Spending over the budget


From: Dave Binius

Retired CFO/CIO

United Building Centers

I read Hugh Miller’s passionate plea for sanity regarding our country’s current fiscal problems, that are bad and getting worse, and I agree with most of what he wrote.

Being an analytical person, my tendency is to consider facts and not speculation on what-might-happen-if. There is a series of facts from fairly recent history that are very relevant to our country’s fiscal situation that don’t get much publicity, and in my opinion we all should remember and reflect on.

At the 1988 Republican National Convention George H. W. Bush gave us the now famous line “Read my lips, no new taxes”. Shortly after he became president our country’s high growth of the early 1980s slowed and a recession set in. As a result, Bush was pressured by Democrats and some Republicans to raise taxes as a way to reduce the national budget deficit and relieve the recessionary pressures.

After much controversy and debate during the early years of the first Bush presidency regarding taxes and our country’s deteriorating fiscal health, serious negotiation — by both sides of the aisle — produced the Budget Enforcement Act of 1990.

In short, what the Act said was that no spending could be made by Congress beyond what was budgeted for unless additional revenue was identified to cover the expense. Obviously, revenue to cover unbudgeted new spending meant more taxes and both sides of the aisle were opposed to that.

The Act also detailed where monies were to come from to cover spending not included in any approved balanced budget. Once again, very briefly, the Act specified that children’s programs, elderly citizens’ programs, etc. would be cut to free up monies to cover unbudgeted spending by Congress. Raising taxes and cutting any of these sensitive programs were things that Congress simply did not want to do.

So reviewing facts, Bush did not get reelected in 1992 as many will tell us because he promised not to raise taxes, but eventually felt it necessary to do so. The two terms of Bill Clinton’s presidency were then basically concurrent with the Budget Enforcement Act of 1990. As a result, the facts are that during much of the Clinton presidency we had budget surpluses. During the last year of Clinton’s term in office, there was a budget surplus of a trillion dollars. Also, during those last few years of Clinton’s term we were actually paying down the national debt. And remember, this was at the end of the 1990s, not that long ago.

Unfortunately, the Budget Enforcement Act was written to be in effect for only 10 years and then it needed to be renewed by Congress if the process was to continue. In 2000 George W. Bush won the election and with a Republican Congress let the Budget Enforcement Act lapse. So once again Congress began spending beyond what was budgeted, and now we have budget deficits in the multiple trillions of dollars and our national debt has soared.

Obviously, there are other issues — the war in Iraq, the reduction of regulations in the banking system and subsequent near financial collapse, NAFTA, and many others which have helped cause spending to get out of control and the fiscal nightmare our country currently faces.

History tells us that unless we legislate budget control, our Congress, whether Democrat or Republican, simply cannot resist spending beyond our means. Therefore, it seems that step # 1 to solve our seemingly unsolvable fiscal problem is budget legislation with unpopular penalties for spending over the budget.


Search Archives

Our online forms will help you through the process. Just fill in the fields with your information.

Any troubles, give us a call.