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Business Officer Magazine
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Sobering News From an Expert on the Federal Budget

I'll give you the punch line right now: We're doomed," said Stan Collender, as he opened the featured session, "Making Sense of the Federal Budget Debate." Collender, a sought-after expert on the federal budget, taxes, and spending, is founder and managing editor of the blog "Capital Gains and Games" as well as author of The Guide to the Federal Budget.

"The budget debate is not going to get better any time soon," Collender explained. "Until there's a deal that includes changes in Social Security, Medicare, and Medicaid, your part of the budget will still be under pressure." He noted that even Rep. Paul Ryan's plan, "The Path to Prosperity," doesn't balance the budget for 25 years.

Under the looming across-the-board cuts to the domestic portion of the federal budget that would be triggered in January 2013, "you folks [in colleges and universities] will get hurt pretty bad," Collender said. Particularly hard-hit would be federal student loan programs and university research grants.

"Higher education will have to change its message," advised Collender, noting a shift in the public perception of a college education as a societal benefit to seeing it as a private good. "The average person thinks that the only one who benefits from higher education is the person getting that education. He doesn't think in terms of higher car sales, for example."

In Collender's view, current extreme partisanship in Congress can be explained by the influence of several tea party tenets, among them: any continuing resolution must defund "Obamacare," there will be no votes for an increase in the debt ceiling, shutting down the government long enough might position conservative factions for a better deal, and any compromise is considered "a sin."

"Everything that has happened in the past year was foretold by these things," he said. "This is not a rational process; it's not about numbers. The attitude now is, 'If I can't get 100 percent of what I want, I'm going home.'"

Voters, however, may be more pragmatic. Collender cited a February 2011 poll of self-identified tea party voters in South Dakota who would support a state sales tax increase and an income tax increase for those with income over $1 million a year. A majority also opposed cuts to Medicare benefits as well as cuts to military spending.

"The most important thing to remember," Collender concluded, "is that people don't want less government, they just want government that costs less."

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