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Saturday, Mar 28, 2015

Republican Budgeting genius

Marotta on Money


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Something refreshing is happening in Congress. For the first time in years, our legislative process finally has the chance to cut spending in a nontraditional but highly democratic way by passing a series of small consecutive spending bills.

As we all know too well, the United States has been sinking deeper into debt. And each year Congress blindly votes to spend even more, raising the debt ceiling ever higher. Why do we bother having a debt ceiling?

Entitlements represent an ever-increasing portion of federal spending. We collect more money to redistribute it than to use it. Corporate welfare is the norm. Pork barrel spending still runs rampant. All the attempts to starve the beast of government spending have failed.

Even though most Americans support a balanced budget amendment, congressional Democrats won't even consider it.

This partisan deadlock offers us a novel opportunity to reach consensus: pass the budget one line item at a time.

Legislators would start this process by voting on the size of the federal budget, limiting how far into debt they are willing to go. Setting boundaries for spending before determining where it will be spent is the first principle of any solvent budget.

Then Congress would allocate funds where there is widespread agreement. Not only could they fund the portions of the federal budget that are not in dispute, they could fund them for multiple years. That way, a future shutdown would not jeopardize the most essential and least controversial functions of government.

After all the noncontroversial portions of the budget have been passed, legislators can move on to the important debatable ones, evaluating each line in an order proposed by the Budget Committee. Once the total amount of allocated funds equals the original agreed on amount of money to be spent, discussions will be complete.

Opponents of this plan fear that some of their favorites programs may not be funded. But line-item budgeting is the solution to a runaway budget.

The Republicans are brilliant to implement this process. Among the first bills they proposed is funding the National Institutes of Health.

On Oct. 2, the Republicans in the House proposed and passed a bill reinstating the entire NIH budget. Earlier that day, Dana Bash, a CNN journalist, asked Democratic senators the question most of us want to ask.

"The House is presumably going to pass a bill that funds at least the NIH. Given what you've said, will you at least pass that? And if not, aren't you playing the same political games as the Republicans?"

Harry Reid (D-NV) replied, "What right did they have to pick and choose what part of government is going to be funded?"

Bash persisted, asking, "But if you can help one child who has cancer, why wouldn't you do it?"

Chuck Schumer (D-NY) tried to come to the rescue, hastily replying, "Why put one against the other?" Reid quickly chimed in, saying, "Why would we want to do that? . . . to have someone of your intelligence to suggest such a thing maybe means you're irresponsible and reckless."

As Rep. Peter Welch (D-VT) said, "There's three battles going on right now. One is the debt ceiling, the other is keeping the lights on and the third is the government funding level."

Reid and the others are asking us to ignore the debt ceiling by voting once again to increase it and to turn the lights back on by placing funding levels exactly as Democrats want them. However, Americans disagree sharply about where and how much money to spend.

The country cannot afford many controversial and luxury items. Americans look at Greece and wonder how it got so far into debt. Many of those same people blame conservatives for failing to get the job done, as though the job is voting for legislation that no longer has a 51 percent majority.

"Obamacare" would not be passed today. It is so unpopular that it would fail to be funded even if we had infinite resources.

Opponents of "Obamacare" believe that defeating this move toward socialized health care is vital to the country. It is certainly critical to representing those who elected them.

Their standoff and insistence on a line-by-line budget shows great integrity toward the people who voted for them. So they will continue to offer small funding bills on which there should be no dispute. This strategy allows both parties to come together on the functions of government where there should not be disagreement.

Meanwhile, Senate Democrats hold hostage these common interests by demanding that Republicans cave and support the funding of "Obamacare." The greatest danger to Republicans is the media that will characterize the intransigence as entirely theirs. In truth, both sides are clinging passionately to their own point of view. However, this line-by-line strategy is a way to pass the budget that could end this war without any substantial casualties.

David John Marotta is President of Marotta Wealth Management, Inc. of Charlottesville providing fee-only financial planning and wealth management at Megan Russell studied Cognitive Science at the University of Virginia and now specializes in explaining the complexities of economics and finance at www.marottaonmoney .com.

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