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Current time:0:00Total duration:9:35

Video transcript

- [Instructor] What we're going to do in this video is focus on the budget process in the US Congress. And just as a reminder, that's one of the major functions of the United States Congress is to pass a budget for the Executive Branch to decide how much money the Executive Branch has to use to actually function. And when it comes to the budget, the two most powerful committees are the Appropriations Committees in the House of Representatives and in the Senate. They get to decide how much money goes to various departments and programs in the federal government. Just for context, let's get a broad view of what the federal budget looks like and how it has changed over time. So over here you see the trend from the early 80s all the way until projected a few years into the future at the time of this video being created. And you can see the absolute level of the federal budget has gone from a little under $1 trillion and it is now approaching $4 trillion. And this view of the breakdown of the various spending areas gives us a better sense of some trends. As we mentioned in other videos, there's a significant chunk of mandatory spending. Mandatory spending are things that by law we have already obligated ourselves to. And the big ones here are Social Security and Medicare and you can see that they have gone collectively from a little over 20% of the federal budget to now approaching almost 2/3 of the federal budget. Now another chunk of this budget that we are obligated to pay is the net interest on our national debt. We are borrowers as a country and so we need to pay interest. Now everything else here you can consider to be discretionary. That would be this national defense piece right here in purple and then everything above this net interest piece. And that's what the Appropriations Committees are going to decide on, where to spend that money. How much does national defense get and how much do these other priorities for the country get? Now generally speaking, the amount of money allocated to various programs and various departments, how it is spent tends to be decided by the Executive Branch. Congress's job is to set the budget but that is not always the case. Congress can also set aside portions of this budget for specific projects. And the setting aside of parts of the budget for specific projects is known as earmarks. And to make things tangible, here are some examples of earmarks from the Highway Bill that was passed in 2005. And as you can see, it just lists a bunch of special projects and this goes on for tens and sometimes hundreds of pages. So here in California, there's a project to construct safe access to streets for bicyclists and pedestrians including crosswalks, sidewalks, and traffic calming measures in Covena, California, $400,000. If we go down here to number five, renovate and expand National Packard Museum and adjacent historic Packard facilities, and that is almost $3 million. And so one thing that's probably crossing your mind is hey, this is a national highway bill and you have these little projects that seem very, very, very local. And these earmarks here, these set asides, because they feel sometimes wasteful or they're being used more as a political tool versus something that the federal government should actually worry about, sometimes these types of earmarks are referred to as pork barrel projects, pork barrel projects. And the reason why I introduced both words are earmarks are just a general thing. You can decide whether they're good or bad. Many of those earmarks that I listed, even though they are for specific projects in specific locations, they seemed at least related to the Highway Bill, but it would be very reasonable for some folks to say why is Congress in the business of funding these specific projects? Isn't it their job to just set the budget to figure out how much the Department of Transportation gets and then let them, as part of the Executive Branch, decide how to execute on improving the national highway system or our transportation system? And so they would argue that that is pork, that those are pork barrel projects, that those are government waste. Now to get a sense of how significant earmarks and debatably pork barrel have been in the past, we have this chart from Citizens Against Government Waste and it shows earmark spending from 1991 to 2016. And you will immediately notice some things. Going from 1991 all the way until about 2006, you have this steady upward trend in earmark spending all the way to the peak in 2006 of $29 billion of earmarks. But then something interesting happens. In 2011, it looks like it gets pretty close to zero and then it starts trending up from there, but it's much lower that it was before and that's because as we get into this period after 2006, earmark spending became a very big political issue. Some of these projects, there was famously an earmark for a bridge to an island in Alaska that was going to cost several hundreds of millions of dollars. It was later canceled but it got a lot of press and a lot of politicians started to make it their mission to do away with earmark spending. Some of these pork barrel projects were easy to get people worked up about, and say, hey look, this is a sign of government waste. And so in the end of 2010, both the Senate and the House of Representatives passed resolutions to end earmark spending, although you can see that it still exists in some way, at least according to the Citizens Against Government Waste. Now at first, this seems very good because $29 billion on things like museums or maybe bridges that go to islands that very few people live on does not seem like a good idea. It seems like classic examples of government waste. But it's also important to keep it in context. Remember the federal budget is approach $4 trillion. So even in 2006, when the federal budget was a little under $3 trillion, this was only about 1% of the federal budget. And so even though earmarks, which often get called pork barrel projects, became a lightning rod for a lot of media attention because they seemed so wasteful, in most years, they represent well under 1% of the federal budget. And there are folks who would even argue that earmarks are a good thing by essentially allowing Congresspeople to set aside an earmark for something in their district. It makes it easier for bills to get passed and it's only costing us less than 1% to do it, and it's only something that's streamlining the political process. Other arguments they make is these earmarks aren't spending above and beyond the regular budget. If they do not set aside this money for these projects in these various districts or in these various states, well, then the Executive Branch is just going to decide on how to use that money. And ideally the Executive Branch would open these things up for bid, these would be competitive processes, but there's examples of the Executive Branch also favoring certain regions or certain projects. So the budget could arguably be the same whether or not there are those earmarks. It's really a question of whether it is Congress that is deciding where these special projects go or whether it is the Executive Branch. Now another term that you might often hear with the legislative process, something that helps streamline it, is the germ logrolling. Now logrolling can apply to a lot of things, not just in terms of where you spend money. Logrolling is just the idea that let's say that I am Congressperson A and you are Congressperson B, and I really like this bill right over here. I like bill number one and you like bill number two, and I agree to support you, if you agree to support me. Here I describe logrolling where we support each others bills but we could even have logrolling where we support each others parts of bills. For example, I'll support your transportation museum in your state, if you support my bicycle path in my state. So I'll leave you there. The big takeaways here are to appreciate the size of the federal budget, where it gets spent, and some of the processes used to help pass that federal budget. We also talked about earmarks which sometimes get called pork barrel projects. And it's interesting for you to think about after this video, are they good or are they bad? At first, especially when you look at the media attention, they seem clearly bad, they seem wasteful. But when you think about that they're less than 1% of the budget, and they might help streamline the passing of other important legislation, maybe making it even more bipartisan, who knows, some would argue that they might not be as bad as people first believed. You decide.