Investing In People: Fiscally Responsible And Sustainable
By. Stuart R. Levine, Stuart Levine & Associates LLC
On November 27th, I was fortunate enough to hear a presentation by David Walker, Founder and CEO of the Comeback America Initiative (CAI). In this capacity, he leads CAI’s efforts to promote fiscal responsibility and sustainability by engaging the public and assisting key policymakers on a non-partisan basis to help achieve solutions to America’s federal, state and local fiscal imbalances.
His presentation provided an excellent overview of our need as a nation for fiscal oversight. He sees problems looming for the U.S. now and in the years ahead if budgetary solutions are not agreed.
As we are now into a period of sequestration, it is interesting to note that the term sequestration used to refer to valuable property being put aside by the courts and locked away for safekeeping. It now describes a new fiscal policy procedure to ensure that the size of the Federal government’s budget deficit is reduced by “automatic” spending cutbacks. This act of “sequestering” by the Treasury is designed to ensure that all of the appropriations bills passed by Congress are not in excess of the annual Budget Resolution. As many large Federal programs are exempt from the sequestration process, including Social Security, Medicare and part of the Defense budget, the “across the board” cutbacks affect the remaining un-exempted programs.
On March 1, because Congress failed to reach agreement on appropriations and spending, the estimated cuts this year will be $44 billion, approximately half of the $85 billion Congress could allocate this year, and it equals 2 percent of the total federal budget. Affected Federal agencies will be charged with cutting their budgets by about 9 percent, except for the Pentagon which needs to cut defense programs by 13 percent.
Spending has been a bi-partisan problem, as both parties have been in control of Congress and the Presidency since 2003. And we need to remember that the recession cut revenues and increased expenditures as more people qualified for food assistance, unemployment benefits and Medicaid. Over the past 100 years, the Federal Government has lost control of the budgeting process. In 1912, 97% of the budget was discretionary; in 2013 only 33% is discretionary due to the mandatory expenditures, substantially due to Social Security, Medicare and Medicaid.
Although the budget gaps are disturbing, a significantly more important gap is the social cost of underutilized human potential. The gaps in academic achievement are costing the U.S. economy trillions of dollars a year. Learning continues to be the key to both personal income levels as well as the capacity of our country to innovate and lead. Those leaders who continue to focus on the growth and leadership development of their employees will have the strength to reach lofty visionary goals, increase organizational capacity and move faster with increased financial acumen, strategic thinking and decision-making. Indeed, by investing in the creativity of the American people, in time that investment will also create incremental revenues that can balance the Federal budget.
