Introduction
The President Barack Obama unveiled his blueprint budget for the fiscal year 2015 on Tuesday the 6th of March 2014. The $3.9 trillion budget blueprint sent to the Congress has already elicited sharp reactions among the American Public. The Government has made it clear that this budget is aimed at seeking new spending to improve economic growth. It also aims to reduce the national debt by increasing taxes on the rich, reducing outflows to health-care providers and revamping immigration laws.
The budget is also seen as a bridge towards development, opportunity, and economic accountability. Through this budget, the President offers us a roadmap for fast-tracking our economic development, increasing opportunities to all citizens of American, and ensuring economic accountability. Through this budget, the government can invest more on infrastructure, career development, and schools among other items. It also leads to tax cuts on pro-works and greatly reduces deficits through health, tax, and immigration transformation.
What items dominate the budget?
After keenly studying this blueprint budget, there are several points worth noting about it. Most items that have dominated the previous budgets still dominate this one though there are several significant changes. A huge chunk of the $3.9 trillion has been allocated to the defense department amounting to $495.6 billion signifying the highest expenditure on a single item according to the blueprint budget for fiscal year 2015. The other items that dominate this blueprint budget includes: Health and Human Services allocated $73.7 billion, Education sector-$68.6 billion, Veteran Affairs- $65.3 billion, State and other International programs -$42.6billion and Homeland Security- $38.2 billion among others.
Among these items that dominate the budget it is only the defense department that has not witnessed any change compared to the budget 2014. It is important to note that the department of Health and Human Services has been subjected to a huge budget cut compared to the amount allocated to it in the last financial year. The education sector and Veteran Affairs has seen an increase in their allocation while the State and other International programs and Homeland Security have been subjected to cuts. Other items that dominate this budget includes Urban and Housing Development -$32.6 billion, Energy -$27.9 billion, Justice -$27.4 billion and Agriculture $22.2 billion.
Why are the budget priorities as they are?
A lot has been discussed on President Obama’s blueprint budget for the fiscal year 2015. It is important to note that the budget priorities are still similarly the same as the previous years with no major changes. However, of concern is why some items have been subjected to budget cuts while others have been allocated more funds compared to the previous financial year.
The nation still values more the defense department as it has received the highest amount of allocation than any other item. This is mainly because the DOD is one of the biggest departments in the US government. This allocation is used in funding all military branches which include the Navy, Army, Marine Corps, Air Force and Coast Guard. It is also important to note that this budget pays the wages, training expenses, and health care facilities to all uniformed and civilian personnel within the U.S. department of defense. It is also these funds that are used to maintain arms, improve equipment and facilities, fund military operations, and develop and buy new equipment to be used by the D.O.D. or other military related activities.
The other item dominating this budget is education that has received more funding than it was allocated in the last fiscal year 2014. The reason for this is that the education system is a very important sector of any government as it represents a nation’s man-power and success. The department of veteran affairs has also received an increase in allocation, and this can be attributed to the fact that the country has witnessed an upsurge in the number of veterans recently. The other item, the health and human services department remains a key area of spending by the U.S. government despite the cuts that it is being subjected to this fiscal year.
Why the deficit?
The U.S. deficit for the financial year 2015 has reduced drastically by almost 25% from previous budgets. The main reasons for this are that medical costs have stopped increasing at rates previously set, and there is increase taxes that in turn boosts the revenue leading to a slow improvement of the economy. The budget has been made to reduce government spending within the next twelve months by almost $642 billion. This deficit is roughly about 4 percent of projected gross domestic product (GDP) according to the Congressional Budget Office (CBO) and will be the lowest deficit since the year 2008.
According to the CBO, the budget cuts subjected to the U.S. budget this year have been made to reduce spending by the government on short term programs. Moreover, the huge dividend expenses from Fannie Mae and Freddie Mac which are the leading government housing financing agencies controlling almost all new home mortgages will boost government receipts this year.
The CBO also projected that by 2015, the federal budget deficit, as a percentage of the GDP, will reduce to 2.1 percent. However, the deficit is projected to resume its long-term growth after this. The CBO also anticipates budget shortfalls to escalate later in the coming years, predicting it to 3.5 percent of GDP by the year 2023. The main reasons for this are due to compressions of an aging population, growing health care costs, an enlargement of federal subventions for health insurance, and upward interest costs on federal debt.
What would you cut, drop, add, or change?
After carefully studying the President’s budget for the fiscal year 2015, there are several items that were either allocated more than enough and some allocated less than they deserve. Looking keenly at the budget, we find out that it seeks to reduce the national debt. Revenue sources should be increased by further hiking taxes and applying more cuts on certain items. The defense department budget is a bit higher though it has undergone some allocation cuts. The health and human services department has been subjected to budget cuts that according to me are wrong. This item should have received more funding as it is the backbone of our country.
Judging by previous budget, the president has been increasing allocation to the energy department, and this can be seen again this fiscal year. However, I would not place more priority on this item and should be subjected to some cuts. The labor department and agriculture were also subjected to budget cuts which according to me are wrong.
How would you balance the budget?
Given a chance to make changes to the President’s budget for the fiscal year 2015, I would look for Items that would make the budget balance. The budget depends on revenues from taxes that the government plans to increase within this fiscal year. Other sources are return on investment, sale of goods and services, licenses permits, royalties and lotteries and gaming. The other source is through borrowing to fill the large deposit that has been projected.
Reference List
Office of Management and Budget “The President's Budget for Fiscal Year 2015” Retrieved
“Obama budget seeks new spending, new taxes to boost economy, tame debt” by Zachary
Goldfarb. Retrieved from
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/03/04/obama-budget-seeks-new-spending-new-taxes-to-boost-economy-tame-debt/. Accessed on March 8, 2014.
