Every other Tuesday, the team behind Civics 101 joins NHPR’s All Things Considered host Julia Furukawa to talk about how our democratic institutions actually work.
In recent months, the Trump Administration has tried and often succeeded in freezing federal money that Congress has already allocated.
So why does the government fund things like education, science and foreign aid in the first place? And what happens when those federal funds go away? Civics 101 host Hannah McCarthy joined Julia to answer those questions.
Transcript
So let's start with the basics of how federal funding works. How does the money get to these departments or programs?
So there are two kinds of government spending: mandatory and discretionary. Now mandatory spending accounts for about two-thirds of government spending. This is dictated by existing laws like the Social Security Act, as well as legally mandated payments to businesses, people [and] state and local governments.
Then there's discretionary spending. This is what is voted on during the annual appropriations process. The Constitution gives Congress the power to create the actual budget, to decide how much money the government can spend over the coming year and how that money is going to be spent. Now, Julia, we are experiencing in real time what it looks like when Congress cannot agree on a spending plan.
But let's say Congress does pass a spending bill. It goes to the president to sign. If the president signs it, we've got a budget. And then the OMB, the Office of Management and Budget in the executive branch, apportions that money. So the money doesn't go straight to the departments and organizations and programs. The OMB is there to ensure that the money is spent reasonably prudently, not all at once, so they don't run out of money halfway through the year.
The OMB is not there to override Congress's constitutional power to say how money is to be spent. That is, however, what has happened in the executive branch as of late. The OMB has issued memos saying, essentially, you can't spend this money until we tell you it's OK, which has in effect stifled or eliminated grants, research and programs that the executive branch has determined are not in alignment with the president's policy goals.
What happens when the OMB freezes or stops federal funding?
The classic example of what happens when the OMB freezes or stops funding is USAID. This was the world's largest foreign aid agency since 1961. It had provided life saving medical care and development programs across the world.
What happens when the OMB freezes that funding and that funding stays frozen for long enough is that agencies and programs disappear. And that has happened to USAID. It was dismantled by the Trump administration, and what was left of it went to the State Department. So it may seem innocuous to hear that the OMB is freezing funding while they're thinking about how it should be spent, pending review, but when you don't have money to do the thing you need to do, the thing that Congress has appropriated the money for, that thing stops.
Why has the federal government funded things like education and research and foreign aid?
Well, very broadly speaking, our federalist system of 50 semi-sovereign states and thousands of towns and cities is not super conducive to broadly thriving education, transportation, medical, technological, agricultural, etc., systems. If left to our own devices, we would likely have grossly inadequate systems in some places and spectacular systems in others. We'd have local governments underserving or discriminating against those who need services, but at too great a cost. So over time, the federal government has provided more and more financial assistance for all of the elements that go into making the United States a powerful, well-educated, safe, healthy, wealthy nation.
