Budget Percentages

With the passage of the first continuing resolution, the United States federal government has spending authority until December 11, 2014.

House Joint Resolution 124 (HJR 124) allows Uncle Sam to spend money through the first quarter of Fiscal Year (FY) 2015. Instead of going through all of the federal programs one by one and allocating money, HJR 124 mandates that federal programs have their spending levels set at FY14 levels.

Except, that’s not entirely true. Section 101(b) of HJR 124 says that all spending levels for FY15 will be cut by 0.0554 percent of FY14 levels.

Not 1%.

Not even 0.1%.

Congress slashed spending across the board by one-half of 0.1%.

In other words, for every $100 spent, spending has been cut by a nickel. In other other words, for every Ben Franklin bill, subtract a Thomas Jefferson coin.

How does that work in the real life of the federal government? Here are some examples.

According to the Congressional Budget Office (CBO) estimate of FY14 spending (here in PDF form), the United States Department of Agriculture (USDA) was authorized to spend $20,880,000,000 (or $20.88 billion for those who like their numbers in words). With the ax wielded by HJR 124, the folks over at 1400 Independence Avenue SW in Washington D.C., now have $11.56 million less to spend in FY15.

The Department of Defense was authorized in FY14 to spend $572,042,000,000 ($572.042 billion…or 27.39 times more than the USDA). Courtesy of HJR 124, the Pentagon now only has $571.725 billion to work with.

And so on down the line.

According to the CBO, discretionary spending for FY14 was set at a level of $1,110,725,000,000 (or $1.110 trillion). Therefore, using a bit of math, the federal government has its FY15 spending authority cut by $615,341,650 and now can only spend $1,110,109,658,350 (or $1.110 trillion).

But how much of this cutting, hacking, and slashing of 0.0054% by Congress actually accomplished anything?

With the start of October, FY14 ended and the CBO has come out with its preliminary look at the fiscal year just passed. According to the CBO Monthly Budget Review for September 2014 (jump to the graph entitled “Total Outlays”), the federal government spent $1.608 trillion on discretionary spending ($578 billion for Defense, $1,030 billion for everything else). However, Uncle Sam spent a grand total of $1.651 trillion on only three programs ($840 billion for Social Security, $509 billion for Medicare, and $302 billion for Medicaid). That $1,651,000,000,000 of mandatory spending – or almost half of all FY14 spending – was untouched by the Congressional ax for FY15.

In fact, those three mandatory programs increased their spending. Once again, according to the CBO, Defense spending shrunk 4.9% from FY13 to FY14. In that same time period, all the other discretionary spending shrunk 2.3%. Meanwhile, over the twelve months from September 2013 to September 2014, Social Security grew 4.6%, Medicare grew 2.7%, and Medicaid grew 13.6%.

All of those figures for mandatory spedning are greater than 0.0554%

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Governmental Gridlock

Once again I will be exploring the concept of the “do nothing” Congress, the charge levelled against the legislative branch of the United States government when people feel Congress hasn’t passed enough legislation, approved enough presidential nominations, or failed to even debate proposed laws.

The appellation of “Do Nothing” was first applied to the 80th Congress by President Harry S. Truman during the 1948 elections.

The charge of “Do Nothing” has been levelled against the most recent sessions of Congresses as both the 113th (here and here for examples) and the 112th (example here) have been accused of being even more lazy than the 80th.

However, is such a charge of do-nothingness even true or even reasonable?

Congress does much more than pass legislation, which is one way of measuring effectiveness. For all of the vitriol dumped against the 80th Congress, that legislative session did pass 906 public laws. For comparison, the 112th passed 283 and the 111th passed 383.

As part of its additional duties, Congress debates legislation, hold committee hearings and subcommittee hearings, and hears from their constituents.

There is also one part of the job of Representatives and Senators that could, in my estimation, be part of the reason why things are so gummed up over at the Capitol Building. Congress is inundated with communications from the Executive Branch. Granted, this is the fault of Congress as each one of the official communications that finds its way from 1600 Pennsylvania Avenue to the Capitol is required by federal law so if any Representative has any complaint, they only have themselves to blame.

I will use only one day from the Congressional Record as an example. On Friday, September 19, 2014, Congress received seventy-six letters from different agencies of the Executive Branch. I would fathom the guess that members of Congress are expected to read all of these missives (or at least the ones directed their committees and sub-committees).

So what are some of the things the executive agencies need to tell their legislative counterparts? Let’s take a look.

There is a letter from the Under Secretary for Rural Development, Department of Agriculture, transmitting the Department’s final rule — Eliminate the 6-Day Reservation Period Requirement for Rural Development Obligations (RIN: 0575-ZA01) received September 18, 2014, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Agriculture.

There is a letter from the Deputy Director, ODRM, Department of Health and Human Services, transmitting the Department’s final rule — Patient Protection and Affordable Care Act; Annual Eligibility Redeterminations for Exchange Participation and Insurance Affordability Programs; Health Insurance Issuer Standards under the Affordable Care Act, Including Standards Related to Exchanges [CMS-9941-F] (RIN: 0938-AS32) received September 3, 2014, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Energy and Commerce.

There is a letter from the Assistant Secretary, Legislative Affairs, Department of State, transmitting Transmittal No. DDTC 14-089, pursuant to the reporting requirements of Section 36(c) of the Arms Export Control Act; to the Committee on Foreign Affairs.

There is a letter from the Chief, Branch of Endangered Species Listing, Department of the Interior, transmitting the Department’s final rule — Endangered and Threatened Wildlife and Plants; Threatened Status for Oregon Spotted Frog [Docket No.: FWS-R1-ES-2013-0013] (RIN: 1018-AZ04) received September 19, 2014, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Natural Resources.

There is a letter from the Deputy Assistant Administrator for Regulatory Programs, NMFS, National Oceanic and Atmospheric Administration, transmitting the Administration’s final rule — Atlantic Highly Migratory Species; North and South Atlantic 2014 Commercial Swordfish Quotas [Docket No.: 000007123-4657-02] (RIN: 0648-BD96) received September 18, 2014, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Natural Resources.

Those are just five examples and you may have noticed something similar in all of the above correspondences. The item common to all of them is the phrase “pursuant to 5 U.S.C. 801(a)(1)(A)”. So what does that mean?

That phrase is referencing the United States Civil Code – specifically Title 5 (Government Organization and Employees), Chapter 801 (Congressional Review), Section (a), Paragraph (1), Line (A) which basically states that before a new rule from a federal agency can take effect, that agency has to submit to Congress a copy of said rule.

Read that again.

Every rule. To Congress.

With all that mail to read, it’s more of a wonder why less isn’t done in the halls of Washington.

Nonprofit Tax Havens Are a Thing?

While the news is full of stories about the current do-nothing Congress (see here and here and here for examples) and even this here little blog pokes light at the lack of working days under the dome of the United States Capitol, there are moments when the members of the House of Representatives and the United States Senate (and even…gasp…the President of the United States) can actually come together and pass legislation.

Although funding the federal government doesn’t seem to be one of those things.

However, in the lane of cooperation, the federal government did pass Public Law 113-163, which started life as S.1799 and which is officially known as the Victims of Child Abuse Reauthorization Act of 2013.

The Victims of Child Abuse Act (VOCA) of 1990 created a program that would allow the Department of Justice (DoJ) to “…make grants to develop multidisciplinary child abuse investigation and prosecution programs.” The DoJ created the Office of Juvenile Justice and Delinquency Prevention (OJJDP) to distribute those grants to establish regional and local children’s advocacy centers, strengthen court appointed special advocate programs, and improve the prosecution and court management of child abuse cases. The head of the OJJDP is the Administrator and it is this position’s role to make those grants (and if you like to see the actual law, you can pop on over to Title 42, Chapter 132, Subchapter I, Section 13003 of the United States Civil Code to see the technical legal language concerning the Administrator and grants).

The reason the word “Reauthorization” is in the title of Public Law 113-163 is because funding for VOCA was not included in President Obama’a budget for Fiscal Year 2014 (FY14). In 2013, the junior Senator from Delaware, Democrat Chris Coons, introduced legislation that would restore $20 million in funding to VOCA programs for FY15.

Helping abused kids is a rather non-partisan issue in the halls of Washington so it is not surprising that in June of 2014, the Senate passed S.1799 by unanimous consent and on the next month, the House passed the legislation by voice vote. The President signed the bill in August and the OJJDP is back in the grant-making business until the end of FY18.

But none of the above is why I chose to write about VOCA, the OJJDP, Senator Coons, or child advocacy centers. Instead, what I found intriguing about S.1799 is some of the wording that happens after the text that extends funding through the end of Fiscal Year 2018.

Section 2(b) of Senator Coon’s legislation adds text to the original 1990 law that created VOCA (also known as Public Law 101-647 which was first known as S.3266 and was introduced by the then-junior Senator from Delaware, Joe Biden, the current Vice President).

Section 214(c)(1) has now been added to PL 101-647 that mandates that the DOJ’s Inspector General conducts audits “of recipients of grants under this subtitle to prevent waste, fraud, and abuse of funds by grantees.” Obviously, these audits weren’t being done before which is why the Senator from Delaware had to add this language to look for malfeasance on the part of grant recipients.

Has the news been filled recently with child advocacy center grant recipient using federal money in a wasteful manner? I have not been able to find any, but then I must admit my on-line search was not entirely exhaustive.

In a like vein, section 214(c)(2)(b) states that the “Administrator may not award a grant…to a nonprofit organization that holds money in offshore accounts for the purpose of avoiding paying the tax described in section 511(a) of the Internal Revenue Code of 1986.”

Basically said, if you are a nonprofit helping abused children and you also store money in a bank outside of the United States to avoid paying a certain tax, the OJJDP wants nothing to do you.

Again, has the news been filled recently with nonprofits stashing dollars in the Cayman Islands to avoid paying Uncle Sam?

I find it weird that the United States government would let it be known via legislation that nonprofits are not welcome to park their cash outside America. However, this same government has absolutely no issue with giving the green light to companies that do make a profit to put money away in international banks to avoid paying federal business taxes.

According to this Newsweek article, “Apple and GE owe at least $36 billion in taxes on profits being held tax-free offshore, Microsoft nearly $27 billion and Pfizer $24 billion…” all in perfectly legal and Congress-approved ways. This article from Bloomberg states that companies like Apple and IBM have parked a combined $1.95 trillion (yes, with a “T”) overseas to avoid paying taxes. These companies still can play with the United States government.

But if you’re the Pennsylvania Alliance for Child Advocacy (or a similar-named outfit), don’t even think about opening up a bank account in Ireland…you tax dodger, you.