One-a.m. thoughts on the President’s FY2012 Federal Budget.

Living on another planet? Perhaps you’re unaware that today President Obama is making public his proposed 2012 federal budget. Those of us here on Earth? The figures are keeping us awake at night.

Last weekend (a happier time!), the Super Bowl captured media headlines. This week the ink and the talk are all on the federal budget, and what it implies – for the economy and jobs, for foreign policy and national defense, for education and health care – you name it. Coming in at $3.6T, more than 25% of United States GDP, the federal budget will affect virtually every aspect of our lives. And in our interconnected world, those effects will be tied to the reaction abroad. You can bet that the accounts are being studied almost as carefully in Beijing and New Delhi, Tokyo and Brussels, London and Brasilia, as they are here.  Do those analysts see a United States coping with the twin challenges of today’s stagnant economy and unemployment and tomorrow’s need for fiscal responsibility? Or do they see a government and a people still in denial, refusing to face reality? Their impressions will shape the status of the U.S. currency, our ability to borrow, our trade, and our role in human affairs throughout the 21^st century.

Other than that, no pressure.

So it’s no wonder than some of us are tossing and turning, losing sleep, right?

[We’ll turn to that in a moment. But first an historical factoid – a point to ponder. Remember that reading of the Constitution that opened the sessions of the 112^th Congress just one month back? Well, those folks back in the 1^st Congress saw the appropriations process as wholly their purview. Check out Section 9 of Article 1 (the legislative piece): No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

Do you think Washington or Lincoln submitted an annual budget with attendant hoopla? No way. Had they attempted to do so, they’d have been impeached. But in the Budget and Accounting Act of 1921 Congress made official what was becoming the practice after a century of experience; they started to require that the president submit a budget for the coming fiscal year. How times change. Just as a thought experiment, imagine, given today’s polarization in the Congress – particularly on this very issue – what it would be like if the executive branch waited passively for the legislative to initiate, as well as formulate and pass a budget. Something to think about when anyone calls for a slavish return to the literal wording versus the more comprehensive vision of the founding fathers.]

But back to our topic…

Why you should lose sleep over the budget.

For some in Washington, it’s all about the winning and losing. People are poring over the hundreds of budget pages and the thousands of figures, looking to see what is happening to their niche programs. And you should know they’re not doing this for the first time. Although those budget figures have been embargoed, dating back to the first formulations over the previous summer, you can bet that in every corporate boardroom, in every NGO, there are people who know already what they’re going to find. They’re simply waiting for confirmation of what they already expect. The big losers? They’re lying awake because they have the fight of their life on their hands. The big winners (or survivors)?  They’re lying awake too. They know it’ll be almost impossible to protect those wins from the depredations of losers looking to recover a bit of lost ground. With tomorrow’s release everyone can go public with statements that have been prepared for weeks. The bugle call is sounding. Now the advocacy can begin (actually, enter a new phase).

For others, the concerns are more profound. One person who has drawn a lot of attention the past few days? Mitch Daniels, Governor of Indiana, a former OMB director, and possible Republican candidate for president in 2012. He spoke to CPAC last Friday on the Red Menace (not China…but the sea of red ink in those budget figures). Think this is just Republican rhetoric, red meat being thrown to tea party conservatives? Think again. Check out the Committee for a Responsible Federal Budget. The systemic imbalances in the federal budget? They’re real, they’re dangerous, they run deep, and they admit no easy, painless fixes. The problems are non-partisan. We’re all in this together.

But, for those of us living on the real world, the reason for concern runs deeper yet. The 2012 budget? All that red ink? Those folks at CFRB.org who see the problem? They aren’t even taking into account carbon- and other environmental subsidies. If we were to price carbon and other natural resources at their fully internalized, end-to-end life cycle cost, the U.S. economic picture (in fact the world’s economic picture) and all government budgets (not just ours) would look bleaker still. And we have had one eye on the other headlines. We see world dependence on coal, the dirtiest of all fossil fuels, ratcheting up. Agricultural prices are spiking in response to the Chinese drought, increasing demand for bio-fuels, and other forces. Complex emergencies are flaring up around the globe, as the poor are hard-hit by these and a slew of environmental problems. The real-world’s bills are coming due.

Aargh! But now it’s three a.m…so ready or not, I have to give sleep another try.

Tomorrow, the rosier side of the same picture! What you and I can do, and why we can and should get some rest…