Creating Wealth podcast
Jason Hartman
05/04/2015
On episode 511 of the Creating Wealth podcast, host Jason Hartman invites guest Doug Hall of the National Priorities Project to talk about the federal discretionary budget and how his company is trying to make the federal budget more transparent to taxpayers.
Listen the whole podcast here.
Transcript:
Jason:
Here we go, so let’s get to our guest and talk about the National Priorities Project. We’ll be back with you on Wednesday.
It’s my pleasure to welcome Doug Hall to the show. He is executive director of the National Priorities Project, which was a 2014 nominee for the Nobel peace price. Doug, welcome, how are you?
Doug Hall:
I’m doing well, thanks.
Jason:
Good to have you on the show.
Doug:
I appreciate you having me on today.
Jason:
Yeah, yeah, my pleasure. Give our listeners a sense of geography, where are you located?
Doug:
We’re actually located in Northhampton, Massachusetts.
Jason:
Taxachusetts, that’s funny that you should be located there, almost. So, what is the National Priorities Project really focusing on nowadays?
Doug:
Well, we’re an organization that’s been around for over 30 years and our basic approach is to try to make our federal budget accessible and transparent so that regular people can wrap their heads around it. We’ve certainty been focusing most recently on the President’s budget proposal and the various options from other sources and, of course, as we head into tax day, we’ve been looking at some of that stuff too and really showing folks how their tax dollars are distributed in terms of the various programs and services that result from that.
Jason:
Is it even possible for a typical, regular, average Joe, so to speak, to wrap the head around the federal budget, even? We’re not even talking state and local, before we get to that.
Doug:
Well, I mean, certainty no human being could wrap their head around sort of all the intricacies of it, but even just giving people a better sense of what the general buckets look like, you know, a great example is we get a lot of traffic on the work that we’ve done around international aid and there’s, you know, if you look at pulling data, people think we spend the 20 cents on every dollar that we spend goes to international aid of some sort and the truth is it’s closer to one cent on every dollar. So, it gives you a sense of sort of the magnitude of the misconceptions that out there and the importance of giving people a more accurate sense of what the federal budget actually looks like.
Jason:
Can you give us kind of that overview. I mean, I want to dive in to the impact of various spending with different levels of government and so forth. Can you give us an overview of those buckets? I think that would be really interesting to the listeners.
Doug:
Yeah. Well, so, the two sort of main buckets that we look at are the discretionary budget and then the whole budget, which includes not just the discretionary part, but also the non-discretionary parts, the mandatory spending. Those two pieces, they’re huge and they account for literally billion, trillions of dollars in fact and that’s another great example of how it is that people have trouble wrapping their head around this, I suppose.
Certainty, if you’re talking about the discretionary side of the budget, you know, the real piece of that is the fact that over 50%, I think it’s 54% now, of the federal – of discretionary budget, is going to the Pentagon spending, which leaves very little for things like education, infrastructure, all of those sorts of things that are critical to the well being of the American people today and in the future.
Jason:
Maybe in the context of the political parties, you know, people on the left would certainty say we’re spending too much money on war. I think a lot of people on the right are starting to say that too. People on the right would say we’re spending too much money on government hand outs in the welfare state. Kind of bring those into focus a little more if you would and talk about the welfare side too.
Doug:
Certainty there’s lots of room for disagreement on what the federal budget should emphasize. I think that probably people across all parties strips and all ideologies would agree that if there is something like waste and fraud and abuse in the system, we should address that and certainty if you look at the Pentagon budget and some of the, you know, sort of stereotypical examples you hear about million dollar toilets and that kind of thing.
Those are great examples, but it’s just sort of one piece of the puzzle, obviously. The truth of the matter is that when you drill down, you get a better sense that, you know, there’s lot of complexities to this and there’s no magic answers, but at the same time, you know, you mentioned the welfare piece of that. You know, that’s a piece of the puzzle that if we spend our money wisely at the front end, we end up having much better results at the back end.
So, just as an example, when I worked in Connecticut for several years, they quite literally used forth grade education testing results to determine how much they would need to spend, you know, down the road on corrections. Just wrap your head around that. They’re using, you know, the educational achievement of folks to figure out how many of them are going to end up in prison. It makes so much more sense to invest early in those kids, you know, call it welfare if you like, call it whatever you want to, but is smart public policy and smart spending. It’s not pennywises and non-foolish, instead it’s exactly the opposite. Sort of stitch in nine, in time saves nine, if you wanna, evoke competing vision there.
Jason:
Or an ounce of prevention is worth a pound of cure as my grandmother used to say, yeah. So, that certainty makes sense from an ideological perspective. I don’t think anybody is going to disagree with you there, but where the disagreement comes is people will say, well, the educational system is broken. You know, Steve Forbes was on my show, he, years ago, referred to the NEA as the National Extortion Association. These organizations get, they get big and they get entrenched and they become corrupt and inefficient and they become what one of my other guest called, ‘iron triangles’.
I happen to be back, just visiting in my home state of California. I mean, the state is just a disaster. It’s like the public employee unions run the state and they are just driving it in the ground. I don’t know, maybe you’ll disagree with me there, but that’s what a lot of people, at least myself included, think. So, it’s not really the concept, it’s more the application, right? Are those fair concerns in your eyes?
Doug:
Well, I think they are fair concerns, but I think that it is very easy to latch on to a few antidotes here and there and over generalize. I look at someone like Randi Wiengarten, for example. The head of the American Federation of Teachers and she is obviously a strong advocate for the unions that teachers belong to, but she’s also very receptive to some really constructive ways of looking at education reform. So, yes, you know, any time that you have entrenched interests, you need to be looking for ways, you know, to get those folks out of the trench per say, but I don’t think the fact that they are unions or the fact that they are public employees, that’s not what the problem is.
In fact, the evidence is pretty clear that public sector unions have been the foundation, the backbone, of the American middle class for so many people for generations and the fact we are attacking them now, I actually think is really misguided and it, I think it also distracts in very important ways from some of the bigger struggles that are out there.
Jason:
Let me run an idea by you. I’m really curious what and, please, just be open with me on this. If my thinking is wrong, tell me so, I have no problem with that at all. So, the government, the legal system, the government and its court system is really the arbitrator of fairness in our society and that’s why it seems to me like, I don’t mind unions in the private sector. I think really, definitely served a purpose, especially in the time where they rose, but should there be a union for public employees? I mean, basically those unions are on the opposite side of the table as the tax payers.
The government should be fair, because it should be impartial, like it’s not the government’s money, so why would they have a big problem with paying people a fair wage? It’s kind of like the tragedy of the commons, right, when it’s everybody’s money, it’s nobody’s money, you know? I mean, I certainty see the need for unions and so forth. I’m fine with their existence, but public employee unions, that’s a distinction, isn’t it? Isn’t that a fair distinction to make a different between employee unions and regular unions?
Doug:
Well, I think it’s certainty fair to distinguish between those two, for sure, but what we find actually when you look at what’s going on out there in the labor market is, you know, there is quite literally a war on workers going on where we’ve had decades of wage stagnation and you are only now..
Jason:
Well, of course we have, because they’ve offshore all their jobs and the tax code is kind of incentivized the companies to do that, unfortunately.
Doug:
Well, there’s no doubt there’s some room for changes there and some of the trade agreements that we have, you know, signed onto are ones that have very clearly, you know, been very much in the interest of transnational corporations, but not so much in the interest of workers in our country or any other country for that matter. Those are bigger conversations that I’m sure you could do a couple of shows of as well.
Jason:
Totally. We could do a couple of days on that, so yeah, fair enough, fair enough. Okay, but, so just the concept though on the public employee unions. That was all I was really getting at.
Doug:
Right and my sense is that we need to be looking, you know, what you so often hear our arguments to say, you know, those public sector workers, they have, you know, good retirement benefits and they have good health care and that’s not fair and, you know what, it’s not fair, but then the question should be not how can I take it away from them; the question should be, how can I get back. What are they doing right that I’m not doing right? Some of that might in fact be looking for ways to achieve co-active bargaining whether it’s through a formal union or some other mechanism.
Jason:
Okay, alright. I didn’t mean to, you know like, derail the conversation too much, because there’s some other stuff I want to touch on. So, you know, one of the things I wanted to discuss with you is just sort of a general statement and that is, you know, what is the impact of federal spending at the state and local level? You know, just kind of a very broad, general question, just your thoughts on that.
Doug:
Yeah, I think that’s a really good example of a question that not enough people of asked and certainty not enough people have answered and there’s sort of two ways I can come at that. One is to sort of think, you know, when you wake up in the morning and you turn on your water, you can trust your water is going to be safe. When you go outside, when your kids go outside, breathing air, you know, which for the most part is safe. That’s your federal government at work and doing good work.
Another way to look at it is sort of more directly in terms of the relationship between federal spending and what goes on with your state and local government and just as a point of example, on average, in 2012, 32% are pretty much, 1/3 of every dollar in state budgets comes from the federal government. So, wrap your head around that, you know, I think people have a better sense of what goes on in, you know, government that are closer to them, so certainty they might have a better sense of what’s going on with state government, but I don’t think very many people realize that a third of the money that their state government is spending is really the federal tax dollars at work.
Having said that, the other thing that’s really quite striking is that ranges considerably from about 20% in Alaska to 45% in Mississippi and it’s certainty not a coincidence that, you know, Mississippi is one of the poorer states and it’s actually hugely ironic that this states that are most heavily dependent on federal spending are also the states where the people most consistently take an anti government perspective.
Jason:
Well, either like ungrateful teenage kids, okay, or what I don’t know if you said in that statement is that doesn’t that spending come with a whole bunch of strings attached? I mean, there are sorts of mandates that come with that spending where’s it’s this horse trading game. The federal government says, look, if you do this and you know, in the old days it was, if you keep your speed limit at 55 miles per hour, then we’ll give you some money for roads and there are a million other examples of that that I can’t think of, maybe you can, but it’s not like there’s no strings to that, right?
Doug:
Oh, of course, and that’s exactly as it should be. I mean, you know, if you were spending anybody’s money, it would be reasonable to think that the person whose money that was would have some say in that. If it’s coming from the federal government, I think it’s entirely appropriate that we expected states would, for example, meet minimum national standards.
Jason:
Right, right. There is kind of a states rights issue here though that arises, because when – just like, you know, anybody getting money from a parent or the government, they become beholden to them and then it’s all about, you know, do this thing, bring the money to my district, then it becomes these like, turf wars and it’s not what’s good for the country, it’s just what’s good for my little district, you know, that’s what the congress will argue for, right? I got to bring this money to my distinct and even if it’s totally illogical – that’s why we have these airports around the country that aren’t used, we have these facilities around the country, because they’re in like these nonsensical places and they showed up there because someone lobbied well! They were just a good lobbyist, you know?
Doug:
Right, but you know what? When you started talking about that type of expenditure, my mind immediately went to sort of the “bridge to no where” in Alaska. Like, a specific project that was, you know, ten or 12 years ago, which to me speaks volumes by the fact that, you know, there’s no question you’re going to find examples like that and that’s not good. That’s not the smartest way for us to be spending our public dollars, but that doesn’t mean that, you know, 80% of the dollars that are spent or 90% of the dollars that are spent are being spent unwisely. You would never want to look at sort of the worst, you know, the worst performer on a sports team or the worst student in the class room and paint everybody with that same brush. That’s not fair in education and it’s not fair in sports and it’s not fair in assessing the effectiveness in government programs, either.
Jason:
Yeah, okay. I guess that’s a fair statement. So, do you think that the Obama administration is transparent enough with their budget?
Doug:
I think in a general sense, yes, and certainty, I don’t think there’s any evidence that I am aware of that they are any less transparent than other governments. Having said that, I pointed out fairly early that a big chunk of our money is going to defense and it’s a complete travesty that the Pentagon has been essentially unauditable.
Jason:
That’s for sure. You’ll get a 100% agreement with me on that one and same goes for the federal reserve, by the way, but that’s sort of a different conversation.
Doug:
Yeah, also another conversation, you’re right about. Certainty any time our public dollars are being spent, I think there is a reasonable expectation that the citizens of this country have, at least, a general sense of what that looks like. Now, that’s not to say that, you know, there can’t be areas where money is being spent that we don’t know necessarily know about. We don’t need to know sort of the intricacies of international spy stuff. The stuff you read about in novels, for example, because that’s, obviously, there are legitimate national security concerns there. Having said that, it’s completely bogus to, you know, redact three quarters of every single document and just label that, ‘national security’, ‘national security’. There needs to be a middle road.
Jason:
I think you’re right and I think Bradley Manning would say the same thing and Edward Snowden would say the same thing, because the government can basically criminalize everything. You know, everything because classified, everything becomes national security. I mean, that’s totally bogus. You’re absolutely right. It’s ridiculous. Who gets to decide, FISA court, probably, you know, gets to decide that everything, we’ll just mark everything classified. It’s all got the red classified stamp at the top, so you can’t talk about anything anymore. I mean, is it really, you know, how much of the Pentagon is auditable? You said it basically wasn’t, but degree of transparency is there and by the way, I don’t even know if it should be called the Department of Defense anymore. I think it should be called the War Department, like it was called before, because it acts more like that.
Doug:
I think, yes, I think there’s no question of that and Eisenhower talked about the military industrial complex, which has now very clearly morphed into a military industrial congressional complex and there’s lot of dysfunctions there and it’s pretty save bet that there’s lots of dollars being spent, public dollars being spent in unwise ways and in ways that not only don’t make us safer, but probably increase the danger that we face. If you look at what’s going on in the Middle East, every drone we send in, ever bomb that we drop, you know, that’s not enduring to the rest of the world and the results of that we see bubbling up as this terrorist attack here or that one over there and those are certainty horrific acts, but they’re not things that spending another 100 billion dollars on defense or Pentagon money are going to solve either.
Jason:
I couldn’t agree more, but to be on balance, we have to also talk about the, what I call, the government entitlement complex. So, that’s another one, you know, like the military industrial complex. They’re both there and they’re both – all these misdeeds in both of them. As we wrap up here, what else did you want to say that maybe I didn’t ask you. I know we got off on a few tangents here, but I thought that there were kind of interesting in pursuing them. Just anything you want to talk about?
Doug:
Well, to me, one of the most important things is that people realize that the voice of the people is virtually the only thing that stands the hope of having as much influence over how we spend our money as the big spending of very wealthy and corporate doors and it’s because of that that we need to make sure that we’re, you know, in contact with our congressional delegations, letting them know how we would like to see our dollars spent and to get a sense that there is some potential to reallocate just as a real quick example, you know, one of the things I did playing around with the spreadsheet was to sort of take a look at that discretionary spending budget that has things like education benefits, medicare and health, international affairs.
You could increase every single one of those slices by 50% and you would only reduce military spending by about 200 billion dollars and it would still by far the largest slice accounting for about 36% of discretionary spending. So, that’s sort of one example of how, you know, we could reallocate our money to place a higher priority on something like education, on infrastructure, on the things that are going to, you know, build a foundation for our prosperity, you know, generation and decades down the road.
Jason:
Doug, give out your website.
Doug:
So, it’s NationalPriorities.org and for folks that are interested in taking a look of what’s going onat the state level, I urge you to take a look at our State Smart data set.
Jason:
Excellent and Doug, just one more question before you go and it really, you may have said it, but I just want to kind of ask you to wrap it up in a nice little box with a bow on it and that is, what is the ideal, perfect government budget, overall? I mean, I know you mentioned education a moment ago compared to the military spending and so forth, but kind of overall, what’s that ideal budget look like?
Doug:
You know, to me, in an ideal budget, you’re going to see a spending pattern that both reflects the opinions, the priorities of the citizen reign while also ensuring, you know, the general well being of Americas and I think there’s lots of evidence right now, we’re not even close to that on either of those accounts.
Jason:
Good stuff. Doug Hall, thank you so much for joining us. Appreciate having you on.
Doug:
Thank you. Take care, bye bye.
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