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Budgets Are About Priorities

This morning, the House Budget Committee will consider the budget resolution for fiscal year 2010, which is a blueprint for determining tax and spending policy for the upcoming fiscal year.  While all of the talk in Washington has been on the President’s budget request that was released in February (filled with massive tax increases, mammoth new government programs, and trillions – not billions – of dollars added to the national debt), the budget resolution passed by the House and Senate is of much greater consequence in the real world.  That’s because the policies it sets out are binding as Congress sets funding levels for each agency of the federal government.  You can see our views on the budget here.

As Congress begins the budget process, we hope that the Democratic Majority will join Republicans in rejecting the President’s budget because it spends too much, taxes too much, and borrows too much.  Instead, Democrats should put forth a budget that reaffirms the responsibility of policymakers to act as good stewards of taxpayers’ hard-earned dollars.

Even though many Americans are tightening their belts, the Administration’s budget grows the size of government by almost 10 percent.  Under the President’s plan, total government spending would be set at a staggering $3.9 trillion, or 28 percent of the gross domestic product (GDP).  That’s the highest level since World War II.  These facts were confirmed last Friday when the nonpartisan and independent Congressional Budget Office (CBO) released its latest estimate of the nation’s budget situation.  CBO projects that, because of the President’s policies, this year’s federal deficit will hit a post-World War II record of $1.8 trillion, 13.1 percent of GDP.  The agency also projects that the President’s new policies would double the federal debt to $14.5 trillion over the next 10 years.  With CBO’s new estimate, it has become more imperative than ever that Congress must make sure that the nation’s budget focuses on reducing wasteful government spending, unnecessary new programs, and bureaucratic federal mandates. 

One area of great concern is the President’s plan to grow the size of government by nationalizing the student loan program.  His budget requires student loans to be made solely by the federal government and eliminates the Federal Family Education Loan (FFEL) program, the public-private partnership that has been in place for more than four decades and has a strong record of making students’ dreams of a college education possible.  The federal government’s $4 billion investment in FFEL programs leverages more than $60 billion in student loans, which provides important college opportunities to 6.2 million students attending over 4,400 institutions each year. 

These students also receive extensive financial literacy counseling, financial aid counseling, and default prevention services that help students repay their student loans.  Eliminating this public-private partnership in favor of a one-size-fits-all Washington solution is likely to cost the country more than 30,000 current jobs, and it will surely have a ripple effect on thousands more.  It will eliminate any sort of choice in lender for millions of students across the country, and it will jeopardize the ability of institutions of higher education to tailor programs that best fit their students’ needs.  We hope that Congress will reject the Administration’s extreme proposal and examine the student loan programs in terms of what is best for students.

If history is any guide, we’re sure that the budget resolution that will be passed by the Democrats on the House Budget Committee will call for greater government involvement fueled by higher taxes and deeper deficits.  Republicans will fight this irresponsible budget and propose a better plan that focuses on pro-growth policies that foster innovation and job creation, promote American competitiveness, and ensure accountability, state and local flexibility, parental choice, and funding for what works in education.

Posted by Education Policy Staff (03-25-2009, 06:19 AM) filed under Education

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