer is that the Pentagon says they don't need or want the motor. So why would would the government continue to pay $250,000 a motor? The manufacturing of this motor has supplied 1,000 jobs in Ohio for the last 15 years.
Maybe we should ask Speaker Boehner why he is maintaining such a socialist stimulus package to his state. Funny how something is socialism only when you don't benefit from it. The free market and the Pentagon has decided. So Obama and Congressional Democrats and Republicans, I think we have a line in the budget to slash.
Why is it that only the middle-class and poor programs have to make sacrifices. Shouldn't the Speaker and his state also bear some of these growing pains?
Obtaining the American Dream and having a chance to compete in our capitalistic system starts with having an education. Yet the government wants to put up more hurdles to gain a degree for the lower and middle classes while fighting tooth an nail to make sure the rich get tax cuts and big businesses get subsidies.
All this talk of budget cuts is a joke anyway. Even under this new budget the national debt is expected to increase from $14 trillion to $21 trillion by 2016 because no one has the backbone to cut anything real. Cutting education is just a costly lip service that cripples the future of this nation.
Voting against extending the $858 billion deficit causing tax cuts for the rich would have been much more effective at reducing the national debt than cutting $60 billion over a decade that goes fostering education. (Not to mention what it did to the U.S. loan rating) The thing is, the $60 billion it costs to to send 90 million productive, college educated, tax paying, consumers to school pays for itself. This number doesn't even include how many graduate students will be dissuaded from school.
Now here is some dirty math, that is doesn't figure out all the interest rates, or when each student graduates but it gives a good ballpark number:
If you take the average salary ($42,000) in the United States and figure out the progressive income tax rate for that bracket you get $5,570 payed to the government. If you then multiply that by 90 million educated kids that will loose the Pell Grant incentive over the next decade, the government will collect an average annual revenue of $501 billion in taxes. That means even with interests over the time it takes for these kids to graduate and work their way up, the government will make more back on their investment than they put in, not the mention the businesses and inventions some of these 90 million people will add to America's technological knowledge. Thats good business. Building motors we don't need is not.
Education is a human capital investment. Tax cuts for the rich, quite simply make the rich richer.
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