1997-1998 Harry Singer Foundation National Essay Contest
The Budget Process and the National Debt
Luck High School, Luck, Wisconsin
Teacher : Barbara Petersen
"Many people wonder how [a budget is created.] The first Monday in
February, the President submits proposed budget to Congress. Congress also creates its
version of the budget. After careful negotiation, the two reach what they decide is a
budget. When Congress and the President sign [the agreement], there is an actual
budget."
Kayli Chivers, Luck High School, Luck, Wisconsin
"The Contract with America, or CWA, hoped to achieve a balanced
budget for 1995. The first item of the CWA legislative agenda was the Fiscal
Responsibility Act. The Fiscal Responsibility Act sought an amendment to the U.S.
Constitution requiring that all expenses for any fiscal year not exceed the amount of
revenue. The Amendment also required balance at the time of budget submission by the
President, adoption by Congress and …execution. The Amendment only allowed three
circumstances under which deficits would be allowed; when a declaration of war is in
effect, when a Joint resolution is signed by the President and adopted by the majority of
the total membership of each House saying that the nation faces serious military threat to
national security and when outlays in excess of receipts are agreed to by three-fifths of
the total membership in each House of Congress. The CWA amendment neglected to secure
enough votes for ratification on January 26, 1995. Later that evening, a Balanced Budget
Amendment drafted by Charles Stenholm and Dan Schaefer passed on a vote of 300 to 132.
This Resolution was different from the CWA proposal in two major ways. It imposed no
national debt ceiling…and no tax limitation provision. . The national debt ceiling is
a limit set by Congress beyond which the National Debt cannot rise."
Karen Oeffler, Luck High School, Luck, Wisconsin
"Most people think that there's a separate Social Security Trust Fund into which the government deposits the payroll taxes that we pay, plus the income tax that some high-income retirees pay on their Social Security retirement benefits. That's the way a truly separate trust fund would work…Instead, the government counts all the Social Security payroll tax and income-tax money that it takes in as revenues and counts the checks it sends to retirees and disability recipients as an expense. The effect is that Social Security cuts the federal deficit about [$70] billion a year.
The government doesn't count as an expense the huge and growing interest
payments it pays the Social Security Trust Fund. That interest is money the government is
pledging to future Social Security recipients, but that doesn't count as an expense in the
federal budget. If a separate trust fund actually existed, that interest would be called
an expense. Instead, because the fund is merely an account at the Treasury, the interest
is considered money that the government shifts from one pocket to another, and therefore
not an expense. For right now, we do not need to worry about Social Security going
broke."
Megan Hetfeld, Luck High School, Luck, Wisconsin
"It is still possible to hear about different variations of
Balanced Budget Amendments., now in 1998. Congress cannot agree on what would be the best
solution to the debt. Every day that they argue about possibilities, [it costs a billion
dollars in interest charges.] One possible solution would be simply to raise taxes. There
are three good arguments against this idea. First, raising taxes is highly unpopular
because many Americans feel they are taxed too much already and they have little
confidence in their public officials. Second, legislators are concerned about higher taxes
having a negative impact on work, savings and investment. Third, many people feel that
higher taxes will simply pave the way for further spending increases."
Karen Oeffler, Luck High School, Luck, Wisconsin