ADVANCE PRAISE FOR 
Women and the U.S. Budget
Jane Midgely says that women are the “shock absorbers” 
when essential government services are cut. Due to the impacts 
of national policies, they have to be money and budget wizards 
at the household level, keeping their families together throughout
economic ups and downs; to add insult to injury , their unpaid work
doesn’t show up in any national accounts. W omen and the U.S. Budget
is a tool to enable ordinary women to insert their values and 
common sense into the process of determining how our 
public resources are gathered and spent.
— MEIZHU LUI, Executive Director, United for a Fair Economy
If only all the members of Congress and all the TV shouters 
would take the time to read this book. Women and the U.S. Budget
is an indispensable resource from the woman who pioneered the
“woman’s budget” concept. It’s for all of us who believe in using 
our national funds for social needs, global justice, democracy 
and peace. This is a book to have on hand while you read the
newspaper or watch the news, and it’s most certainly a book to 
bring along when you meet your Congressional representatives! 
— MARY DAY KENT, executive director, US Section, 
Women’s International League for Peace and Freedom
For those who thought it to be impossible, read Women and the U.S.
Budget — you’ll find an entertaining, clear and engaging 
explanation about what is important about our national budget 
and tax policy , how it affects women every day , and how US policy
fits into the big picture of world economic growth. Every woman
who wants to give children a good start in life and make this world
a better place to live needs to read this book. 
—HEIDI HARTMANN, President, Institute for 
Women’s Policy Research
NEW SOCIETY PUBLISHERS
T o my parents,
Grant and Marsha Midgley
Cataloging in Publication Data:
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Copyright © 2005 by Jane Midgley.
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Cover design by Diane McIntosh. Images: Comstock Images.
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ix
Contents
❖
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii
Chapter 1: Women and Abundance . . . . . . . . . . . . . . . . . . . . . . . 1
Part One: Budget Basics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Chapter 2: Where Does the Money Come From? . . . . . . . . . . . . . 21
Chapter 3: Where Does the Money Go? . . . . . . . . . . . . . . . . . . . . 43
Chapter 4: Debt or Surplus? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Chapter 5: Who Decides? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Part Two: Connecting the Dots . . . . . . . . . . . . . . . . . . . . . . . 101
Chapter 6: The Budget and the US Economy . . . . . . . . . . . . . . . . 103
Chapter 7: The Budget and the Global Economy . . . . . . . . . . . . . 125
Part Three: Creating the Future. . . . . . . . . . . . . . . . . . . . . . . 141
Chapter 8: A New Budget for the United States . . . . . . . . . . . . . . 143
Chapter 9: What You Can Do . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
x
xi
Acknowledgments
❖
T
HIS BOOK WOULD NOT HA VE BEEN POSSIBLE without the help of many
wonderful people who gave me encouragement, provided
resources and connections, and read various drafts. Thank you espe-
cially to Betty Burkes, Carol Barton, Agnes Williams, Mary
Zepernick, Marilyn Rubin, Louise Dunlap, Jan Strout, Judith Nies,
Curdina Hill, Susan Moir, Mary Leno, and Donna Cooper. I learned
so much from working with George Friday on developing budget lit-
eracy for women. A special thank-you to the women who attended
the Women’s Budget Project national meeting in 1996 (see note 2 in
Chapter 8 for more information).
I thank the Women’s International League for Peace and Freedom
for sending me on this journey to focus on the federal budget and for
supporting work on women and budgets. I am also grateful for my
year spent at the Bunting Institute at Radcliffe, which gave me space
to think more deeply about the issues dealt with in this book.
Special thanks go to my sister, Marty McCune, my brother, John
Midgley , and my parents, Grant and Marsha Midgley , who both passed
away while I was completing the book. They have always inspired me
and believed in me, and that has been the greatest good fortune.
xiii
Foreword
❖
At present, our country needs women’s idealism and
determination, perhaps more in politics than anywhere
else.
— Shirley Chisholm
M
ore than 30 years ago, I began my unlikely journey in politics
because I was galvanized by the example of a courageous
woman. I was a student at Mills College in Oakland, the mother of
two small boys, and largely disgusted by what I saw in the world of
politics. One of my teachers required all of the students in the class
to work on one of the presidential campaigns, and I thought I was
going to fail the class because I didn’t believe there was a candidate
I could believe in enough to support. The woman who saved me
from failing that class was Shirley Chisholm, the first African
American woman elected to Congress. Her 1972 presidential cam-
paign was a true inspiration to me, and to women everywhere,
because she so clearly shattered the myth that there was no space for
a woman’s perspective in our democracy .
I learned a great deal from Shirley Chisholm over the years, but in
considering Jane Midgely’s book, one thing stands out the most:
Shirley taught me and an entire generation of women and people of
color that we could go beyond calling for our rights to be recognized
— that we needed to take a seat at the table and exercise those rights.
Women & the U.S. Budget comes at a time when our schools are
chronically underfunded, when millions lack basic access to health-
care, and environmental protections that keep safe the air we
breathe and the water we drink are under attack. It is a time when
we are facing soaring deficits, the massive human and financial costs
of an unnecessary war, and a debate about privatizing Social
Security, a move that would spell the beginning of the end of our
nation’s commitment to providing a social safety net to protect the
most vulnerable.  
It is a time when women need to bring our idealism and determi-
nation to the table and play an active role in shaping the priorities
that are spelled out in our nation’s budget.
I believe that budgets are moral documents. They represent a pro-
found statement of what our nation values. As mothers, daughters,
sisters and activists, women are very attuned to the moral implica-
tions of the priorities set out in the budget process. 
The difficulty with budgets is that they don’t lend themselves to a
moral reading. Nowhere in the document will it say that increases in
Defense spending for new weapons systems, or the extension of tax
cuts will be at the expense of funds for housing, food assistance pro-
grams or education. But that is indeed what happens.
This book offers an important tool for the difficult task of deci-
phering both the budget and the process that goes into making it. It
is an important tool because it opens up the process, and allows peo-
ple who aren’t policy experts to understand how the budget is made,
who makes it and who benefits, and lets them draw their own con-
clusions about whether the priorities funded in the budget match
their own values. Looking at the budget in both a domestic and
global context allows us to understand how subtle shifts in funds can
translate into significant differences in policy . With a better under-
standing of the process, we can see more clearly who will be
impacted by each decision, and take proactive measures against
moves we feel are unjust.  
Perhaps more importantly, this book lays the groundwork for
looking forward and envisioning a budget that fully reflects our val-
ues. It offers a vision of how we can move from a budget that priori-
tizes tax cuts for the wealthy to one that reflects a commitment to
building healthy communities, and that can be measured by invest-
ments in creating better-paying jobs, providing access to housing and
healthcare, and ensuring that the air we breathe and the water we
xiv Women and the U.S. Budget
drink are safe and clean. It offers concrete ways that we can work to
move from a budget that prioritizes new weapons systems to one that
reflects a commitment to global peace and human rights that can be
measured by investments in international diplomacy and measures
aimed at addressing poverty, disease and other causes of war and
instability. It offers us a blueprint for constructive action to move
from a budget that prioritizes subsidies for the oil, coal and nuclear
industries to one that reflects our commitment to our future and the
planet’s future, a commitment that can be measured by investments
in our children’s education, in renewable and sustainable energy poli-
cies and measures to protect our environment.
I love my work, and I have fought to promote women candidates
so that there will be more of us in Congress, but you don’t need to be
an elected official to help restructure our federal priorities. In fact, I
believe this sort of change will only come when women in all walks
of life begin to get involved and take control of the process of setting
our national priorities. No single person can achieve this, but
together we can go from just a budget to a budget that is just.  As
Shirley Chisholm once said, “You must be the change that you want
to see in the world.”
Congresswoman Barbara Lee is a Co-Chair of the Congressional
Progressive Caucus, the Congressional Black Caucus Whip and a Senior
Democratic Whip. She serves on the House International Relations
Committee and Financial Services Committees, and was first elected to
represent California’ s ninth Congressional District in 1998.
Foreword xv
xvii
Introduction
❖
I
STARTED WORKING ON THIS BOOK when I was seven years old, although
I didn’t realize it at the time. My father had just taken a job with a
newly elected Democratic senator from Utah, and we moved from
Salt Lake City to Washington, DC, to start a new life. While running
around the halls of congressional office buildings, listening to debates
on the Senate floor, meeting legislators, and helping with re-election
campaigns, I was absorbing the rhythms and ways of Washington,
DC, with an outsider’s sensibility .
I was part of the 1963 Civil Rights March on Washington, joined
in the massive anti-war demonstrations during the Vietnam War,
became a strong feminist, and worked on housing, racism, and com-
munity issues in Washington, DC. With other community activists
I challenged the priorities of our city — questioning the presence of
JROTC in junior-high schools and military recruiters in the halls of
high schools at a time when youth jobs programs and after-school
programs were underfunded. I was also one of the organizers of the
first Women’s Pentagon Action, which brought together peace
activists, environmental activists, and a broad range of women’s orga-
nizations. By that time, I became legislative director (I later served as
executive director) of the Women’s International League for Peace
and Freedom (WILPF) the year Ronald Reagan took over the presi-
dency. I’d had long experience with movements for positive social
change that had an alternative vision for the United States.
In the early 1980s I watched David Stockman, the president’s bud-
get director, make deep cuts in spending for human needs without
public knowledge or debate, and I heard Richard Perle advocate an
expensive new generation of nuclear weapons that put the world on
a hair trigger. The national budget was being distorted by ideologues,
with the help of many men and women in Congress. T o counter this,
WILPF participated in national coalitions calling for new budget pri-
orities and organized training sessions to teach women about the fed-
eral budget. Later, after publishing the Women’s Budget — a proposal
for cutting 50 percent of the military budget and investing it in social
programs — we held citizens’ hearings in cities around the country ,
bringing women together to highlight the impact of national and
state budget and economic policies on women and children.
My international travels took me to the groundbreaking 1995
United Nations Fourth World Conference on Women in Beijing,
China. This historic meeting set a comprehensive global agenda for
women’s advancement. At that time I founded the Women’s Budget
Project, bringing women activists and economists together to analyze
current budget and economic policies and develop an alternative
framework. The work on budgets and gender issues has exploded
around the world ever since the Beijing meeting. I hope this book can
help move this work forward in the United States.
In W omen and the US Budget, I invite the reader to take on the role
of a public investigator (or PI). A PI in this case scrutinizes the shad-
owy areas of the public realm to see what is really going on and to
break through the secrecy surrounding how our public resources are
gathered and spent. A PI’s strategy is to make visible what has been
invisible — to make understandable what has been mysterious. The
budget and the budget process are shrouded in mystery for all but a
few experts, and a lack of openness in this area represents a major
roadblock to achieving our ideal of democracy. Once the budget is
transparent — once the reality behind it is visible — it loses its power
to overwhelm us or keep us at a distance. We can approach it and
choose our response.
The national budget represents the resources of the people of the
United States. The budget is drawn up by the Congress and the pres-
ident, but the money does not belong to them. It belongs to all of us.
We can forget that these are our resources they are collecting and
dividing up, either because we feel too removed from the budgeting
process or because we have lost hope in the political system. Even if
xviii Women and the U.S. Budget
we have awareness that these are our resources, we often feel power-
less to create change.
For Parts One and Two of Women and the US Budget: Where the
Money Goes and What You Can Do About It, pretend you are a PI try-
ing to solve the mystery of how the budget affects women and their
families. In Part One you will investigate the basics of the federal
budget — where the money comes from, where it goes, whether the
budget is balanced or runs a surplus or deficit, and who decides. In
Part Two, you will look at how the budget interacts with the US
economy and the global economy . In Part Three, you will think about
principles, values, and a structure for a new budget, and you will
learn about strategies and resources you can use to take action on the
budget and economic policies.
As a PI, you can draw inspiration from fictional female sleuths
like Blanche White, V .I. Warshawski, Anna Pigeon, and Nancy Drew ,
the creations of BarbaraNeely, Sara Paretsky, Nevada Barr, and
Mildred Wirt Benson (aka Carolyn Keene). These characters use a
combination of persistence, love, intuitive knowledge, keen powers of
observation, and courageous action.
Blanche White is fiercely independent and self-sufficient and also
acutely aware of the politics of race, class, and gender. She has to nav-
igate them with skill to secure her own well-being and that of her
children and her community . V .I. Warshawski is keenly tuned in to
the class politics of Chicago and is not afraid to go up against the
powerful political forces that want to stifle the truth and maintain the
status quo. Anna Pigeon, a park ranger, is powerfully connected to
nature and wilderness and is determined to uncover the facts no mat-
ter what danger or violence she herself experiences. Nancy Drew uses
her upper-class influence when needed, dressing up and conforming
to help her get information, but she will go anywhere and do any-
thing to solve a mystery and see justice served.
All of these characters are masters at using logic and tapping into
their intuition. It’s safe to say that without their advanced access to
deep knowing (the ability to know something without knowing why
you know), they would have been dead many times over. They show
PIs how to integrate intuition, emotion, and reason.
PI Pointers throughout Parts One and Two will help you dig
below the surface of the budget. There are also exercises and questions
Introduction xix
in Chapter 9 to help you explore the connection between the
national budget, your personal budget, and your life, and to help you
determine actions you may want to take.
xx Women and the U.S. Budget
1
Chapter 1
❖
Women and Abundance
There exists an obligation toward every human being
for the sole reason that he or she is a human being,
without any other condition requiring to be fulfilled
.... This obligation is an eternal one .... This obligation
is an unconditional one.
— Simone Weil, The Need for Roots
I
N THE UNITED STATES TODAY we are surrounded by an abundance of
economic resources that should insure everyone has adequate
food, healthcare, housing, education, and jobs at good wages. Instead
we find ourselves falling far short of providing those basic needs for
all our people. The economic resources we do have as a country rep-
resent the labor — paid and unpaid — of everyone in the United
States. As workers, taxpayers, and nurturers within our families and
communities, women are major contributors to this abundance. But
do we understand the depth of our contribution? Are we in a posi-
tion to tap into our current economic abundance for the good of our
families, our communities, and ourselves? Can we envision a soci-
ety in which everyone has access to that abundance?
Economic abundance includes three things: income, wealth, and
assets. Income is financial gain that comes to a person in a given
period of time from, for example, salary , self-employment or small
business income, interest from investments, or gifts. Wealth is an
accumulation of money that is held in bank accounts, stocks, and
other financial instruments. Assets can include some of the elements
of wealth, but assets are also things like land and buildings a person
owns, other material possessions, and rights to future pension pay-
ments. In order to calculate the actual wealth and assets of a per-
son, business, or country , liabilities (debts owed to others) have to 
be subtracted.
A budget is a forecast of what money will be accumulated and
how it will be spent over a specific period of time. It is used to set pri-
orities as well as to monitor what actually happens. For example, if
you wanted to do a budget for your household for a month, you
would include all the sources of income you expect for that month as
well as all the things you need and want to buy .
The US budget sets out the government’s plan for the coming year,
as well as recording the receipts and spending of previous years. The
process of planning a budget includes making decisions on how to
use other government resources beyond simply revenues and expen-
ditures, just as your personal finances involve more than just your
monthly income and expenses. The government’s other resources
include debt, savings, investments, and assets.
The national budget is a window on the larger patterns of how
our common resources are used, and the aim of Women and the 
US Budget is to provide “budget literacy” so we can better understand
and influence the management of those resources. The US national
budget is vast and has a powerful impact on communities across the
United States and around the world. Federal government spending
makes up a large portion of the nation’s economy — almost 18 per-
cent of the total goods and services produced — and the government
exerts a strong influence on economic trends and the political and
social well-being of the nation through taxation and spending policy .
Every woman’s life is inextricably connected to what happens in
Washington, no matter what her race, class, ethnicity , job, or family
situation. From CEO subsidies to summer youth programs, food
stamps to school lunches, Social Security checks to home mortgage
deductions, a visit to the Grand Canyon to a drink of water from the
tap, the budget decisions of the government affect women’s lives on
a daily basis. In spite of this, and in spite of the fact that women are
full participants in the economy as workers and taxpayers and com-
prise over half of the population, they make up only 13 percent of the
members of the US Congress. This means our voices are not being
fully heard, and our experiences and wisdom are mostly left out
2 Women and the U.S. Budget
when important decisions are made. It also means that when the
budget pie is being cut up, women and the families they support,
alone or with a partner, can end up with the smallest slice.
In recent years, women, especially women of color, have been sin-
gled out and criticized for relying on national programs in the bud-
get, and these criticisms have been used to justify cutbacks in welfare
and housing subsidies. For instance, during the 1990s, advocates of
reforming welfare argued that Aid to Families with Dependent
Children (AFDC) was breaking the budget when it actually took just
one percent of it. They promoted an image of welfare abusers — usu-
ally African American women, although only 40 percent of the recip-
ients were African Americans — who received aid for many years.
Most women on AFDC were women supporting one or two young
children on their own and who needed transitional help to get back
on their feet after a financial setback. The average time spent on wel-
fare was only a few years.
In fact, all sectors of society depend on help from the government
for housing (think home mortgage interest deduction), retirement
money (Social Security), physical infrastructure (such as highways),
healthcare (Medicare and Medicaid), and many other services, pro-
vided by our national pooled resources. In addition, the unpaid and
unrecognized work that women do in their homes and communities
is the foundation for the productivity of the “official” economy and
deeply affects national priorities as reflected in the budget. It is esti-
mated that the value of unpaid elder care, for instance, is $257 billion
annually , and that women are 6 out of 10 of the unpaid caregivers.
If women did not provide this care, more public resources would
need to be invested in paying for home health services, or longer hos-
pital and institutional care. A Rice University study found that some
caregivers lost substantial work time and experienced a reduction of
more than $10,000 in annual earnings. Women who cared for elderly
parents were more likely to end up in poverty themselves than
women who did not provide care.
Women have made strides in labor force participation and there-
fore in contributions to their families’ financial well-being, and they
make enormous unpaid contributions, yet they are not always rewarded
by the economy .
Women and Abundance 3
❖ According to the Government Accountability Office (GAO) (for-
merly the General Accounting Office), the pay gap between men
and women persists. Between 1983 and 2000, women earned
approximately 44 percent less than men, 20 percent less after adjust-
ing for experience, education, and occupation. Since 2000 that
gap has widened, with women making 75 cents for every dollar
a man earns.
❖ In the area of wealth and assets, women on the whole are also
behind. There are no studies on the real distribution of wealth
between men and women (information is collected by house-
hold), but there are indications that men still dominate wealth
ownership, particularly of income-producing assets. Women of
color are even more challenged in this area. According to a report
by Rakesh Kochhar for the Pew Hispanic Center, whites enjoy an
11 to 1 wealth advantage over Hispanics, and a 14 to 1 wealth
advantage over blacks.
❖ Most women who do work have no pension, which endangers
their quality of life when they stop working or if they separate
from their partner or spouse.
The US budget affects all these aspects of women’s economic lives.
It is one tool that could help meet the needs of all US citizens, but we
have yet to agree as a country that all people, including women, have
a right to food, shelter, jobs, healthcare, and education. Until we do,
the national budget will continue to be a central arena for this debate
about the role of government.
The budget, and money itself, are not inherently bad or good. The
way in which a government accumulates and spends money deter-
mines whether it will be a force for good or a force for injustice. In
the same way , there is nothing inherently bad or good about govern-
ments, nor is government inherently inefficient. In a democracy , ide-
ally everyone would be involved in determining the government’s
priorities, yet we currently have a system that discourages many from
participating.
Decisions about what the United States spends its money on
should flow from clarity about the country’s mission and clarity
about the strategies needed to fulfill that mission. As a country , we
should share in a vision for ourselves, answering the questions:
4 Women and the U.S. Budget
❖ What are the core values we share and want to embody in how
we collect and use our resources?
❖ What can the government provide that can’t be provided effec-
tively in any other way?
It is crucial that women in the United States join across class and
race lines to take a stronger part in determining the answers to these
questions. I wrote Women and the US Budget to encourage more
engagement with these issues, and in Part Three we will look at values
and principles that could guide the distribution of public resources
in order to provide a better quality of life for all of us.
The Bigger Picture
The tragic events of September 11, 2001, and their aftermath changed
the dynamics around the US national budget, just as they changed so
much else. The president’s and Congress’s response to the attacks on
the World Trade Center and the Pentagon revealed that the United
States has abundant national resources. Within days, the federal gov-
ernment made $40 billion available for disaster relief to New York
City , emergency relief to victims’ families, and increased security .
Where did that money come from? The fact that the resources
could be made available so quickly illustrates that although the bud-
get is a plan for how money will be raised and spent in a given time
period, it is also flexible enough to respond to unexpected events and
changed circumstances. This is a positive thing. It would be absurd
if, in a budget of over $2 trillion, money could not be found to
address the national needs after September 11.
It is a good idea to look deeper, however, if we are to understand
the complex maneuvering that happens when so many resources are
at stake. September 11 demanded a quick response from the govern-
ment, but a quick response cannot take all relevant factors into
account. A quick response also tends to favor those with ongoing
access to decision makers. So, for example, an airline assistance act
was passed a few weeks after September 11, giving $5 billion to the
airlines immediately , and slated to cost $17 billion over five years.
This act became law at a time when thousands of workers in the 
airline industry and other industries were being laid off, yet the aid
Women and Abundance 5
was not tied to retaining workers or limiting CEO salaries and benefits.
Another example of the shortsightedness inherent in a quick
national response is provided by the dilemmas faced by states in their
budgeting after September 11. As the federal government rearranged
the flow of money , it chose not to help states with their fiscal crises.
Before September 11, states were already facing challenges. Because
of the ongoing recession, they were receiving less income (unem-
ployed workers can’t pay taxes), and were dealing with more human
needs (for instance many women who got off welfare to take a job
were losing their jobs). September 11 also created a lot of new
expenses as states and local communities had to beef up security . The
national government faced all these things, too, but the difference
was, as State Senator Sue T ucker of Massachusetts said, “States can’t
print money . We have to balance our budgets.”
1
Massachusetts — the
state in which I live — faced a $1 billion deficit and began to slash
programs such as higher education, homecare, substance abuse treat-
ment, and instruction in English as a second language.
When expenditures increase during an emergency , it is time to
look at the tax side of a budget. There is an option to postpone or
repeal tax cuts that have already been passed, or to increase taxes to
cover the new expenses. However, the federal government and many
states did the opposite in the last months of 2001. They continued to
limit income to the system — by refusing to raise taxes — when the
need for money to cover expenses was higher. The result was that
those people with the least influence in the political process were
more likely to see their programs cut so the budget could be balanced.
Because the federal government can issue money , it can sustain a
deficit budget. Deficit spending can be a positive thing if it is used to
provide needed services and programs in a year when revenues may
be short, and it can help stimulate the economy when times are hard.
But if deficits are allowed to get too big or to accumulate year after
year, the results are higher interest costs to taxpayers and the invest-
ment of more of our national resources into paying off the national
debt. As we will see in Chapter 4, when deficits are high, bondhold-
ers and investors make money , while more of the taxes paid by aver-
age taxpayers go to cover interest payments.
Since September 11, 2001, the amount of money in the US budget
going to the military and to security agencies for the war on terror-
6 Women and the U.S. Budget
ism has increased and will stay high for many years to come.
President George W . Bush requested an increase of close to $50 billion
in his fiscal year 2003 budget, which was the third-largest increase in
military spending in a single year (after the increases for 1952 and
1966). In addition, the military budget is still loaded with expensive
aircraft, submarines, ships, and other weapons that were originally
designed to fight the Soviet Union. This money , which goes to mili-
tary contractors to develop, build, and maintain these weapons, does
more to protect military contractor profits than it does to protect any-
one from terrorism.
Many members of the American armed forces and many Iraqis
have been killed or injured in the war. In addition to the grief, pain,
and stress this has brought to service people and their families and to
so many Iraqis, the increased military expenses put a strain on the
national budget and the resources available to address domestic
needs. T ypically , wars have had the effect of holding steady or reduc-
ing spending on social programs within the United States, and this is
happening again. Over $150 billion has been spent on the war and
the US presence in Iraq so far, and additional expenditures — over
$80 billion as of the end of 2004 — are on the way . However, a CBS
News/New York Times poll in January 2005 found that 57 percent of
adults disapprove of the way President Bush is handling the war in
Iraq. If the war becomes increasingly unpopular, public opinion could
challenge the scenario of continually escalating costs and casualties.
We can’t use terrorism as an excuse for neglecting the human
needs of our own people. The events of September 11 have under-
standably made everyone in the United States acutely aware of
national security , and we do need to address legitimate security weak-
nesses that make people vulnerable to harm. Yet President George W .
Bush’s response to terrorism directed against the United States has
eroded our civil liberties and increased economic and social pressure
on immigrants and people of color in general. True national security
comes from a strong democracy and internal well-being. Unless we
have distributed our resources well and insured that all families and
children have adequate income, enough to eat, and decent housing,
we are undermining what we want to protect.
It is illuminating to look at women’s perspectives on domestic pri-
orities. In a survey conducted for the Business and Professional
Women and Abundance 7
Women’s Foundation by the Institute for Women’s Policy Research in
2004, nearly nine out of ten women (86 percent) said that healthcare
costs were of major importance, while just under half (49 percent)
said homeland security was the most important issue. Homeland
security ranked well behind retirement security (80 percent), job
opportunities (71 percent), good schools (66 percent), and housing
costs (61 percent) in a list of issues. Domestic security is important
but not the most important thing, while issues of adequate healthcare
coverage and retirement income are at the top of the list. These are
issues that the national budget can more fully address on behalf of
women and families.
Women and Work
Although women in the United States have made tremendous gains
in recent decades in terms of their access to education and the labor
market, many women still face a triple burden in the US economy.
First, women are concentrated in lower-paying jobs with fewer ben-
efits. Second, women are often the unpaid caregivers in US society ,
bearing children and providing primary care for them and for the
family generally, which often includes caring for elderly parents.
They usually do not receive money for doing this work, which is not
counted as a productive contribution to the economy and which can
interfere with their full-time participation in the labor force. Third,
when women do not have enough income to support themselves and
their children, they are often given inadequate support by the gov-
ernment or are refused assistance from public resources. This triple
bind is worse for poor women and women of color due to the added
effects of discrimination based on race and class.
Even as women in the 21st century enjoy a greater share of the
economic pie than they have had in the past, racism and classism
continue to block progress for certain groups of women. Teresa L.
Amott and Julie Matthaei look into the histories of these groups, and
their relationships to the US economic system and government, in
their book Race, Gender and W ork: A Multi-Cultural Economic History
of Women in the United States. A brief overview of these histories and
conditions show:
❖ Native American women have increased their workforce
8 Women and the U.S. Budget
participation in the last 20 years, but their community still suf-
fers from high unemployment and underemployment.
❖ African American women have also increased their labor force
participation but are still concentrated in lower-paying jobs, and
their community suffers persistent cycles of poverty .
❖ Chicana labor force participation rates have risen, but Chicanas
still remain concentrated in low-paid, seasonal jobs and suffer
high poverty rates.
❖ Puerto Rican women in the United States have experienced an
increase in labor force participation in recent years, but the gains
tend to be less than those of other groups.
❖ Many Chinese American women have been subjected to sweat-
shop conditions, sewing either in their own homes or in sweat-
shop factories. Some have become unionized through UNITE
(Union of Needletrades, Industrial and Textile Employees, now
joined with the Hotel Employees and Restaurant Employees
International Union).
❖ Japanese American women have labor participation rates similar
to European American women, but their earnings are far less
than those of Japanese American men.
❖ Although European American women have made great progress
in moving into upper-tier management and professional jobs,
they still tend to be underpaid, and most continue in lower-
paying jobs.
More women have entered the job market in recent years, and
their overall wages have been increasing. However, in a 2004 press
release from the Institute for Women’s Policy Research, Dr. Heidi
Hartmann, president of the institute, reported that “women continue
to take a major hit in the on-going economic slowdown. No progress
on the wage ratio has been made since 2001, and women actually
lost ground in 2004. Falling real wages for women indicate a decline
in the quality of their jobs. The economic recovery continues to dis-
advantage women by failing to provide strong job growth at all wage
levels.”
Most new jobs that will be available for women in the com-
ing years pay low annual wages that keep women in the ranks of 
Women and Abundance 9
the working poor. According to the Self-Sufficiency Standard for
Massachusetts, developed by a coalition of organizations in 1999
headed by the Women’s Educational and Industrial Union in Boston,
a family of one adult and two children (one of preschool age) in
Boston needs over $45,865 a year to provide the basics of life. This is
vastly more than most women are able to make as single parents.
Women supporting children on their own are more likely to be
poor because of the low pay available to women — especially those
with little education and few job skills — and the lack of affordable,
high-quality daycare. According to the Joint Center for Political and
Economic Studies, the median income for families headed by a single
white woman with children in 2001 was $30,062, compared to $63,862
for white married couples. The median income for families main-
tained by black single mothers was $20,894, compared to $51,514
for black married couples.
Although the official unemployment rate is 5.4 percent, if you
include people who want work but have stopped looking and “con-
tingent workers” — part-time, temporary, and contract workers —
between a quarter and a third of the US labor force is unemployed or
underemployed. Women make up more than two thirds of part-time
workers and over half of those who would prefer to work full-time.
Part-time contingent workers earn only 60 percent as much as full-
time workers on an hourly basis, are not protected under occupa-
tional health and safety regulations, and do not receive unemploy-
ment insurance. In addition, few part-time workers have
employer-provided health insurance. Many workers who are able to
find full-time work have found that their wages do not lift them out
of poverty .
There are several government policies, in addition to direct income
subsidies like housing and food stamps, that affect jobs and wages for
women. These include minimum wage and other wage policies, pay
equity regulations and enforcement, labor policy, pension policy,
Occupational Safety and Health Administration (OSHA) enforce-
ment, affirmative action, and funding for childcare, healthcare, and
other basic supports. Government labor policy also has a strong impact
on women’s economic security . Union women earn more than their
nonunion counterparts, and receive better benefits. When the US gov-
ernment contributes to a weakening of labor unions, as the Reagan
10 Women and the U.S. Budget
presidency did in 1981 when it decertified the air traffic controllers’
union, all workers are affected.
The federal minimum wage remains at $5.15 an hour, a ridicu-
lously low amount by any standard. A worker who works full-time at
this wage earns less than $10,000 a year. Women, especially African
American and Hispanic women, would reap the rewards of any min-
imum-wage increase — they make up 61 percent of the group of
workers at the bottom of the income scale.
One goal of national economic public policy should be to insure
that women have the training and opportunities to achieve economic
autonomy . This means freedom to follow the life path of their choice,
enjoying a reasonable standard of living, with or without a male part-
ner. It also means freedom from domestic violence. Most women who
leave violent husbands or partners, especially if they take their chil-
dren with them, end up in poverty for at least a period of time.
Privatization, Entitlements, and Women
In recent decades there has been a strong trend to privatize govern-
ment services. This means that services previously provided by the
national, state, or local governments are taken over by corporations
or, in some cases, nonprofit organizations. The corporations that take
over the contracts are paid public money , but provide the service as
part of a profit-making enterprise. One example of privatization is the
use of corporations to fight the war in Iraq — as security guards, sup-
ply workers, weapons handlers and to provide support services to the
troops. Currently 10 percent of US military personnel work for private
contractors. Another example of privatization is the move to hand off
welfare reform implementation, child support enforcement, and data
collection to Lockheed Martin, which has branched out from military
contracts.
When government services are privatized, public sector jobs are
lost, and the jobs created by private companies don’t generally replace
the wages and benefits of the lost jobs. Also, government can provide
services such as low-income housing, which may not be profitable
for the private sector to undertake. When government decides not to
provide those types of services, they may disappear altogether.
This movement of public money into the hands of private companies
Women and Abundance 11
is a central concern for women. According to “Why Privatizing
Government Services Would Hurt Women Workers,” a 2003 study
by the Institute for Women’s Policy Research, most public sector jobs
are held by women. Because public sector employees are unionized,
they generally have higher wages and better access to employer-
funded health insurance and pension benefits than do workers in the
private sector. Women’s wages are closer to men’s wages in the pub-
lic sector than in the private sector. These are key issues for women’s
economic security . African American women hold the highest num-
ber, proportionately , of public sector jobs, so they are disproportion-
ately hurt when these jobs are eliminated.
Besides eliminating public sector jobs, the move to privatization is
threatening three key programs for women: Social Security , Medicare,
and Medicaid. The importance of these programs to women is partly
due to the fact that because women earn less overall in the job mar-
ket, and because the United States does not have national health
insurance, they rely more on the government for support when they
need healthcare for themselves or their children, or when they have
retired. For instance, most women receive very low monthly benefits
from Social Security , yet the Social Security Administration reports
that for one third of women over 65, it is their only income.
However, these facts are not usually considered when Congress
debates these programs, nor are they taken into account when reform
proposals are made.
The Social Security Case Study
To help us understand the move to privatization, we can look at
Social Security as a case study . Social Security is the jewel of federal
government programs. It has benefited more people than any other
government program in US history , enjoys broad political support,
and promotes social solidarity. This retirement, disability, and 
survivor insurance program serves 43 million people a year, yet is
very efficient, with only 0.8 percent of income going to pay for admin-
istration. Most importantly , it has radically reduced poverty for the
elderly .
The campaign to privatize Social Security is taking place in the
context of some legitimate questions about the long-term financing
of social security that need to be debated in the public arena and
12 Women and the U.S. Budget
addressed by Congress. The Social Security Trustees reported in 2003
that if no reform takes place, Social Security would be able to pay full
benefits only until 2042. At that point the trust funds would be
depleted, but incoming tax revenue could still cover more than 70
percent of promised benefits. The challenge is that as the baby boom-
ers retire, there has to be enough cash to pay out benefits each year.
Many people are worried that there will not be enough money avail-
able to cover everyone as early as 2018.
There are many proposals for addressing the long-term needs of
the Social Security program without resorting to private accounts. At
a press conference on Social Security privatization held by the
National Council of Women’s Organizations in February 2005, Kim
Gandy , president of NOW , recommended two strategies for assuring
Social Security’s fiscal soundness as well as its ability to provide more
equity in benefits for women. The first was a modest increase in the
payroll tax around the year 2020, and the second involved raising the
income level at which taxes are paid into the system.
However, the President’s Council of Economic Advisers argues that
workers should be allowed to divert money from Social Security and
put it into private savings accounts that they could invest in the stock
market. Under one proposal, they could put 4 percent of their earn-
ings, up to $1,000 per year, into an individual account. This leaves
these individual accounts vulnerable to the vagaries of the stock mar-
ket and also takes money out of the Social Security system that will
be needed to pay benefits to those retiring in any given year. This is
the foot in the door of privatization — and it is not necessary to
insure the continuation of Social Security . It is estimated that the cost
of shifting to a system of individual accounts could add as much as
$4.7 trillion to the national debt over four decades.
If the Social Security system is not broke, as politicians and pun-
dits claim, why are we having a national debate about whether or not
we should privatize it? The reason is hidden in the perverse dictates
of globalization. The “needs” of banks, bond traders, mutual fund
companies, and insurance companies to make ever-increasing profits
in the casino of the international economy has caused them to set
their sights on public money . The Social Security funds of the United
States are one of the largest pools of public money in the world, and
they are vulnerable to being raided. Even if only part of the system
Women and Abundance 13
were privatized (just 5 percentage points) financial middlemen
would be able to siphon off $150 billion of payroll taxes to increase
their profits each year.
Although they don’t want to be seen as spearheading the effort to
privatize Social Security , companies such as American International
Group Inc. (insurance), State Street Boston Corp. (pension com-
pany), American Express Corp., and Fidelity Investments are fund-
ing the public relations blitz in favor of privatization. These and
likeminded companies, foundations, and individuals finance speeches
and media campaigns that have so successfully highlighted the “crisis”
in Social Security that, as former House Speaker Newt Gingrich 
(R-GA) was fond of saying, more people under the age of 30 believe
in UFOs than believe that they will ever collect any money from
Social Security . Privatization is then presented as the “fix” to a crisis
that doesn’t exist.
The push to privatize pensions in the United States is part of a
global move to transfer public money to corporations and financial
managers. In Chile, for example — a country that is often held up as
a model by President Bush and others — the privatized pension system
requires that 10 percent of workers’ salaries be deposited in mutual
funds and as much as a third of their contributions go to fees for the
pension fund managers. Under the reformed Chilean system, at least
half of all workers receive no pension from the government at all.
The government minister of labor and social security , who oversees
the program, told Larry Rother of the New York Times in January
2005, “It is absolutely impossible to think that a system of this nature
is going to resolve the income needs of Chileans when they reach old
age.” Pension reform was initially forced on Chile during the rule of
Augusto Pinochet when the World Bank threatened to deny badly
needed loans unless the government made deep social security cuts.
Now the World Bank is pressing for pension reforms in many
other countries in Latin America and elsewhere. Foreign firms,
mainly from the United States, control a large segment of the global
retirement fund management sector. Foreign private insurance com-
panies are moving into the gigantic Chinese market as China sets up
personal retirement funds for some workers and considers disman-
tling the social security system that had provided decent pensions for
its retirees.
14 Women and the U.S. Budget
Women, particularly low-income women, have the most to lose
from privatization. In the United States, women are 58 percent of the
people on Social Security who are 62 years of age or older, and approxi-
mately 70 percent of those who are 85 and older. Relatively low-earning
jobs, time away from the job market in order to raise families, and
patterns of discrimination in the job market all contribute to women
having low Social Security benefits in relation to men.
In spite of this, because most women receive no income from a
pension, and because monthly benefits for retired women who do
receive a pension average much less than those for retired men,
Social Security is essential. In addition, Social Security provides dis-
ability benefits and survivors’ benefits to families. Without this cov-
erage, many more women would become destitute and would be
unable to support dependents after an injury to, or the death of, their
spouse. Finally , if basic benefits were reduced for the poor under pri-
vatization schemes, women could become the “silent shock absorbers”
once again as they take on the care of aged parents with fewer means
to be independent.
Medicare and Medicaid
Despite spending more money on healthcare than any other country ,
the United States is ranked very low compared to other countries on
overall measures such as life expectancy and infant mortality , par-
ticularly for people of color. This is the only industrialized country
that does not provide healthcare for all its citizens — 45 million peo-
ple do not have health insurance. Yet that figure is misleading. A
study done by Families USA in 2004 found that if you add in peo-
ple who go without health insurance for part of a year, the number is
81.8 million people, one out of three people in the United States
under age 65.
Over 85 percent of Medicaid recipients are women and children,
and about 47 percent are African American. Low-income senior citizens
spend a quarter of their income on medical care, while the richest fifth
of the population spends 15 percent.
Medicare was created in 1965 as a federal health insurance program
to make sure that the elderly would have adequate health coverage
after they stopped working. It provides health insurance to 40 million
people, about one out of every seven Americans. Medicare beneficiaries
Women and Abundance 15
include 34 million people aged 65 and above, and about 5 million
people below age 65 with physical disabilities. At age 61, women
make up 57 percent of the recipients of Medicare, while at age 85
they make up 71 percent, since women, on average, live longer than
men. Combined with Social Security , Medicare has made a substan-
tive difference in the lives of elderly Americans and is particularly
important for women.
Like Social Security , Medicare is an entitlement, meaning that all
who qualify for the program must be covered. This means the bud-
get has to accommodate whatever level of funding is needed each
year. Also like Social Security , the Medicare system is run efficiently .
Expenses for overhead and administration are less than 2 percent of
the benefits paid out. In contrast, private insurance companies are
estimated to have overhead rates of 12 to 14 percent or more, and the
overhead in managed care organizations (i.e., Health Maintenance
Organizations or HMOs) is often even higher.
The Bush administration and many conservatives want to pri-
vatize Medicare. The Medicare Prescription Drug Improvement and
Modernization Act of 2003, which was passed by the Congress, is a
step in that direction. According to the AFL-CIO, this bill does
nothing to control drug prices and was written to benefit big drug
companies, not people participating in Medicare. This legislation
helps steer billions of dollars from taxpayers to the pharmaceutical
industry .
Medicaid provides healthcare and long-term care services to more
than 40 million low-income families, the elderly , and disabled people.
It insures more than one in seven Americans and is the primary source
of federal financial assistance to the states. Medicaid covers the cost
of long-term care for conditions that Medicare does not cover, so it is
essential for anyone with few assets or a chronic condition. Although
Medicaid reaches many people, there are still millions of children
who are eligible for Medicaid but who do not receive coverage because
of poor outreach and other enrollment barriers.
In recent years, certain services previously provided through
Medicaid have been privatized, particularly those in the area of men-
tal health. This leads to the loss of public sector healthcare jobs,
which, as we saw earlier, negatively affects women. In addition, more
and more states are forcing Medicaid recipients into managed care,
16 Women and the U.S. Budget
ostensibly to save money . This compromises their access to health-
care and the quality of service they receive.
Fighting Privatization
These moves to privatization make it even more essential that
women get involved in determining our national priorities so that
safety nets are in place for everyone who needs them. George W.
Bush has set an agenda for his second term that includes partial pri-
vatization of Social Security combined with benefit cuts, tax reform
to solidify the transfer of wealth upwards, cutbacks in government
services, and increased military funding. Now is the time to clarify
our alternative vision and to gather the courage to pursue it boldly .
Globally , national governments are finding their powers weak-
ened and their public wealth depleted by trade policies that increase
the power of corporations and consolidate international money flows
in the hands of an elite group of money managers. This has a pro-
found effect on women and people of color because they rely on gov-
ernment support disproportionately, especially if they support
children on their own or if they are elderly . According to the United
Nations, women do two thirds of the world’s work, but receive only
10 percent of the income. At the other end of the spectrum, in 2001,
the world’s 497 billionaires registered a combined wealth of $1.54
trillion, greater than the combined incomes of the poorest half of
humanity .
Organizations and individuals across the United States and around
the globe are working to strengthen their national governments and
communities in the face of these trends. I offer Women and the U.S.
Budget as a tool to bring women in the United States to the forefront
of decisions about resource allocations and budget priorities.
Women and Abundance 17
19
Part 1
❖
Budget Basics
Y
OU ARE NOW ENTERING the land of the national budget. The money
the government receives, holds, and spends belongs to all of us.
In Part One — the next four chapters — we will explore where the
money comes from, where the money goes, whether the budget is
balanced or shows a surplus or deficit, and who decides.
As I suggested in the Preface, you might want to take on the role
of a public investigator (PI) as you investigate the mysteries of the
budget and how they affect women. I will give you “PI Pointers” as
we go along to highlight some of the smokescreens and mirrors that
hide budget realities.
21
Chapter 2
❖
Where Does the Money Come From?
T
HERE IS NOTHING MAGICAL about the income side of the budget,
but the curiosity and persistence of a PI comes in handy when
trying to understand it because much of the information available to
the public is unclear. Little is known about how the Department of
the Treasury prepares estimates of income for the government, and
the budget documents themselves give scant information about
income. The focus of the budget documents is on spending and gov-
ernment programs, downplaying the central role taxation plays in
public policy .
Tax policy is important for the following reasons:
❖ It determines how much disposable income a family or house-
hold has.
❖ It determines which sectors of the population bear the biggest
burden of supporting the government.
❖ It determines how much is available to the government for pub-
lic programs.
Taxation has a huge impact on women as they participate in the
labor force in greater numbers. The fastest-growing group of tax filers
is “heads of households” — single, unmarried, or separated people
supporting children on their own— and it is made up mostly of sin-
gle mothers.
One thing to keep in mind as we look at taxation is that account-
ing is a key to understanding it. Accounting, which refers to the
records the government keeps of its financial transactions, appears to
be a neatly plowed field, but it is really a minefield. How the records
are kept has consequences in the policy-making arena because it
shapes how people think about the money . Another way of looking
at it is to realize that how the records are kept is a political decision,
reflecting certain assumptions and values. On the income side of the
budget we will be walking through this minefield of accounting,
especially when we look into certain tax laws. As we will see later on
in the chapter, accounting methods play a large role in how public
policy is implemented through the tax laws.
Think of the government’s income as a great river of money made
up of many streams. The source of each of these streams is the labor
and productivity of workers and businesses, which create the wealth
that is then available to be used by the government.
Congress passes tax laws in order to get the streams flowing. As
the river of money comes in, it is used for various programs and ser-
vices for which money has been appropriated.
It is important to keep in mind that the way the income streams
are set up now is only one of several possible ways for configuring
income, and decisions by Congress can change it at any time. Before
we look at how things are set up now, though, let’s take a look at
some highlights on the path to the present system of taxation.
Background
From the time the first money-raising bill (a tax on imports) was
passed in 1789, Congress has changed the income streams over and
22 Women and the U.S. Budget
PI Pointer
When you think about accounting, remember
the Enron scandal. One of the most successful
companies in the world worked with one 
of the biggest accounting firms, Arthur
Anderson, to use accounting tools that
masked the truth. Accounting reflects values.
over again. The first income tax was enacted in 1862 to support the
Civil War effort. The act of 1862 also created the Commissioner of
Internal Revenue, the precursor to the Internal Revenue Service
(IRS), which is now a division of the Department of the Treasury .
The Constitution explicitly forbade a national tax on income, but
such a tax was legalized when the 16th Amendment was adopted in
1913. At that time Congress put in place an income tax that applied
only to the richest 5 percent of households.
Between 1909 and 1941, most of the money the government
received came from taxes on corporations. (Like taxes on individual
income, corporate income taxes have gone through many changes
over the years.) It was not until 1941 that individual income taxes
became the main source of revenue for the government. The with-
holding tax on wages was introduced in 1943 and was key to increas-
ing tax collections.
President Franklin D. Roosevelt signed the Social Security Act
into law in 1935. It created another stream of individual income
taxes: a payroll tax. The Social Security tax shows up on your pay
stub as FICA, short for the Federal Insurance Contributions Act,
which is phrasing from the original Social Security Act. The govern-
ment began collecting Social Security taxes in 1937 and putting them
in a trust fund — a fund the government could use to pay benefits,
cover administrative costs, and invest in securities to earn interest.
The programs associated with Social Security include Old-Age,
Survivors, and Disability Insurance (OASDI), and Medicare.
From the beginning, the pressure to levy and increase individ-
ual income taxes has usually come from the government’s need 
to raise money to fight wars or increase military spending. The great
expansion in revenues necessary to enter into and sustain fight-
ing in World War I, World War II, the Korean War, and the Vietnam 
War would not have been possible without Congress’s power to tax
income.
It has only been since World War II — particularly in the decades
of the Cold War — that the IRS has developed its enormous bureau-
cracy of collection and enforcement. The writer Edmund Wilson,
who was hounded by the IRS and had income seized for years, said
that Americans were taught to fear two things — the Soviet Union
and the IRS. As he pointed out, these two fears came together to
Where Does the Money Come From? 23
insure income was raised to fund the large US military and weapons
buildup during the Cold War.
Which brings us to an important point: Taxes are compulsory . If
a person receives income but does not file a return with the IRS and
does not pay any tax, he or she can be penalized if discovered by the
IRS. Tax resisters face double fines (for both non-filing and non-pay-
ment). The IRS may start criminal prosecution, and it can seize
wages, money in bank accounts, cars, homes, and other assets to pay
tax bills. However, the more extreme actions and criminal penalties
are unusual.
There is a long history of people who have refused to pay taxes for
a variety of reasons across the political spectrum. Writer Henry David
Thoreau became one of the most famous tax resisters when he spent
a night in a Massachusetts jail for refusing to pay taxes to support the
Mexican-American War of 1846. Tax resistance to wars reached a
peak during the 1960s and 1970s, when more than 500,000
Americans openly opposed paying taxes to support the Vietnam War.
Congressman Ronald Dellums (D-CA) introduced the World Peace
Tax Fund Act in the 1970s to create a special “conscientious objec-
tor” status for taxpayers. Although the legislation has been intro-
duced in every session of Congress since, it has yet to pass.
Sources of Federal Income
Now we will look at the major streams that currently make up the
giant river of money . Figure 2.1 is drawn from the budget documents
and summarizes the receipts (or income) side of the budget (to see
24 Women and the U.S. Budget
PI Pointer
You would have to spend over $5 million a
day every day for one year in order to spend
$1.8 trillion — what the government took in for
fiscal year 2004 — in twelve months.
the budget documents, charts, and tables yourself, go to <www.
gpoaccess.gov/usbudget/fy06/index.html/>).
Note that the numbers in Figure 2.1 are in billions of dollars, so
the amount of individual income taxes in fiscal year 2004 was really
$809,000,000,000 or $809 billion. The total receipts for 2004 were
$1,880,100,000,000 or almost $1.8 trillion. This is what the river of
money amounted to in 2004, and it is a lot of resources.
Figure 2.2 presents another way of looking at the same information.
As you will see, individual taxes are close to half the total sources
of income. However, more than half of social insurance and retire-
ment taxes also come from individuals, and some of the excise (or
sales) taxes are on products that individuals consume, such as alco-
hol and cigarettes. This means that close to three quarters of the taxes
the government collects come from individuals.
If you are employed, you are feeding into three of these streams:
individual income taxes; social insurance and retirement (in the form
of Social Security and Medicare, or FICA); and excise, or sales taxes.
You are also paying state and in some cases local income taxes, sales
taxes, and fees.
Receipts By Source — Summary
(In billions of dollars)
Source 2004 Estimate
Actual 2005 2006 2007 2008 2009 2010
Individual income taxes . . . . . . . 809.0 893.7 966.9 1,071.2 1,167.2 1,245.1 1,353.3
Corporation income taxes. . . . . . 189.4 226.5 220.3 229.8 243.4 252.4 257.6
Social insurance and retirement
receipts . . . . . . . . . . . . . . . . . 733.4 773.7 818.8 866.2 911.7 959.1 1,016.2
(On-budget) . . . . . . . . . . . . . (198.7) (212.4) (225.6) (237.0) (247.2) (258.4) (273.0)
(Off-budget) . . . . . . . . . . . . . (534.7) (561.4) (593.2) (629.2) (664.6) (700.7) (743.2)
Excise taxes. . . . . . . . . . . . . . . . . 69.9 74.0 75.6 77.2 79.0 81.0 82.9
Estate and gift taxes . . . . . . . . . . 24.8 23.8 26.1 23.5 24.3 26.0 20.1
Customs duties . . . . . . . . . . . . . . 21.1 24.7 28.3 30.6 31.9 33.9 35.3
Miscellaneous receipts . . . . . . . . 32.6 36.4 41.6 45.6 49.5 52.6 55.4
Total receipts. . . . . . . . . . . 1,880.1 2,052.8 2,177.6 2,344.2 2,507.0 2,650.0 2,820.9
(On-budget) . . . . . . . . . . . . . (1,345.3) (1,491.5) (1,584.4) (1,715.0) (1,842.4) (1,949.3) (2,077.7)
(Off-budget) . . . . . . . . . . . . . (534.7) (561.4) (593.2) (629.2) (664.6) (700.7) (743.2)
Source: Table S-8, Budget of the United States Government, Fiscal Year 2006.
figure 2.1 
Where Does the Money Come From? 25
Now we will look at what the categories used in Figures 2.1 and
2.2 refer to.
Individual Income Taxes
Individual income taxes are based on your income. Individuals are
taxed in a number of ways: on wages and salaries; tips; interest
received; dividends; alimony received; business income; rental income;
certain state and local tax refunds; certain pensions and annuities;
private supplemental unemployment benefits; gambling income; cap-
ital gains; and some social security income.
If you are employed, you will fill out a W-4 form when you start
your job. This tells the employer how much money to withhold from
your paycheck to cover the federal, state, and, in some cases, local
taxes you owe each year. The employer is required to take the money
withheld from his or her employees’ paychecks and deposit it in a
Federal Reserve bank (see Chapter 6) or authorized financial insti-
tution each pay period or each month. This money streams into the
Federal Reserve banks from every employer, and the government
draws on these resources to pay for services and programs.
You are legally required to file a tax return every year. On the
return you list all the money you made and all the taxes you paid.
The information on how much you have paid is on the W-2 form,
which your employer is required to give you in January of each year
and which you send in with your taxes. Then you determine if you
still owe any taxes or if you have paid too much and are eligible to
receive a refund.
US Government Receipts by Source, Fiscal Year 2004
26 Women and the U.S. Budget
Note: “Other” includes receipts from estate and gift taxes, custom duties, and miscellaneous.
Source: Figures from Table S-8, Budget of the United States Government, Fiscal Year 2006.
figure 2.2
Corporate 10% Excise 4%
Other 4%
Individual
43%
Social
Insurance
39%
If you are self-employed, you pay income taxes directly to the
government in four installments a year, based on what you paid the
year before. This system is called estimated taxes.
Corporate Taxes
Corporations pay income taxes based on their profits. Some corpo-
rations pay no or few taxes due to tax breaks and lowered taxes on
profits earned.
Twenty years ago, corporate taxes were a much bigger share of
government income — more than twice what they are today — but
tax laws were changed to reduce the amounts corporations owed.
This means individual taxpayers now pay a larger share of the govern-
ment’s income, and corporate tax collections are at their lowest level
in six decades. Many corporations also find ways to avoid paying
taxes they do owe. Under tax changes made during the presidency of
Ronald Reagan, corporations were allowed to write off purchases of
machinery and equipment at a much faster rate than before.
According to the Government Accountability Office (GAO), 60
percent of US corporations failed to pay any tax from 1996 to 2000.
In 2004, the Institute on Taxation and Economic Policy reported that
82 companies received rebate checks totaling $12.6 billion between
2001 and 2003. The largest tax breaks went to General Electric, SBC
Communications, Citigroup, IBM, Microsoft, A T&T, and Exxon Mobil.
In 1986, the US Congress adopted the alternative minimum tax to
reduce differences between what various companies paid and to
insure every company that made a lot of profit was paying some tax.
But legislation passed in 1993 and 1997 emasculated the tax. In 2002
and 2004 Congress passed more corporate tax breaks. Many corpo-
rations are once again paying less than zero in national income taxes.
Other Taxes
Employers are required to withhold and deposit Social Security and
Retirement taxes (FICA) from their employees’ paychecks. They
must also make matching contributions. If you are self-employed,
you pay the full amount of FICA yourself. These taxes are used to
pay out benefits to current recipients of Social Security and Medicare
programs. Social Security taxes currently generate a surplus each year
(in other words, more is taken in than needs to be paid out to retirees
Where Does the Money Come From? 27
each year). The Social Security law requires that the surplus be
loaned to the government — through the purchase of government
bonds — and the government uses it to cover budgeted expenses.
Excise taxes are mostly sales taxes on specific items, including
alcohol, tobacco, telephone service, gasoline, firearms, ammunition,
and certain chemicals and other products. They also include user fees
for highways and airports.
Estate taxes are paid on the money and property possessed by a
person when he or she dies, while gift taxes are taxes paid by the giver
when he or she gives another person property (including money)
worth more than a set amount without expecting payment in return.
Custom duties are funds collected from taxes on imports and
exports.  
The Miscellaneous heading covers deposits of earnings by the
Federal Reserve (the Federal Reserve banks are required to transfer a
portion of their surplus after expenses to the US Treasury) and other
miscellaneous receipts such as the sale of seized goods.
Tax Expenditures
Now we will investigate a mysterious part of the government’s
income known as tax expenditures. The “tax code” — the collection
of laws enacted by the government that determines how income is
collected — includes the income streams outlined above and tax
expenditures. Tax expenditures are mysterious partly because they
are completely invisible in the budget itself, yet they determine how
28 Women and the U.S. Budget
PI Pointer
How can a corporation pay less than zero
taxes? They take advantage of so many tax
breaks — ones they lobbied for — that they
actually get a refund check from the govern-
ment (in other words, from you and me).
a good portion of our national resources is used.
If you examine the official budget documents, you will see charts
of income (like the ones in Figures 2.1 and 2.2) and expenses (which
we will look at in Chapter 3) prominently displayed, but you will not
see the tax expenditure programs. They are buried much farther back
in the documents and are, in fact, in a different document altogether
from the budget presentation. The government is required, by the
Congressional Budget Act of 1974, to list these programs somewhere
in the budget documents, but they are not accounted for in terms of
money coming in and going out. In other words, this is where the
accounting methods completely break down from the point of view
of a PI. Because tax expenditures are not visible in the budget, one of
the major ways the government distributes resources is hidden, and
anyone who wants to understand this distribution will be confused.
Tax expenditure programs are administered through the tax code
(and therefore are implemented by the IRS), in contrast to spending
programs, which are implemented through the government agencies
responsible for them. Tax expenditures range from the home mort-
gage interest deduction to subsidies for McDonald’s to advertise
abroad and reimbursements to defense contractors for mergers.
If we go back to our image of streams of money to the govern-
ment, tax expenditures are like negative streams, backwaters that have
been created by dams at certain points. Some of them flow backwards
and stay clear, and some are swamps. These streams never make it to
the river, but if they did, the river would be much larger.
Where Does the Money Come From? 29
PI Pointer
“Tax expenditure” is the term used to describe
a vast array of government programs designed
to accomplish some social or economic goal
by using the tax system.
One way to understand tax expenditures is to think of them as a
form of tax break, as money the government would normally collect
but forgoes for a specific purpose. For instance, if the interest home-
owners pay on their mortgages were taxed, it would bring in tens of
billions of dollars each year. However, because of the home mortgage
interest deduction, a tax expenditure program, this interest is not
taxed. The government’s loss of this revenue directly benefits one
group of people — homeowners — but the resources are then not
available to be spent on programs that would benefit other groups.
For instance, people who prefer to rent or who cannot save for a
downpayment get no support from the national tax system (although
some states do help renters). As well, the government does not fully
subsidize low-income housing, so someone who cannot afford mar-
ket rents has a housing crisis.
The top tax expenditures are:
❖ taxes deferred or never paid on employer and employee contri-
butions to retirement plans such as 401Ks and IRAs,
❖ taxes deferred on employer-paid health insurance for workers,
❖ the home mortgage interest deduction,
❖ capital gains, and
❖ a whole array of corporate tax breaks.
Some tax expenditures take the form of tax credits and tax exclu-
sions. The government issues tax credits for certain expenditures and
activities. Credits reduce the amount of taxes due, unlike a deduc-
30 Women and the U.S. Budget
PI Pointer
Over $100 billion a year goes to corporations,
including those in such needy industries 
as insurance and oil and gas, through tax
expenditures in the form of tax breaks.
tion, which reduces the amount of income to be taxed. (An exam-
ple of a tax credit — the Earned Income Tax Credit (EITC) — is
described below .) A tax exclusion is income or funding not subject to
taxation, such as income received by charitable or religious organi-
zations, or employer contributions for medical insurance premiums
or medical care.
As PIs, we notice that programs benefiting upper-income earn-
ers and corporations often take the form of tax expenditures rather
than direct payments from the expense budget. Since these programs
are invisible in the budget — unlike most programs for poor and low-
income people, which are shown in the expense side of the budget —
they are less subject to public attention and scrutiny . In other words,
an accounting trick hides the way the government helps to make the
rich richer, while poor and low-income people are often accused of
being too “dependent” on the government, an accusation that some
groups use to justify cutting safety net programs.
One concern about tax expenditures is that many of the ones struc-
tured as personal deductions benefit those who have lots of resources
more than poor people. And the richer a person is, the greater the
benefit. For example, let’s look at the home mortgage interest deduc-
tion again. You can deduct more interest if you are in a higher tax
bracket. This is an upside-down benefit that would not likely remain
as presently structured if it were a direct spending program. If it were
visible in the budget, rather than being an invisible tax expenditure,
people would question the fairness of such an arrangement.
Another example of a tax expenditure that benefits the wealthy
disproportionately is the reduction in the capital gains tax. Taxes are
due on capital gains after a person sells assets such as stocks, bonds,
real estate, and artworks. However, there are limits on how much tax
a person has to pay on capital gains, so the capital gains tax expen-
diture figure is money lost to the government.
Multinational corporations can take advantage of complex “trans-
fer pricing” systems allowed by the tax code. The IRS determines
how much of a company’s worldwide earnings relate to its US activi-
ties and are therefore subject to US tax. As a result, companies try to
shift income away from the United States and shift deductible
expenses into the country . In the report “Hidden Tax Entitlements,”
Robert J. McIntyre used IBM as an example of how this works. In its
Where Does the Money Come From? 31
annual report to stockholders in 1987, IBM said that a third of its
worldwide profits were earned by its US operations. But on its federal
tax return, IBM treated so much of its research and development
expenses as US-related that it reported almost no US earnings.
Despite $25 billion in US sales that year, the company owed no taxes. 
McIntyre, director of Citizens for Tax Justice, points out that the
cost of business and investment tax expenditures is now much more
than the support for businesses in the form of spending programs.
These business tax expenditures are only one part of a larger pattern
of government support for corporations that we will be investigating.
Another concern about tax expenditures is that they are not subject
to as much cost review and evaluation as spending programs are. Tax
expenditures are available to any individual or company that qualifies,
and they tend to run on autopilot once they get into the tax code. In con-
trast, spending programs, such as those for environmental protection
or for roads and community development, must be approved every year.
Often, funding for these programs is limited by laws that set ceilings
to control government spending. These programs often shrink as a
percentage of government spending, while tax expenditures — which
are not subject to any freeze or review — grow tremendously .
The invisibility of tax expenditures might be acceptable if these
were relatively small programs. But tax expenditures (those that are
business related as well as all the others, such as the home mortgage
interest deduction) total close to $830 billion or the equivalent of a
third of total budget expenses.
32 Women and the U.S. Budget
PI Pointer
Welfare used to be an entitlement, meaning
that anyone eligible who applied for it was
supported, no matter what the cost to the
government. Now welfare spending is limited,
but entitlements for the middle class, wealthy
and corporations are hidden in the tax code, a
mountain of lost resources that keeps growing.
There are, however, tax expenditures that provide much-needed
assistance and promote equity . The Earned Income Tax Credit (EITC)
is one of the major tax credit programs. It was started in 1975 to off-
set Social Security and Medicare taxes for low- and moderate-income
working families. It is a refundable credit for individuals and families
who earn less than a certain amount of income. The fact that it’s
refundable means that if the credit is more than what the family or
individual owes in taxes, they will receive a check for the rest of the
credit. The EITC moves more than 2 million children out of poverty ,
more than any other safety net program.
Another tax credit is the Child Tax Credit (CTC), for families
with dependent children under age 17. It was worth up to $600 per
child in 2002. The CTC has been in effect since 1998, and in 2001
Congress introduced changes that made the credit available to mil-
lions more low- and moderate-income working families and gave
many families a larger CTC than they would have received in the
past. Like the EITC, the CTC is refundable, meaning some families
can get the credit even if they owe no income tax.
Who Contributes?
The question of who contributes is a tricky one for PIs. As we have
seen, tax laws create income streams from many sources and produce
back eddies that drain off money , as in tax expenditures. When we
want to understand the contributions of different sectors of society ,
Where Does the Money Come From? 33
PI Pointer
Here’s how the EITC benefits a single mom:
Let’s say she is raising two children and earned
$10,000 in 2004. Her Social Security and
Medicare payroll tax was $765. She is eligible
for an EIC of $4,000, which pays her back 
her payroll tax and gives her an EIC refund 
of $3,235.
we need to look at more than the total numbers. For instance,
although wealthy individuals might pay a huge total amount of
money in individual taxes, they could receive tax breaks that mean
they pay a smaller percentage of their income than someone who
makes less money .
The government decides not only how much money it wants to
raise to cover government programs, but also how this money will be
raised. For example, it knows it can raise money from individuals by
passing income tax laws, but it still has to determine how much to
raise from each individual, who will not have to pay taxes, and how
it will collect the taxes owed. Our next step in uncovering clues
about where the government’s income comes from is to look at how
the taxes are structured.
Tax Rates
As mentioned earlier, the tax code is the collection of laws that guide
the way taxes are assessed and collected. It covers such details as the
rates at which people and corporations must pay taxes, as well as
when and how the taxes must be paid. The US tax code is huge and
complex, containing 7 million words and almost 6,000 pages (you
can view it online at <www .fourmilab.ch/ustax/ustax.html>). Its com-
plexity makes the income side of the budget a mystery for regular
people. It also gives people who have the resources to hire tax
lawyers and tax accountants an advantage at tax payment time.
The part of the tax code that sets out what individual taxpayers
34 Women and the U.S. Budget
PI Pointer
The government does not keep track of what
percentage of taxes women pay, so we can’t
compare their contribution to what men pay.
pay is progressive. This means that the rate at which income is taxed
rises as income rises, so people with higher incomes pay more of
their income to the government. This is designed to make the system
fair, as people with a higher income will theoretically pay a higher
proportion of the costs of government programs that benefit everyone.
However, wealthy people eligible for various tax credits and exemptions
often have access to lawyers who help them figure out how to pay as
little tax as possible. And,because of lax enforcement on the part of
the IRS, people with high incomes often pay a smaller proportion of
their income in taxes than those with low and moderate incomes.
Individual tax rates start at 15 percent and go up to 35 percent (as
of 2005), with the exact rate determined by your marital status (i.e.,
whether you are single, married, or the head of a household). It is
important to remember that the tax is figured on taxable income, not
gross income. The tax rate therefore applies to income after various
deductions and exemptions have been taken.
Income tax changes that favor those with the most income and
assets, such as the tax breaks enacted by the George W . Bush admin-
istration and Congress in 2003, contribute to the massive increases
in wage and income inequality that have occurred in the United
States over the past 20 years. In 1997, the richest one percent of
households had 40 percent of the nation’s household wealth. They
had more wealth than the entire bottom 95 percent.
Other taxes on income include payroll contributions to Social
Security and Medicare (FICA). This tax is paid equally by employer
Where Does the Money Come From? 35
PI Pointer
Between 2002 and 2012, the richest taxpayers
— those with incomes in the top one percent
— in the United States will receive, on average,
$342,000 each in tax cuts, while most tax-
payers will receive, on average, $350 each.
and employee on every dollar of wages and salary up to $90,000 (as
of 2005) of income. After that there is no tax. The Medicare part of
FICA is paid on every dollar with no ceiling. If you are self-employed,
you pay the combined amount.
Capital gains taxes are collected after a person sells his or her cap-
ital assets such as stocks, bonds, real estate, and artworks. Since taxes
are collected only after an asset is sold, investors don’t have to pay
any taxes as long as they hold onto their assets. When they do sell,
they can reduce these taxes by reporting capital losses at the same
time, which are deducted from what is due.
Some income is not taxable, including child support payments
and T emporary Assistance for Needy Families (TANF); life insurance
proceeds received after a death; money received for an accident or
health insurance claim; property received as a gift or inheritance;
benefits administered by the Department of Veteran’s Affairs; and
money received under the Worker’s Compensation Act for occupa-
tional sickness and injury . Also, some or all of the benefits received
under Social Security or equivalent Railroad Retirement Benefits may
not be taxed if they are your only income.
Not everyone is required to pay national taxes. It makes sense that
people who earn very little are allowed to keep this money to cover
basic expenses. Two decades ago the federal government acknowl-
edged that taxing poor families was counterproductive and unfair. As
part of the Tax Reform Act of 1986, virtually all families below the
poverty line were excused from the requirement to pay federal income
tax. By 1997, half of the states had implemented the same policy .
As PIs, we need to consider the whole tax situation people face.
Federal taxes are not the only taxes people pay . They also pay state
and local taxes. State taxes tend to be more regressive, which means
everyone pays the same amount, regardless of income. Low- and
moderate-income people pay the same as the very wealthy. This is
“regressive” because the tax takes a proportionally bigger bite out of
the income of people near the bottom and in the middle. Wealthy
people may pay more money in total, but it’s a lower portion of their
income. Poor people or the working poor pay the highest portion of
their incomes on these taxes, thereby bearing more of the burden of
taxation in those instances. In the early 1990s, many states lowered
personal income taxes — a boon to the rich — and increased sales
36 Women and the U.S. Budget
taxes, which are another form of regressive tax. This meant that the
rich had more disposable income and the poor, or people with mod-
erate incomes, had less.
As is the case with the federal government, there is often a lack of
information from the state governments about the impact of state tax
policy on different sectors of the population.
Underlying Contributions: The Care Economy and Earth
As PIs look into the issue of who contributes the money that makes
up the income streams to the government, they begin to understand
that important contributions can be overlooked or discounted. It is
our job to shine the light on these hidden contributions and to under-
stand some of the more visible ones. When we think of the river of
money streaming into the government, it is important to remember
that this river could not flow without the wealth produced by work-
ers. Workers work, earn salaries in exchange for that work, and then
the government takes part of that income to pay for public programs.
The workers’ labor also helps to generate a surplus — profit — for
their employers, who are then also taxed by the government.
However, none of this wealth from workers would be available to
be taxed and used by the government without the activity of the care
economy , which is invisible in official economic measurements. The
care economy includes all the wealth-producing and life-sustaining
activities, institutions, and relationships not counted in the official
economy .
Much of this care economy consists of the goods and services pro-
vided within and by all the households in the United States. This
includes meal preparation, sewing, laundry, child and elder care,
home repairs, volunteering, produce from gardens, and transporta-
tion services using private automobiles. Women provide most of the
goods and services in this invisible economy , but their contribution
is not counted, valued, or compensated for in our economic or bud-
get measures. The US budget exists in the context of this unac-
knowledged contribution, which is worth hundreds of billions of
dollars a year to the country . This is the deeper foundation of the US
budget and the economy , since the care economy provides services
for free that would otherwise have to be provided or subsidized by
government or other sectors of the economy .
Where Does the Money Come From? 37
At an even deeper level, Earth and its ecosystems provide an
underlying contribution. Without the resources of Earth, nothing
could be produced, and no wealth could be generated for house-
holds, corporations, or the government. Because standard economics
— which is based on money — leaves out the contribution of Earth
and the cost of economic development on the environment, it skews
what we recognize as having worth and what we value. (These issues
are discussed further in Chapter 6.)
Who Benefits?
Who benefits from the way the US tax structure is currently set up?
There are many ways to answer this question. Everyone in the coun-
try benefits from the services and programs that the government
funds with our tax dollars. These services and programs — which
include the physical infrastructure of the country , grants to states and
local communities for a variety of programs, education, housing,
healthcare subsidies, and programs like the national parks, environ-
mental protection, Medicare and Social Security — enable commu-
nities and individuals to function. Low-income people benefit from
the EITC, as well as from Medicaid (the government health program
for the poor), income and housing subsidies, and programs like Head
Start. However, these programs are not fully funded, which means
they do not serve all people who need the program.
When we ask who benefits, we need to look at overall fairness
and lack of fairness in the tax structure. As we have seen, businesses
and corporations benefit disproportionately from the tax structure in
many ways, including through tax expenditures. Wealthy individu-
als benefit from the tax system through tax breaks, lower tax rates,
and a lower overall tax bill if you take into account the total amount
of taxes they pay , including state and local taxes. The middle class
benefits from the tax system through such things as the home mort-
gage interest deduction.
Taxation has a huge impact on women who are struggling to find
their place in the economy . As mentioned earlier, the fastest-growing
group of tax filers is single people supporting children. Most of them
have incomes that are not growing. In fact, single mothers today are
worse off than the single mothers of 1970, and nearly twice as many
38 Women and the U.S. Budget
adult women as men live below the poverty line. This has a dispro-
portionate impact on people of color. A large number of families in
those communities are maintained by women alone: close to half the
families in the African-American community , and a quarter of the fam-
ilies in the Latino community .
Tax policy is a central issue for women because it is one of the
main factors influencing the flow of resources into their lives. One
example is the Earned Income Tax Credit, discussed above, which
can make the difference between a family being able to meet basic
necessities or not. This is particularly important for women who are
leaving welfare for jobs that do not pay enough to lift them out of
poverty. Welfare recipients who take jobs have average earnings of
$8,000 to $10,800 per year, which is not enough to raise a family of
three or four above the poverty level.
However, although the EITC provides financial relief for the work-
ing poor, when a household begins to earn more in the workforce, the
EITC is phased out, which increases the tax burden on low-income
families. This is because the government takes away the EITC bene-
fit, which has become a key part of the resources of the family , and at
the same time it begins to tax the worker at regular rates. For many
workers in the low-income bracket, this means they are shoulder-
ing the same high level of taxation as solidly middle-class taxpayers.
Married working mothers also often find that their contribution
to the family’s economic picture is compromised by the outdated tax
structure. When they file as part of a couple, their joint earnings push
them into a higher tax bracket than they would be in on their own,
even if they only earn the minimum wage. As a result they lose a lot
of the buying power of their earnings, while also having to pay exor-
bitant costs for childcare to make their employment possible. Some
changes were made to this situation in 2003 — for instance, the stan-
dard deduction for couples was doubled — but they are temporary
changes and do not comprehensively deal with the challenges many
working women find in trying to balance work and family .
I described the Child Tax Credit earlier, but it is only worth hun-
dreds of dollars, barely enough to cover a few months of childcare for
one child. Although the Child Care and Development Block Grant
offers a subsidy for childcare, only one in seven families who need
it receives the subsidy .
Where Does the Money Come From? 39
Obviously , higher wages, pay equity , and decent benefits are just
as important to women’s economic lives as tax policy , but taxes are
a key part of the puzzle that need more attention.
Low-income, working-class, and middle-class women have been
particularly hard hit by increases in the Social Security payroll tax
and the state and local taxes (like sales taxes) that take a bigger bite
out of the incomes of low-income families. In fact, Donald L. Barlett
and James B. Steele, award-winning investigative journalists, revealed
how Social Security and Medicare taxes (taken out of paychecks as
FICA) are actually double taxes — or as they refer to it, “a tax upon
a tax” — that hit working Americans hard. In a 2003 article in Time
magazine, they show how a family earning $60,000 in wage income
has $3,720 deducted for Social Security taxes and $870 for Medicare.
The family never sees that $4,590, but it is considered to be part of
their taxable personal income, and it is taxed as if the family received it.
In contrast, when President George W . Bush proposed the elimi-
nation of double taxation on stock dividends, he said: “It is unfair to
tax money twice.” However, eliminating the tax on dividends pri-
marily benefits the very wealthy . Charles Schwab, founder of the dis-
count brokerage firm and one of the main advocates for ending the
tax on dividends, would save $4 million on his tax bill if this pro-
posal became law .
In the past 20 years, tax policy has been a major instrument for
an upward distribution of wealth, which has benefited the very
wealthy and corporations. Hidden entitlements for the wealthy and
corporations reduced income to the government by hundreds of billions
40 Women and the U.S. Budget
PI Pointer
Businesses can take a direct tax deduction for
meals and entertainment, but a working-class
mother cannot deduct her childcare expenses.
of dollars a year at the same time that public services and social pro-
grams were being cut. In the next chapter we’ll look at how the gov-
ernment decides which of those services and programs to fund and
how much money to spend on each of them.
Where Does the Money Come From? 41
43
Chapter 3
❖
Where Does the Money Go?
N
OW THAT WE HAVE INVESTIGATED THE INCOME SIDE of the budget, it
is time to turn to the expense side of the budget. This is where
the rivers of public resources that stream in through the tax system
flow out to various programs and sectors of society . In this chapter,
we will look for answers to the questions:
❖ Where does the money go?
❖ Who benefits?
The more closely we look at the expenses, the clearer it becomes
that, just as all women’s lives are connected to what happens in
Washington, so are all sectors of society interdependent with the gov-
ernment. All of us receive a part of that flow of money and resources.
One person may use the income support programs, another may rely
on Social Security , and a third benefits from special education pro-
grams funded by the government, while everyone uses the roads, and
corporations get subsidies. We are all dependent, all part of the flow .
In fact, payments and special programs for corporations cost far more
in the national spending plan than programs like welfare, which ben-
efit poor and low-income women.
One reason the expense side of the budget is so crucial for women
and people of color is that they are discriminated against in the econ-
omy, despite some economic gains in recent decades. Women and
people of color experience higher unemployment, are concentrated
in lower-paying jobs, and have less wealth (assets, property , stocks,
bonds, savings, pensions, etc.) than men. Most women work in the
service sector in jobs that pay little money , provide few or no benefits,
and demand part-time and/or irregular hours. All of this means women
need to rely on certain government services and programs more than
men in order to insure a decent quality of life for themselves and the
children or elders they support. Yet in the last 20 years, many of the
programs women rely on for income support have been singled out
by Congress to be cut back, including welfare, Medicaid, low-income
housing programs, Medicare, student loans, food stamps, and
Supplemental Security Income for disabled children and immigrants.
Diane Dujon, a former welfare recipient who is now a professor
and organizer at the University of Massachusetts, has observed that
“government is the only trust fund for people who live half a world
away from Wall Street.”
1 
Until women are able to thrive within the
economy , with or without a male partner, the government will con-
tinue to be a trust fund for them.
Government spending decisions also have an impact on women
because women tend to be the “silent shock absorbers” when gov-
ernment spending is cut back. Since women provide most of the
uncompensated and unrecognized childcare, supervision of young
people, home maintenance, community volunteering, and elder care,
they will do most of the extra work if national spending to address
these needs is reduced. This means that how the resources are
divided on the expense side of the budget affects the use of women’s
energy and can increase or decrease the stress in women’s lives. If the
full extent of women’s contributions were calculated and taken into
account, it would be obvious that women contribute vastly more to
the nation than they receive from government programs.
Women are currently being deeply affected by the budget priori-
ties of the Bush administration. Programs such as Medicaid,
Supplemental Security Income, food stamps, Temporary Assistance
for Needy Families, childcare, and the State Children’s Health
Insurance Program — all programs primarily used by women and
their children — are slated for large cuts. Huge tax cuts, which pri-
marily benefit the rich, and large military spending increases have
been used as excuses for cutting these key social programs.
44 Women and the U.S. Budget
Background
Although spending the public’s money is the primary activity of
Congress, and therefore the core manifestation of our democracy,
most members of Congress don’t really have a full grasp of the budget.
Outside of a few members on the budget committees, some congres-
sional staffpeople, certain corporate and organizational lobbyists, aca-
demics who teach and study Congress, and those advocates for
certain issues who study the budget closely , no one understands the
whole picture of how , where, and on what the government spends
the public’s money . Even many of the people listed above understand
only the small part of the budget that is their specialty .
According to Stanley Collender, author of the Guide to the Federal
Budget, the Budget Enforcement Act of 1990 (BEA), one of the most
significant changes ever made in the budget process, was conceived
in such a way that “probably no more than half a dozen members of
Congress, congressional staff, and Bush administration officials really
knew and understood the implications of what was being discussed.”
It was passed in a rush, in virtual secrecy , and with no public hearings.
PIs need to be concerned about this in the context of national
spending because the BEA put severe constraints on nonmilitary
spending. This made it difficult to increase funding to much-needed
programs that benefited many women, and in some cases it forced
further cuts in those programs.
The veil of secrecy that surrounded the BEA illustrates how some
entities (such as corporations and the military) and some classes
(families with large incomes and/or huge wealth) who can afford to
lobby government and have access to the budget creation process
exercise a disproportionate influence on the use of public resources.
This lack of democracy extends beyond Congress’s handling of our
annual national expenses. We, the public, are also owners of vast
assets that the government holds, such as public lands (one third of
the country), the public airwaves, and government property , yet we
currently have little influence in how they are used or maintained or
whether they are leased or sold.
Keep in mind that government spending is a flexible economic
tool as well as a way to support programs each year, although the 
best way to use this tool is hotly debated in government and financial
Where Does the Money Go? 45
circles. Government spending can be used to keep the economy stable
during a downturn in the economy (a recession), when businesses
and individuals tend to curtail their spending, tax receipts go down,
and more social services are needed. It can also be used to lessen class
inequality through income support programs, tax policy , and unem-
ployment insurance that helps workers during times of crisis in the
economy . In the last 20 years, many of these programs have been cut
and tax policies have been revised to benefit the wealthy and corpo-
rations at the expense of people at the bottom of the economic ladder.
Each year, spending decisions are determined in a political climate
that can change due to many factors including the political relation-
ship of the president and Congress, the power of corporations, the
state of the economy , the needs of various interest groups, the effec-
tiveness of organizing for social change, and the influence of big
money in congressional elections and decisions.
As we did in the previous chapter on tax policy , we will look at
how things are currently set up on the expense side of the budget,
but keep in mind that federal spending reflects the values and
assumptions of the people who put the budget together. The budget-
ing process is about making political choices and arranging the num-
bers and flows to satisfy those political choices; it is not necessarily
about economic or social rationality . This means that it can be recon-
structed and redesigned according to different values and realities. It
also means that spending is presented in an accounting framework
that serves the values of the people making the decisions, just as tax-
ation is.
One example of how the framework can be adjusted is the use of
off-budget programs. Currently only the huge Social Security trust
fund and the US Postal Service are off-budget. These are programs
that are kept out of the yearly budget limits or laws. However,
Congress and the president use “off-budget” as a tool when they need
it. In the past, programs ranging from the savings-and-loan bailout to
the strategic petroleum reserve have been off-budget. Off-budget pro-
grams are counted with the on-budget programs to form what is
known as the unified budget. The deficit is calculated from the uni-
fied budget, so any surplus from the Social Security budget helps to
make the deficit smaller than it would otherwise be.
46 Women and the U.S. Budget
Spending
Each year Congress and the president must agree on a budget for the
fiscal year (October through September) that determines what
resources will be allocated to the various functions of government.
Congress has a lot of resources to deal with, given that the budget is
now well over $2 trillion a year. Even so, sometimes the government
has more expenses than income in a given year, which means the
budget is in a deficit situation. When the government has more
income than expenses, it means there is a surplus.
In Chapter 2 you learned about the streams of money into the
government. These are collected at Federal Reserve banks and other
financial institutions and transferred to the Department of the T reasury .
They are then paid out to various government agencies and programs
according to the allocations in the budget.
In some ways, the federal expense part of the national budget is
like your household budget. Your budget is divided into categories
based on what you need and want to purchase to meet your family’s
(or your own) needs. Your budget (or your spending plan if you don’t
keep a formal budget) is divided into the following categories:
❖ Mandatory things (necessities) like water, food, rent or mortgage
payments, clothing, fuel for heating and cooking, car or other
transportation, childcare, taxes, loan repayments.
❖ Discretionary things like entertainment and eating out, vaca-
tions, hobbies, and charitable contributions.
Where Does the Money Go? 47
PI Pointer
Another slippery accounting issue: Social
Security is sometimes on-budget and some-
times off-budget. This is because the Social
Security money sits in a large trust fund and
can affect how big the deficit looks. It was
first put on-budget to mask the costs of the
Vietnam War.
❖ Long-term investments like a retirement plan (if it is not fully
covered by your employer or if you are self-employed); a college
fund for yourself or your children; or savings for a mortgage,
home improvements, or other future goals.
How much you allocate to these different categories says a lot
about what you think is important and how you balance present
needs and wants with future goals. You will also make calculations
about whether it makes sense to go into debt to meet current expenses
in order to reach your long-term goals. If you don’t have enough to
cover monthly expenses (perhaps because you are unemployed,
underemployed, the sole support of children and on welfare, in a
low-wage job, elderly , or disabled), you either go into debt to meet
necessities or you and your family do without – or both. Whatever
your level of resources, though, you and your family are constantly
making decisions about what is most important. Whether you have
a formal budget or not, these monthly and daily decisions are part of
how you care for yourself and your family . The national budget is a
reflection of how we are caring for each other in this country .
Women, especially women supporting children on their own,
often find themselves in the situation of not having enough to cover
monthly needs, let alone generate a surplus that could pay for further
education, retirement, or buying a house. Elderly women often have
to choose between medicine and food or heating fuel or a visit to the
grandchildren. As PIs we know that these personal decisions are con-
nected to decisions made in Washington about what is important and
what is not important.
In the same way that your personal budget plan reveals what is
important to, or necessary for, you, the expense side of the US bud-
get reveals the values and priorities of the United States government.
Remember that your spending budget is divided into mandatory (the
things you must pay) and discretionary (you choose how to handle
these items). That’s also how the government divides up the national
spending side of the budget. Figure 3.1 shows the national expense
side of the budget.
The chart in Figure 3.1 is from the US budget documents and
shows discretionary and mandatory spending . Outlay is the budget
term for dollars spent or expected to be spent on a certain activity —
48 Women and the U.S. Budget
in other words, spending. (As a PI, you can begin to familiarize your-
self with the documents themselves at <www .gpoaccess.gov/ usbud-
get/fy06/index.html>.)
You will notice that discretionary spending is broken down into
“DOD (for Department of Defense) military” and “Non-DOD.”
“Defense” is the official budget term, but I call it “Military” in Figure
3.3 because I believe that is a more accurate term than defense (most
of the spending in this category has nothing to do with defense), and
as PIs we should be giving things their correct names. Note that by
putting “DOD military” first and lumping all other discretionary
spending together as “Non-DOD,” the government defines those
other programs in relation to military spending, indicating the promi-
nent position of the military part of the budget and implying the rest
of the programs are “leftovers” or somehow less important.
Where Does the Money Go? 49
Budget Summary by Category
(In billions of dollars)
2004 2005 2006 2007 2008 2009 2010
Outlays:
Discretionary:
DOD military. . . . . . . . . . . . . 436 443 424 426 445 466 483
Non-DOD . . . . . . . . . . . . . . . 459 487 497 491 488 486 488
Total, Discretionary . . . . 895 930 922 917 932 952 971
Proposed Supplemental . . . . . . – 35 25 18 2 1 –
Mandatory:
Social Security. . . . . . . . . . . . 492 515 540 567 596 630 665
Medicare. . . . . . . . . . . . . . . . 181 194 199 209 225 245 266
Medicaid and SCHIP . . . . . . . 181 194 199 209 225 245 266
Other . . . . . . . . . . . . . . . . . . 299 337 331 319 324 328 351
Total, Mandatory 1,237 1,337 1,410 1,476 1,551 1,635 1,743
Net Interest. . . . . . . . . . . . . . 160 178 211 245 272 294 314
Total Outlays. . . . . . . . . . . . . . . . 2,292 2,479 2,568 2,656 2,758 2,883 3,028
Receipts . . . . . . . . . . . . . . . . 1,880 2,053 2,178 2,344 2,507 2,650 2,821
Deficit . . . . . . . . . . . . . . . . . . -412 -427 -390 -312 -251 -233 -207
On-budget deficit . . . . . . . . . . . . -567 -589 -560 -506 -466 -463 -460
Off-budget surplus . . . . . . . . . . . 155 162 170 194 215 230 252
Source: Table S-10, Budget of the United States Government, Fiscal Year 2006.
figure 3.1 
Figure 3.2 shows another way to look at this information for
Fiscal Year 2004.
As Figure 3.2 shows, a large portion of national resources go to
programs in the mandatory category like Social Security , Medicare,
and interest on the federal debt. The rest of the budget is known as
discretionary spending and includes housing, education, military
spending, jobs and training programs, roads, bridges, mass transit,
government administration, international aid, industry subsidies,
community and regional development, aid to the states and federal
government, environmental programs, science, technology , and com-
munity health programs. These discretionary expenses are broken
down in Figure 3.3 below .
This figure shows that the military receives over half of discre-
tionary spending. Therefore, after mandatory spending and the mili-
tary portion of discretionary spending are taken out of the expense
side of the budget, only a small percentage of national resources is
left for everything else. Levels of funding for each discretionary pro-
gram — including the military — are decided each year in the annual
budget process. (See Chapter 5 for more on the process.)
The tables and graphs I’ve included give a broad overview of the
expense side of the budget, but the budget documents get very spe-
cific about how much is allocated for each program. The president’s
budget proposal each year breaks the budget into what are called
50 Women and the U.S. Budget
US Government Spending, Fiscal Year 2004
Note: “Other” includes unemployment compensation, federal employee retirement, food and nutrition assis-
tance, supplementary security income, and miscellaneous income security and social services.
Source: Fiscal Year 2004 figures from Table S-10, Budget of the United States Government, Fiscal Year 2006.
figure 3.2
Other 13%
Social
Security
21%
Discretionary 39%
(see chart below for details)
Interest on
the Debt 7%
Medicaid 8%
Medicare 11%
“functions” (see Figure 3.4), which group spending according to its
purpose (i.e., whether it’s going to the military , agriculture, science
and technology , etc). Within those functions are “line items” for each
US Government Discretionary Spending
Where Does the Money Go? 51
PI Pointer
The national budget, like all of life, is filled with
trade-offs. Here is one example from one state:
Taxpayers in California are paying $752 million
a year for ballistic missile defense (the most
expensive single item in the military budget).
For this same amount of money, California
could fund 92,971 Head Start places for children.
Source: Fiscal Year 2004 from Table 8.7, Historical Tables, Budget of the United States Government, Fiscal Year 2006.
figure 3.3
Military
Energy, Environment,
Science, Agriculture
Housing, 
Income Security
Government
Administration
Health
International Affairs
Veterans’ Affairs
0 10 20 3040 50 60 7080 90 100
Education, Employment, 
Training, Social Services
Community & Regional
Develop., Transportation
Administration of Justice
specific program. (We will see in Chapter 5 that these are related to
the appropriations bills that must be passed each year.)
So, for example, Function 500 is “Education, employment, train-
ing and social services,” under which fall many line items for pro-
grams such as the Child Care and Development Block Grant — a
program that helps working parents hold down jobs, pay taxes, 
and stay off government support by subsidizing childcare. Each of
the hundreds of programs on the expense side of the budget is an 
individual line item and must be approved in the course of the
annual budget process.
Budget Rules and Expenses
If you want to get a deeper understanding of the expense side of the
budget, it helps to look at the very particular definitions “mandatory”
and “discretionary” have in the national budget. Mandatory spending
52 Women and the U.S. Budget
US Budget Functions
Function number Budget function
050 . . . . . . . . . . . National defense
150 . . . . . . . . . . . International affairs
250 . . . . . . . . . . . General science, space, and technology
270 . . . . . . . . . . . Energy
300 . . . . . . . . . . . Natural resources and environment
350 . . . . . . . . . . . Agriculture
370 . . . . . . . . . . . Commerce and housing credit
400 . . . . . . . . . . . Transportation
450 . . . . . . . . . . . Community and regional development
500 . . . . . . . . . . . Education, training, employment, and social services
550 . . . . . . . . . . . Health
570 . . . . . . . . . . . Medicare
600 . . . . . . . . . . . Income security
650 . . . . . . . . . . . Social Security
700 . . . . . . . . . . . Veterans benefits and services
750 . . . . . . . . . . . Administration of justice
800 . . . . . . . . . . . General government
900 . . . . . . . . . . . Net interest
920 . . . . . . . . . . . Allowances
950 . . . . . . . . . . . Undistributed offsetting receipts
figure 3.4
is spending for which Congress has defined special eligibility and pay-
ment rules that apply over the long term. Everyone who meets those
requirements and is enrolled in the program will receive payments. The
amount paid out for the program will change depending on how many
people need the program in any given year. By law the government is
required to pay out that amount, no matter what it is. This is called
an entitlement. Most mandatory programs are entitlements.
An example is the food stamps program. All the people who are eli-
gible and registered to receive food stamps receive them, and the govern-
ment foots the bill each year. During a downturn in the economy more
people need food stamps, so the program will cost more than it does in
a year when the economy is stronger. Some people may be eligible for
food stamps but do not receive them, usually because they don’t realize
they are eligible, don’t know how to sign up, or face other barriers to
participation. This is one of the reasons many national and local orga-
nizations do benefits outreach work in communities so that eligible peo-
ple can receive the income and tax breaks for which they qualify .
In contrast to mandatory spending, discretionary spending is
determined by Congress each year. The people preparing the bud-
get look at the pool of resources available for discretionary spending,
they look at the discretionary programs, and they decide how to allo-
cate the money through appropriations. An appropriation gives fed-
eral agencies the legal authority to make payments from the Treasury
for specified purposes in a given year. (For example, the Department
of Housing and Urban Development oversees such programs as home-
less assistance and low-income housing assistance, or the Department
of Health and Human Services oversees such programs as Head Start
and Temporary Assistance for Needy Families.) In other words, an
appropriation commits a certain amount of money for each program
to be spent that year. This leaves nonmilitary discretionary programs
(remember that the military currently takes up half of discretionary
spending) vulnerable to being scaled back when members of
Congress are searching for ways to cut spending in the budget.
Who Benefits?
Now that you have a general idea how the expense side of the budget
is set up, we’ll take a look at who benefits from the way expenses are
Where Does the Money Go? 53
handled. One example of how nonmilitary discretionary spending
has been affected in recent years is provided by the Community
Development Block Grant (CDBG). CDBG is a line item under the
Department of Housing and Urban Development. For 25 years it has
provided essential support to low- and moderate-income neighbor-
hoods in over 1,000 communities. It has helped to build houses,
playgrounds, and businesses and supports local decision making by
allowing communities to decide how they want to spend the money .
Two of the critical needs in low- and moderate-income neighbor-
hoods are housing and jobs, and between 1994 and 1996, CDBG dol-
lars were used to build or rehabilitate 641,000 affordable housing
units and to create 445,000 new jobs.
However, Congress has cut CDBG funding by over 41 percent
since 1980, even though the needs in low- and moderate-income
neighborhoods have increased during that period. At the same time,
military spending was protected from deep cuts and then began rising
again. Because the Budget Enforcement Act put a limit on how high
discretionary spending could go, the increases in military spending
have actually been financed by cuts in programs like CDBG. In this
case, the beneficiaries are the military-related industries and con-
tractors. As Congress prepares the 2006 budget, President Bush has
proposed eliminating CDBG funding altogether.
Although most of the federal budget goes to mandatory programs
(such as Social Security , Medicare, and Medicaid), only a third of the
benefits of these programs go to poor and low-income people. When
54 Women and the U.S. Budget
PI Pointer
Women are the majority of the recipients of
Social Security, Medicare, Medicaid, and social
programs such as housing subsidies. This
increases as they age — after age 85, they 
are 70 percent of those who receive Social
Security and 71 percent of those who receive
Medicaid and Medicare.
you combine this with the small percentage of discretionary spend-
ing that goes to programs benefiting people with low and moderate
incomes, you can see that poor and low-income people are not the
primary beneficiaries of national resource distribution, despite the
rhetoric that support of poor and low-income people is busting the
budget. This rhetoric was used to justify eliminating welfare as an
entitlement, making it a block grant, and putting limits on how long
women could receive it. This was done without providing adequate
supports in the form of childcare, transportation, job training, and
health coverage that are needed to insure a viable transition to the
working world.
Even though programs benefiting poor and low-income people
are a relatively small percentage of the budget and do not reach every-
one who is eligible, they have proven to be very beneficial. According
to Census Bureau data (as reported by the Center on Budget and Policy
Priorities), federal antipoverty programs have lifted millions of chil-
dren and disabled and elderly people out of poverty . Many of those
who remained poor were significantly less poor than they would
have been without government assistance.
Another issue to consider is the fact that the benefit levels of many
government programs poor and low-income people rely upon are
determined according to an official poverty line that vastly under-
states the real extent of poverty. Non-government researchers esti-
mate that a family of four needs an income much higher than the
official poverty line of $19,350 (as of 2005)to buy sufficient food,
housing, healthcare, transportation, clothing, and other personal
and household items, as well as pay taxes. This does not include
many things, such as paid childcare, and it doesn’t provide for peo-
ple who can’t find low-cost housing. Under this reconfigured
poverty line, one in four people in the United States lives below the
poverty line; 51 percent of African American women live below 
it, as do 66.9 percent of African American children under the age 
of six.
Military Spending
When we are investigating who benefits, it is important to look at
two parts of the spending budget, one visible and one invisible — at
least to the untrained eye. The visible portion is military spending,
Where Does the Money Go? 55
and the invisible portion is corporate welfare. They are usually thought
of as separate, but the vast majority of military spending is really part
of corporate welfare. Many people don’t think of military spending as
corporate welfare because it has been so central a part of our national
spending for so many decades. However, the major beneficiaries of
military spending are corporations (called “defense contractors” in
government lingo) that make huge profits from their contracts with
the government, much higher than they could make on their own in
the private market.
The actual costs of the military are in many ways obscured from
us, even though it is obvious that it has a prominent place in the
national spending plan. For five decades our government has subsi-
dized the military industry to the tune of $19 trillion in public expen-
ditures. This investment has produced the most advanced military
technology in the world, supported industries that stock the military
arsenal — aerospace, communications, and electronics — and cre-
ated a lot of jobs. These jobs, however, went mostly to white males,
and the same amount of money invested in civilian goods and services
56 Women and the U.S. Budget
SELF-SUFFICIENCY
A family of three earning $15,260 per year is living on the threshold of poverty, but
does not meet the technical definition of “poor.” In Metro West [outside of Boston]
however, $15,260 is a third of what a family of three needs to meet basic needs,
according to the Women’s Educational and Industrial Union’s 1999 study. A family of
three consisting of one adult and two school-age children needed $45,357 per year
in order to make ends meet. The Women’s Union, in partnership with the
Massachusetts Family Economic Self-Sufficiency Project, took a realistic look at the
income needed to survive in the state and compiled its Self-Sufficiency Standard.
The standard takes into account a 28 percent increase in the cost of living in the
Boston area over the last five years, led by a 61 percent increase in housing and child
care costs. Housing is not the only important issue confronting low- to moderate-
income residents in Massachusetts.
The Self-Sufficiency Standard sets this realistic monthly budget for a family of three:
� Housing, $1,343
� Child care, $688
� Food, $445
would have provided millions more jobs than can be provided
through the military, many of them in fields such as teaching and
public service where most employees are women.
The average American family has spent well over $50,000 in taxes
on the military over 30 years. This level of military spending has
been maintained even though we spend many times the amount that
all our possible combat enemies, combined, pay for their military
requirements, and even though we have already spent tens of billions
on unnecessary and dangerous weapons. Even since September 11,
2001, and the war in Iraq, more of our military spending goes toward
Cold War-era weapons than goes to the war on terrorism. Several of
these weapons are deemed unnecessary and wasteful by military
experts and are plagued by huge cost overruns that enrich military
contractors and drain our public resources.
For a decade after the Cold War the US military budget was reduced
by relatively small amounts each year, with workers and communities,
and especially people of color, absorbing the brunt of those reductions.
Between 1990 and 2000, hundreds of thousands of defense-related
Where Does the Money Go? 57
� Transportation, $227
� Health care, $225
� Miscellaneous (clothing and household supplies) $293
� Taxes, $738
“We see this as a concrete measurable way to ensure the long-term economic
viability of the region,” said Mary M. Lassen, president and CEO of the Women’s
Union. It is particularly important in this era of welfare reform. According to the
study: “As many parents leave welfare and enter the labor market, they join a grow-
ing number of families who are unable to stretch their wages to meet the costs of
basic necessities.”
The Women’s Union isn’t looking for entitlement programs, Lassen said. Instead,
it suggests the state and federal government make investments in education and
training “so that more Massachusetts residents can work toward the all-important
goal of economic security.”
From an editorial in Metro West Daily News, May 3, 2003. For more on the Self-
Sufficiency Standard, see the Women’s Educational and Industrial Union website
<www.weiu.org>.
jobs disappeared. Profits for the defense industries, however, contin-
ued to outperform the stock of nondefense companies, and in 2002,
President Bush initiated a budget process that included large
increases in military spending, bringing the United States back to
spending levels not seen since the peak of the Cold War. Of the $458-
billion military budget for fiscal year 2004, only $28 billion went to
homeland security and the war on terrorism.
Corporate Welfare
So who really benefits from these high levels of military spending? This
is in some ways the ultimate corporate welfare. Defense contractors
get massive subsidies from tax money . Military aid and the threat of
intervention in developing countries are used to maintain a friendly
climate for corporate exploitation abroad. Corporations also make
arms and sell them to developing countries, which increases the chance
of violence and civil war. Then we are told we have to protect our-
selves against these violent countries. One example of this was spelled
out in a Washington Post article by Michael Dobbs in 2002: “The
administrations of Ronald Reagan and George H.W . Bush authorized
the sale to Iraq of numerous items that had both military and civilian
applications, including poisonous chemicals and deadly biological
viruses, such as anthrax and bubonic plague.” In 2003, the U.S began
a pre-emptive war against the same Iraqi regime.
The United States dominates this global trade in arms, supplying
just under half of all arms exports in 2001, roughly two and a half
times more than the second- and third-largest suppliers. US weapons
sales help outfit non-democratic regimes, soldiers who commit gross
human rights abuses against their fellow citizens and citizens of other
countries, and forces in unstable regions on the verge of, in the mid-
dle of, or recovering from conflict. This encourages other regimes in
developing countries to spend their money on arms rather than on
badly needed healthcare and education for their people.
The various branches of the armed forces — Air Force, Army,
Marine Corps, Navy — have powerful lobbies working to make sure
they get their pet projects funded, and military contractors also lobby
to ensure they get the contracts for those projects. Military contractors
are among the biggest contributors to members of Congress, and other
groups with an interest in nonmilitary spending in the discretionary
58 Women and the U.S. Budget
budget do not have similarly powerful advocates to push for their
programs. Military contractors have also been expanding their
involvement with the US government in recent years, moving more
heavily into NASA and into welfare administration as part of an over-
all drive to privatize previously public functions.
A variety of corporate subsidies cost taxpayers hundreds of bil-
lions of dollars and often go to increase the profit margin of corpora-
tions or augment CEO compensation rather than create new jobs. As
we saw in Chapter 2, there are special tax breaks in the income side
of the budget that help corporations retain more of their profits. On
the expense side of the budget there are more than 120 programs to
help corporations.
One example Ralph Nader pointed to, in testimony to the House
Budget Committee on corporate welfare, is the use of government
research and development funds to support drug and pharmaceutical
companies. The drug Taxol, which is used to treat ovarian cancer, was
developed thanks to a grant of $31 million from the National Institutes
of Health, which supported research right through the clinical test-
ing process. The formula was then given to the Bristol-Myers Squibb
company for no charge. No royalties were paid to the taxpayer, and
there was no restraint on the price Bristol-Myers Squibb could charge
for the drug. In 2002, Attorney General Richard Blumenthal of
Connecticut filed an antitrust suit, charging the company with
manipulating the US patent office and blocking generic production of
the drug. Blumenthal argued that “this medicine is a necessity , not a
Where Does the Money Go? 59
PI Pointer
Lockheed Martin, known for racking up cost
overruns while building weapons, has found
another way to access government resources,
taking on contracts for implementing welfare
programs, enforcing child support, and collect-
ing government data.
luxury , for thousands of people with cancer — a condition that Bristol-
Myers exploited financially through flagrant, illegal misconduct.”
2
The price of Taxol now runs between $6,000 and $10,000 per
patient for a series of treatments. Patients, who are also taxpayers,
pay this amount for a drug they funded through their taxes. If the
patients can’t pay , they go on Medicaid, and other taxpayers pay for
the drug again at the other end of the cycle. Bristol-Myers Squibb’s
sales of Taxol have totaled at least $5.4 billion since 1998.
Another example is the savings and loan bailout, which will cost
taxpayers close to $500 billion by the time it is paid out in the year
2020. Ronal Reagan deregulated the troubled savings and loan indus-
try , which led to a crisis that came to a head during the George Bush
Sr. administration. Taxpayers are still footing the bill.
Accounting and National Expenses
In Chapter 2 we saw that how the income side of the budget is con-
structed and how the accounts are kept and made available to the
public are important parts of the policy impact of the budget. This is
true also on the expense side of the budget. Two examples of how
government accounting and accountability have failed, and how this
could affect policy, are provided by military spending and Native
American trust funds.
First, let’s look at the accounting issues with respect to the mili-
tary budget. As mentioned earlier, the military takes over half of the
60 Women and the U.S. Budget
PI Pointer
Every major industry has received research and
development money from the government.
This contradicts the myth that there is free
enterprise in our economy.
discretionary spending in the budget each year, which is now over
$400 billion a year. Since 1980, the president and the military have
made the case to Congress that more money is needed for national
defense. However, according to the Council for a Livable World, the
Pentagon’s problem is not a lack of money but “chaotic accounting
and mismanagement that leaves the Pentagon in the dark about what
it is buying, what assets it holds and what it needs for the future.”
The defense department’s own Inspector General’s office found $1.1
trillion in bookkeeping entries that could not be tracked or justified.
The Government Accountability Office (GAO), the investigative
arm of Congress, also reported that no major part of the defense
department’s operations could pass the test of an independent finan-
cial audit. The GAO report stated:
The Department of Defense’s (DOD) financial manage-
ment deficiencies, taken together, continue to represent
the single largest obstacle to achieving an unqualified
opinion on the US government’s consolidated financial
statements. For example, to date, none of the military
services has passed the test of an independent financial
audit because of pervasive weaknesses in internal control,
processes, and fundamentally flawed business systems ...
The department continues to rely on a reported 4,000
or more fundamentally flawed finance, logistics, per-
sonnel, acquisition, and other management information
systems to gather the data needed to support day-to-
day management decision making and reporting. These
systems ... evolved into the overly complex and error-
prone operation — vulnerable to fraud, waste, and abuse
— that exists today .
3
Senators overseeing the effort to clarify defense department account-
ing pointed out that for seven fiscal years they have been unable to
audit the department because of the chaos. Although the defense
department has agreed to an audit in fiscal year 2007, the senators and
GAO see no evidence that it will be ready for such scrutiny .
What is the consequence of this lack of a money trail? Congress
does not know how much is being spent on many Pentagon pro-
grams and so cannot fulfill its constitutional obligation to oversee
Where Does the Money Go? 61
government spending. Because of the confusion over its finances, the
Pentagon can and does shift funds from one account to another and
spends money on projects that Congress has not approved. However,
under the Constitution, money appropriated for a specific program
cannot be spent on something else. Though most Americans have
heard nothing about this fundamental mishandling of public monies,
it surely ranks as one of the largest consumer frauds in history .
Some members of Congress have spoken out about this and recog-
nize the enormity of this issue. Sen. Charles Grassley (R-IA) said on
the floor of the Senate in February 2001: “If the Pentagon does not
know what it owns and spends, then how does the Pentagon know if
it needs more money? Ramping up the Pentagon budget when the
books are a mess is highly questionable at best. T o some it might seem
crazy .” Of course this was before the attack of September 11, 2001,
and the Iraq War. Since then, this kind of critique has been muted.
The second example of the challenges the government faces in
tracking money is its handling of Native American trust fund accounts.
This story goes back to 1887, when Indian land holdings were bro-
ken into small parcels, and the US government took charge of the
parcels for individual Native Americans. The government, as trustee,
was to collect revenues generated by mining, oil, timber, grazing, and
other interests. It would then distribute the money to the heirs of the
original landholders. Currently the Department of the Interior (DOI)
holds millions of acres of land in trust — originally it held 50 million
acres, but that is now down to 11 million. From the beginning the
62 Women and the U.S. Budget
PI Pointer
If money has not been spent in a program, it
is supposed to be rescinded, or given back, 
to the government. If the Pentagon gave 
back what it hasn’t spent (or what hasn’t 
been accounted for) we could protect Social
Security without new taxes.
trust fund was mismanaged, and Native American sources estimate
that more than $100 billion in royalties may be due 500,000 individ-
uals. It is not clear where the money has gone.
Eloise Cobell, a Blackfeet woman, filed one of the largest class-action
suits in US history in 1996. The purpose of the suit was to force the US
government to account for the billions of dollars in the individual
accounts. Her suit has been in process since then and is now called
Cobell vs. Norton. US District Court judge Royce Lamberth charged
Gale Norton, secretary of the DOI at the time, with civil contempt,
stating that she committed a fraud on the court and undermined the pub-
lic trust by lying about her department’s efforts to address the problem.
Cobell is a founder and current chair of the Blackfeet National
Bank. She has been a proponent of economic development as a path
to financial independence for Native Americans. Ms. Cobell remem-
bers as a little girl hearing her relatives grumble about Indian trust
accounts poorly maintained by the US government. When she became
treasurer of the Blackfeet Nation years later, she questioned Bureau
of Indian Affairs officials about the chaotic state of the accounts.
“They said, ‘Oh, you don’t know how to read the reports,’ and I sat
down,” she said “I think they were trying to embarrass me, but it did
the opposite — it made me mad.”
4
Lamberth ordered the Interior Department to let landowners
know about possible sales, and as of 2005, according to the website
for the case, court rulings point to an ultimate resolution that could
result in tens of billions of dollars going to trust beneficiaries. Cobell
Where Does the Money Go? 63
PI Pointer
One of the responsibilities the government
assumed as legal trustee when it took Indian
lands was to provide basic social, medical, and
educational services for tribal members. 
However, national investments in key programs
for tribes, such as child healthcare, have been
declining in the last few decades.
said in response to previous court rulings: “For more than a century ,
the U.S. government has sold our land out from under us — without
consent, without appraisal and without informing us of our rights as
trust beneficiaries. That ends today .”
5
Is the National Government Too Big?
In recent years, residents of the United States have been bombarded
with the assertion that the government is too big. The real issue is
not big government or small government — the government is about
the same size as it was 20 years ago — but what the government’s
resources will be used for and how we will achieve a national con-
sensus on how we want to spend public resources. In fact, though the
US is the wealthiest country , we have the lowest amount of public
spending of all the major industrialized nations.
64 Women and the U.S. Budget
65
Chapter 4
❖
Debt or Surplus?
T
HE NATIONAL BUDGET CONSISTS OF income to the government and
expenses the government pays, but this alone does not provide a
complete picture of the use of national resources. As PIs, we also need
to examine the deeper relationship between income and expenses, since
that relationship affects the money in our pocketbooks as well as the
funds in the government’s books. In any given year the interaction
between income and expenses can result in one of three things: a bal-
anced budget (equal amounts of income and expenses), a deficit (more
expenses than income), or a surplus (more income than expenses).
Another way to understand this is to picture the rivers of money
flowing in and out of Washington, with the national budget provid-
ing a structure for those flows. Money flows into the government
through several streams created by tax and other revenue laws. The
money received then flows out to government programs and pur-
chases based on the spending decisions of Congress. So if the budget
is balanced, the in-flowing river is the same size as the out-flowing
river. If the budget is in deficit, the in-flowing river is smaller than
the streams flowing out, and if the budget is in surplus, the out-flow-
ing river equals the in-flowing streams, but there is also a reservoir
that the government can release funds from when necessary , or the
money can be directed into new channels.
This relationship between in-flow and out-flow fluctuates depend-
ing on politics and the dynamics of the budgeting process in any
given year. These fluctuations can be seen in our recent history: in
2000 there was a budget surplus; in 2005 the budget is generating
huge yearly deficits and will probably continue to do so for many
years to come unless there are major policy changes. Government
spending is such a large part of the overall US economy that the bud-
get has an effect on how things are going economically for everyone
in the country whether it runs a deficit or surplus, or is balanced.
Why does the US government go into debt? There are usually a
number of reasons, and it can be hard to pinpoint only one cause of
indebtedness at any given time. The following are some of the com-
mon reasons:
❖ To finance war and war preparedness
❖ To cover new spending or emergency spending
❖ To create jobs and/or income support during a time of high
unemployment and economic downturn
❖ To stimulate the economy overall
Government debt is not necessarily a bad thing. It is always impor-
tant to look at the larger context for any debt and the purpose for
which it is used. Just as you could go into debt to gamble at 
a casino or to send your child to college, the government can go 
into debt to put more money in the pockets of the wealthy or to
invest in affordable housing. Many economists believe that the coun-
try should be going into debt, if necessary, to invest in education,
housing, and other long-term needs of the nation. If deficit spending
helps to create jobs during an economic downturn, this serves to
strengthen the economy . However, if the debt increases too much with-
out an accompanying plan for debt reduction, it can harm the econ-
omy and endanger key government programs in the long run.
The government has to make decisions about how to handle its
debt, just as you do. You may be in debt with medical bills, a mort-
gage, car payments, a college loan, credit card debt, loans from fam-
ily and friends, other bank loans, or business loans. In that case, part
of your expense budget will go to pay down the debt, or at least to
cover any interest that is being charged. If you have more income
than expenses, you will have to decide what to do with the surplus:
reduce some of your debt, purchase needed things, and/or save or
invest the money . The government faces the same decisions.
Just as debt is not necessarily bad, a surplus or a balanced budget
is not necessarily good. The impact of a surplus or a balanced budget
depends on the overall budget picture, whether the needs of most 
66 Women and the U.S. Budget
citizens are being met, and the values that are being reflected in the
budget policies. If a surplus is created by reducing spending on pro-
grams for low-income Americans and allowing corporations to pay
low taxes, the surplus comes at too high a price. During the 1990s,
when many conservative politicians argued for a balanced budget —
even going so far as proposing a constitutional amendment to require
a balanced budget each year — their surface motivation was respon-
sible stewardship of national resources, including not saddling future
generations with too much debt. When you took a deeper look at the
policies this group supported, however, you could see that its defini-
tion of “responsible” was connected to holding social spending
down, while allowing large military budgets and tax breaks for the
wealthy and corporations. (This strategy of advocating for a consti-
tutional amendment requiring a balanced budget was revived by a
group of conservatives in 2004.)
One way that debt — no matter what its purpose — has a direct and
immediate impact on taxpayers and the budget each year is through
the interest on the debt. Interest payments are a huge direct cost to
taxpayers each year, taking at least one in every seven dollars in the
national budget. This is a mandatory expense — the government
must pay the full amount of interest due each year. In the last five
years, over $2 trillion has been spent on interest payments. This
amount is equivalent to the entire annual national budget.
History of the National Debt
The second clause of Article I of the US Constitution grants Congress
the power “to borrow money on the credit of the United States.” Due
to the general nature of this permission, Congress can borrow for any
purpose, borrow as much as it wants, choose any lender, and make
the loan on any terms. In 1847 Congress passed permanent legisla-
tion that authorized, in advance, payment of whatever interest is
owed on the national debt. This is in effect a blank check for pay-
ment of interest, since it says that each year the interest will be paid
no matter what else may be going on in that year.
For most of the nation’s history , increases in the national debt have
been the result of either wars or economic downturns. Government
decisions to go to war necessitated major increases in military spend-
Debt or Surplus? 67
ing, while economic downturns reduced federal tax revenues from
businesses and individuals and often increased federal payouts to
economically stressed individuals. The government generated deficits
during the War of 1812, the recession of 1837, the Civil War, the
depression of the 1890s, and World War I. Each time the war ended
or the economy began to grow , the government followed its deficits
with budget surpluses, with which it paid down the debt.
The Great Depression, which came on the heels of the Wall Street
stock-market crash of 1929, was a terrible downturn in the economy
that affected millions through unemployment, farm and business
bankruptcies, and collapsing financial institutions. The Great
Depression lasted over a decade and, combined with the spending on
President Franklin D. Roosevelt’s New Deal, contributed to large
deficits from 1931 to the end of the decade.
It was followed by World War II, which created unprecedented
deficits. After World War II the federal budget deficit rose in most years,
including during the Korean War and the Vietnam War. After several
years of large deficits during the Reagan presidency , there was a steady
decline in deficits under the Clinton administration. For four years,
from 1998 to 2001, there were surpluses. Since George W . Bush took
office in 2001, he has created the largest deficits in the last 50 years.
Budget surpluses outnumbered budget deficits prior to 1930.
Since World War II, however, budget surpluses have been a rarity .
What is the National Debt?
The national debt — known in the official budget as the gross federal
debt — is the accumulation of deficits, minus any surpluses. In any
given year, the government may not have enough cash to cover its
expenses — in other words it runs a deficit. So the government bor-
rows the money to cover the expenses for that year, which adds to the
debt. If there is a surplus in a given year, it is subtracted from the debt
The national debt is currently $7.3 trillion. This is over three
times the entire annual budget.
There are two different components to the gross federal debt. One
part is known as debt held by the public, which was $4.3 trillion in
2004. In this case “public” means non-government, and it distinguishes
money owed to people and institutions outside the government from
68 Women and the U.S. Budget
the money owed internally to the trust funds (see the next para-
graph). The government borrows from banks and other financial
institutions, state and local governments, private pension plans, cor-
porations, foreign investors, and private bondholders, including
members of the US public who buy savings bonds.
The other part of the gross federal debt is called intragovernmen-
tal holdings. It is the amount lent to the government by what is
known in the budget as the federal trust funds. The major trust funds
are Social Security and Medicare. Payroll taxes provide the money for
these funds each year (remember FICA from Chapter 1), and any
surplus left over after the Social Security and Medicare benefits are
paid out that year must be lent to the government. The trust funds
are required by law to invest in US bonds when they have a surplus.
In this way the government borrows from itself. Intragovernmental
holdings amounted to $3 trillion in 2004.
As accumulated deficits (minus any surpluses) add up to the
national debt, Congress needs to have permission to keep raising the
debt. The “debt ceiling,” a law that must be passed by Congress and
signed by the president, sets Washington’s borrowing limit. In effect,
Congress keeps increasing its own line of credit. When the national
debt reaches the amount set by the debt ceiling, Congress must pass
a new debt ceiling law so that the government can continue to pay
expenses that are not covered by income in a given year. Congress
has tried for decades to set a finite ceiling on the national debt, but
these attempts have failed. Members of Congress just keep pushing
the debt ceiling higher.
Debt or Surplus? 69
PI Pointer
If you had 7.3 trillion dollar bills, the amount
of the US national debt, and laid them end to
end, they would stretch from the Earth to the
sun ... four times.
Government Borrowing
So we now know that the government has to borrow money to cover
its deficits, but what does it mean for the national government to bor-
row money? It means the government has to sell bonds to the fol-
lowing buyers:
❖ Banks and financial institutions
❖ Corporations
❖ Individuals (including you and me, if we choose)
❖ Foreign investors
❖ State and local governments.
These groups lend their money to the government, and the govern-
ment pays them interest each year from money it has collected in taxes.
Let’s say you purchase a bond from the government (called a sav-
ings bond). The government takes your money as a loan. In return it
gives you a note that says it promises to pay a specific amount of
interest for a specific amount of time on the money you lent. It also
promises to repay the principal on the maturity date (the date the
bond expires). While the total amount of interest paid on bonds must
be recorded in each annual budget as an expense, repayments of prin-
cipal amounts are considered financing costs and are accounted for
outside of the budget.
The groups that lend money to the government, listed in order of
the percentage of the debt they hold, are shown in Figure 4.1.
70 Women and the U.S. Budget
PI Pointer
Even though it is called “debt held by the
public,” a lot of the debt is held by large 
financial institutions.
Holders of US Government Public Debt
by percentage
Foreign entities and investors 35 percent
Corporations and insurance companies 24 percent
Federal reserve banks 15 percent
State and local governments 13 percent
Private individuals 12 percent
Note: This table includes only debt held by the public, and not the intragovernmental holdings,
which is what the government owes itself.
Source: Joint Economic Committee, US Congress, 2001.
figure 4.1
The national debt is what some people call an internal debt, a debt
owed to the “owners” of the debt — the public — so that it really
represents an asset for the country as a whole. In other words, the
debt on the government’s books is cash in someone’s pocket. Some of
the interest payments currently go to banks and financial institutions,
and some makes up part of the income of millions of individuals and
businesses in the United States.
This view of the debt as an internal debt has become increasingly
less accurate. Before the Reagan administration came to office, the
United States was a creditor nation, meaning that other nations owed
more to us than we owed to them. However, in a few short years we
became a debtor nation as the government was forced to borrow
more and more from foreign sources to finance the huge national
debt. Most of the debt to foreigners is owned by the central banks of
other countries. Japan and China are currently the leading investors,
followed by Taiwan and South Korea. They invest in the United
States for reasons that have to do with their currencies and their
internal needs and politics, and these can change.
Everyone in the United States should be concerned about the
amount of the debt held by investors outside the country . The dan-
ger of having so much of our debt tied up in this fashion is obvious:
if conditions change for the major foreign investors and they decide
to call on the US government to repay their loans, we could find it
difficult to meet our obligations to them and/or to find enough new
investors to meet our needs for credit. If enough foreign investors
lost confidence in the US economy , it could threaten the value of US
currency and cause an economic crisis. According to William Greider,
Debt or Surplus? 71
who has written extensively about international finance, “history
suggests ... the creditor nations will eventually assert their leverage
over the United States, however reluctantly . That critical juncture is
likely to arrive either because the American debt burden has become
so great that additional lending would be too risky or because the
creditor nations want to jerk Washington’s chain, perhaps to head off
reckless new adventures.”
1
The Impact of the National Debt
Deficits — and the national debt — are created year by year, policy
by policy, budget cycle by budget cycle. As noted above, there are
many reasons the government creates deficits, all of which may be
totally justified at the time. One example is World War II. Although
expenses for the massive war effort produced high levels of debt, it
also helped pull the country out of the Great Depression.
Depending on the overall dynamics of the economy, being in
deficit, or “deficit spending” as it is sometimes called, can have a 
positive effect on the economy. Whenever the government spends, 
it helps to put money in circulation and can lead to an increase in
employment. This creates a ripple effect, as people have more resources
with which to buy goods, and that helps local businesses to grow , hir-
ing more workers and buying more goods. If the government directly
purchases goods, as it does during a war or when preparing for a 
war, military industries get a boost, which can also help the econ-
omy grow .
72 Women and the U.S. Budget
PI Pointer
More and more of the national debt — over
30 percent — is being purchased by other
countries and by investors from outside 
the US. This is like playing roulette with our
economic future.
However, it has been shown that money invested in the social sec-
tor tends to create more jobs. Also, women make up a larger propor-
tion of workers in nonmilitary industries, so money spent in other
sectors benefits them more. The amount the government has spent
on wars and the military in the last 50 years would have stimulated
the economy just as well if it had been spent on nonmilitary pro-
grams, and it may have been more beneficial for women. As PIs we
always need to look at what the deficit is being created for.
A study by Employment Research Associates in the 1980s showed
that if the money spent on the military build-up between 1981 and
1985 had been spent on civilian economic activities, 1,146,000 more
jobs would have been generated. Over 80 percent of the jobs lost to
military spending would have gone to women.
When the deficit gets too large, it can affect the general economy
in a negative way . Large-scale borrowing takes up a lot of room in the
economy and can contribute to less capital being available to invest
in the private sector. When the government borrows to finance debt,
it increases the competition for credit and can drive up interest rates,
which in turn costs the government, and everyone else who borrows,
more in interest payments. Higher interest rates can slow economic
growth because they make it more expensive to borrow money avail-
able for businesses to expand and create jobs.
Another impact of the debt is that interest payments have taken
up an increasingly large share of annual budget expenses since the
early 1980s. This ties up money that could be spent on other needed
things, and it means less money is available to help tide people over
when the economy takes a downturn. In any given budget year, once
interest and entitlements — those programs that must be covered —
are paid, only a third of the budget is left for all the other programs
and functions of the budget.
To look at other impacts of the national debt, we need to return
to the history of deficits. The recent history of budget deficits goes
back to the policies of the Reagan administration in the early 1980s.
The government of the time decided to greatly increase military spend-
ing, reduce taxes for the wealthy and corporations, and cut social
spending, which resulted in large deficits. These policies worked syn-
ergistically: the tax cuts insured that there would not be enough
money to cover the increased military spending, and both policies
Debt or Surplus? 73
transferred wealth to the rich and to military contractors and other
corporations. In turn, the huge deficits were used as the pretext for
cutting programs on the domestic (or nonmilitary) side of the bud-
get and for reducing the government’s role in moving the economy
toward greater economic equity for all.
The deficits that were created under the Reagan administration
also spawned legislation that influenced the annual budgets for many
years to come. In an attempt to gain control of the debt, Congress
passed the Balanced Budget and Emergency Deficit Control Act of
1985, known as the Gramm-Rudman-Hollings bill (GRH) after Phil
Gramm (R-TX), Warren Rudman (R-NH), and Ernest Hollings (D-
SC). This law established a schedule for gradually reducing the
annual deficits to zero by fiscal 1991, required the president to follow
this schedule when submitting the budget, and required Congress to
follow specific deficit-reduction targets when it passed the budget
resolution. If the president and Congress failed to adhere to the deficit-
reduction schedule, the statute provided for the comptroller general
to make automatic across-the-board spending cuts, with half the
reductions coming from military programs.
In 1986 the Supreme Court struck down this automatic budget-
cutting mechanism as a violation of the Constitution’s doctrine of the
separation of powers. A revised version of the act was passed in 1987,
but it failed to reduce the debt because Congress kept increasing the
debt ceiling.
The influence of GRH continued for many years, however, and
fostered an approach to reducing yearly deficits that focused on cut-
ting or limiting spending on every program instead of looking at the
value of programs. A 1990 revision of the act explicitly changed the
focus from deficit reduction to spending control. In addition, although
military spending was supposed to take 50 percent of the cuts, military
programs were many times exempted from cuts while programs that
benefited low-income Americans were cut.
According to the late Daniel Patrick Moynihan, a New York
Democrat who was a senator for 24 years, from 1976 until 2000, David
Stockman, budget director under President Reagan, coined the term the
“strategic deficit” — that is, the deficit as political weapon. Moynihan
said the budget director had told him privately that the administra-
tion’s plan was to have a strategic deficit. “That gives you an argument
74 Women and the U.S. Budget
for cutting back programs that really weren’t desired and ... an argu-
ment against establishing new programs you didn’t really want.”
2
Who Benefits from the Debt?
We cannot understand the impact of the debt without looking at the
issue of interest. In order to fully understand the “cost” of the debt,
we need to look at who benefits from the interest payments on the
debt. These interest payments constitute a huge transfer of wealth
from working-class and middle-income people to a group made up
mostly of corporations, banks, insurance companies, and wealthy
investors, many of them from other countries.
As Magrit Kennedy , an architect and urban planner with an inter-
est in currency and money issues, has written: “Interest is a hidden
redistribution mechanism that constantly shuttles money from those
who have less money than they need to those who have more money
than they need.” Interest payments on the national debt are obviously
part of this redistribution mechanism.
Kennedy also points out that if you compare interest paid and
interest gained in terms of income groups, the bottom 80 percent of
income earners pay out much more in interest over their lifetimes
than they receive, whereas the top 20 percent receive much more in
interest than they pay out. If you have substantial savings or invest-
ments, you will benefit as interest rates go up. If you have lots of
debt, which is subject to the variation in interest rates, you will be
penalized if interest rates go up.
Debt or Surplus? 75
PI Pointer
Deficits can be policy tools in themselves, 
not just the results of tax cuts or spending
excesses. David Stockman, budget director
under Reagan, used the term “strategic
deficit” to describe the use of deficits to force
program cuts and stop new programs from
being created.
Although it is hard to measure the distribution of wealth and dif-
ficult to tell exactly how much women have, we do know that women
own far less property and far fewer stocks, bonds, and other financial
assets than men. This means that most women are caught in that
place where they will pay out more interest over the course of their
life — not just in relation to taxes — than they will ever get back.
Women of color are disproportionately denied benefits from large
interest payments on the federal debt. White men continue to monop-
olize wealth ownership, and white families have median net worth 20
times greater than families of color. Many married women benefit
from interest income if their and their spouse’s combined assets 
are substantial. But although they may benefit financially from this 
situation, it does not mean they control the assets or the income from
the interest.
Another way that people with wealth benefit from the debt is by
supporting public policies that ensure paying interest on the debt
crowds out other types of spending, particularly social spending.
These policies negatively affect the economic standing and options of
most women because social programs constitute a vital social safety
net for women, particularly those supporting children on their own.
In addition, when spending is cut in the public sphere, where women
are more often employed, women lose jobs.
Supporting interest payment over social spending is one of the ways
a deficit can be used strategically , as discussed above. Discretionary
spending — which is allocated in the yearly budget process — makes
up only 39 percent of the total budget. This means that any program
76 Women and the U.S. Budget
PI Pointer
Taxpayers pay the interest when the govern-
ment borrows, but they may or may not 
benefit from the debt. That depends on what
the borrowed money is being used for.
other than entitlements like Social Security , Medicare, and interest
payments is competing for a very small slice of the pie.
Surpluses
When the cash revenues received by the federal government in a
given time period exceed the cash outlays in that same time period,
the result is a surplus. There is no clear consensus about what the
government should use a surplus for, either in good economic times
or bad. If there is a possibility of an economic downturn, Congress
could use the budget surplus to cut taxes, to pay off part of the national
debt, or to increase spending (i.e., to make investments).
After 28 consecutive years of deficits, the government had a surplus
from 1998 to 2001. In 2001, when President George W . Bush took
office, there was a surplus of $281 billion. Within three years, the nation-
al budget had a deficit of $400 billion, and larger ones were coming.
The public did not have a chance to indicate what it thought
should be done with the surpluses in the late 1990s because they
were gone so quickly . The last time there had been a surplus before
that was in fiscal year 1969, when the economic and political situa-
tion in the United States was totally different. The $3.2 billion sur-
plus in 1969 was used to create a new program — General Revenue
Sharing — that sent the money back to the states to be used as they
and local governments wanted.
When it looked like the late-1990s surplus would be around for
many years to come, the congressional politics became very compli-
cated. Budget legislation that was in effect in 1998 made it impossible
for the surplus to be used for anything other than debt reduction.
However, several different groups emerged in Congress with proposals
for how the surplus could be used, including the following suggestions:
❖ Continue spending cuts
❖ Create tax cuts
❖ Increase spending
❖ Increase spending on certain programs
❖ Reduce the national debt
❖ Hold off on doing anything until politicians could agree on a
long-term solution to the Social Security problem.
Debt or Surplus? 77
Most members of Congress were frustrated that there were not
enough votes to waive the budget process restrictions that prevented
the surplus being used for anything other than reducing the debt.
Of course, the whole debate around the surplus was ridiculous on
one level, since the last 20 years have seen drastic cuts to investments
in and spending on the social infrastructure of the country , particu-
larly in programs that affect low-income people. Analyses of the
Office of Management and Budget and the Congressional Budget
Office have shown that the bulk of the projected surpluses actually
came primarily from cuts in discretionary spending — from cuts in
these programs. The debt that grew in the 1980s and early 1990s was
partly the result of the huge gap in available national resources created
by the large military increases and tax breaks for the wealthy and
businesses. So at least part of the surplus should have been paid back
to the community to make up for all those years of lost investment.
The Nation’s Balance Sheet
Unlike a business, the government is not required to make a profit to
return to stockholders. This means that the “bottom line” of the bud-
get does not have to dictate everything. One advantage of this is that
the government can decide to have a positive impact on the economy
on behalf of the people by investing in jobs and housing, for example,
even if it creates a deficit. The disadvantage of not having to focus on
the bottom line is that the government can use public monies to
enrich the wealthy and corporations, and it can hurt the economy
and key government programs without any accountability .
Because the government is not a business, its decisions do not
have to be made in the context of a balance sheet that shows the rela-
tionship of assets and liabilities. However, as the “stockholders” of
the government, we need to understand this larger picture. We are
the owners of these assets, and the people who will pay for the lia-
bilities. (If you want to see the budget presentation of the assets and
liabilities of the US government, go to <www .gpoaccess.gov/ usbudget/
fy06/pdf/spec.pdf> and look at Table 13-1.)
What do we see when we look at this informal balance sheet?
One of the things that becomes obvious is just how powerful an actor
the government is in the US economy . Government assets make up
78 Women and the U.S. Budget
40 percent of the gross domestic product, the total amount of goods
and services produced in a given year. We see that the US government
owns a lot of stuff and funds a lot of stuff. We also notice that there
is so much debt that the liabilities outweigh the assets. (Transfer pay-
ments, including Social Security , are not counted as a liability .)
This balance sheet gives us a reading on our national wealth and
also shows us what resources we as citizens own together as a com-
munity . We often hear about our huge liability , known as the national
debt, but rarely do we hear about our overall national assets. Just as
you need to consider your assets and liabilities, along with your
income and expenses, to get the full picture of your personal finances,
so too, for the country . We must look not only at the national budget,
which includes the income and expenses, but also at the national bal-
ance sheet, which includes the assets and liabilities. Ever since 1960,
government liabilities have exceeded the value of the assets. As
pointed out before, if the government is in debt, it is not necessarily
a bad thing; it is important to look at why the debt was created and
whether it is achieving national objectives that serve all of us.
In the federal budget documents, national wealth is officially
defined as the country’s assets, not just the assets in the balance sheet
connected to the federal budget. The national wealth includes: mort-
gages; physical assets such as office buildings, equipment, and bombs;
vast tracts of land; oil and mineral rights; and the public airwaves.
According to the federal government’s definition of national wealth, it
also includes federal, state, and local investments in education; federal
Debt or Surplus? 79
PI Pointer
Women are 51 percent of the owners of
national assets — land (a third of the country),
buildings, and equipment — yet have little to
say about how they are used or maintained.
and other research and development; and grants to state and local
government. In fiscal year 2000, the national wealth figured this way
added up to $78 trillion.
The fact that few people know the overall financial condition of
the government means that some of these assets can be manipulated
without much public scrutiny .
80 Women and the U.S. Budget
81
Chapter 5
❖
Who Decides?
I
N PREVIOUS CHAPTERS we’ve seen how money flows into the budget
in the form of taxes, how it flows out in spending, and what happens
when there is a deficit or a surplus. Now we will look at how the
budget is made and who is deciding how to spend public resources.
As PIs, we know that how the budget is made will influence its effect
on women.
First we will look into the basic steps of the current budget pro-
cess to see what our elected representatives are required to do to pre-
pare the budget. Then we will investigate the deeper reality behind
these steps, the dynamics that illuminate the fundamental questions
of democracy and accountability regarding the government’s trustee-
ship of our national resources.
One important thing to remember is that most of the work that
Congress does is creating and overseeing the budget in a continuous
cycle. “Budgeting is governing,” as Pete Domenici (R-NM), the for-
mer chairman of the Senate Budget Committee, has said.
1 
The con-
gressional historian George B. Galloway wrote that, directly or
indirectly, “perhaps nine-tenths of the work of Congress is con-
cerned...with the spending of public money.”
2
The Constitution
granted the legislative branch of our government the power to tax,
spend, and borrow , which gave it tremendous power, especially as the
US economy has grown to be the largest in the world.
Because of the decentralized structure of Congress, with various
committees dealing with a large number of issues, many members are
experts in their area and know nothing about the work other members
are doing. Typically , only a handful of budget analysts and experts,
policy makers, congressional aides, and administration officials have
a grasp of the overall budget or are aware of the impact of budget pol-
icy on the US people. Often, members of Congress pass important
legislation — including budget legislation — without actually hav-
ing read it. Politics frequently have more to do with which factions
in Congress support a bill than the actual content of the legislation.
There are a few basics to keep in mind about how the national
government functions. Congress has two parts or “chambers” — the
House of Representatives (in which each state is represented based
on population) and the Senate (in which each state has two sena-
tors). Most of the work Congress does takes place in committees.
There are about 250 committees and subcommittees, each made up
of representatives from both parties. Any member of the House or
Senate can introduce legislation, which is referred to the appropriate
committee. The committees then debate and decide whether to rec-
ommend the legislation to the full House and Senate, and members
in both chambers vote on this legislation. If both chambers agree to
legislation, the president must also agree to it and sign it before it
becomes law. The president can veto legislation, and the Congress
can override his veto by a two-thirds vote.
If the Senate and House versions of legislation differ — which is
common — representatives of both houses form what is called a
“conference committee” to create a compromise between those ver-
sions. Both chambers must vote again on the compromise legislation
before it has a chance of becoming law. You will often read in the
82 Women and the U.S. Budget
PI Pointer
According to the Constitution, any legislation
dealing with taxes must originate in the House
Ways and Means Committee.
paper or hear on the news that the House or the Senate passed such
and such a bill. However, that doesn’t mean the bill will become law .
It may not be passed by the other house; it may not make it through
the conference committee, or may be substantially changed in that
process; or, of course, it may end up being vetoed by the president.
Most bills follow a very long and circuitous route, and only a few
make it to the end. Even budget bills are subject to many changes,
and the details are often ironed out in the last days before final passage.
Entering Budget Territory
The national budget is prepared, along with all other legislation, in
the center of Washington, D.C. The city is divided into four quad-
rants that radiate out from Capitol Hill. The Senate and House of
Representatives chambers are both in the Capitol building, while the
offices of representatives and senators are located in large buildings
around the Capitol — the representatives across from the House side
of the Capitol and the senators across from the Senate side. The
White House is down the long stretch of mall from the Capitol.
The place where the budget is created is filled with the spirits of
the people who built it, who work there, and who lived and live now
in the neighborhood. As we consider this place where our resources
are collected and spent, we should keep some things in mind about the
history and current reality of this budget territory . First, according to
the White House Historical Association, slaves provided the bulk of
the labor to build the White House, Capitol, and other government
Who Decides? 83
PI Pointer
Your elected representatives are working in
committee or subcommittee on something
related to the budget. Raising and spending
trillions involves every member of Congress.
buildings, which include some of the key buildings and rooms in
which budget decisions are made. Recently discovered public records
confirm this use of African American slave labor. For example, US
Treasury promissory notes show that slave owners were promised $5
a month for each of their slaves who worked on the construction.
These Treasury Department pay slips indicate that more than two
thirds of the laborers who worked on the White House and the
Capitol were of African descent — 400 slaves and 50 freemen.
In The Debt: What America Owes to Blacks, Randall Robinson
describes his impressions as he watched tourists in the Capitol rotunda:
“The worn and pitted stones on which the tourists stood had doubt-
less been hauled into position by slaves, for whom the most arduous
of tasks were reserved. They had fired and stacked the bricks. They
had mixed the mortar. They had sawn the long timbers in hellishly
dangerous pits with one slave out of the pit and another in, often
nearly buried alive in sawdust.”
I emphasize the fact that slaves made up most of the workforce
that built the Capitol and the White House because the nation still
has not come to terms with the legacy of slavery . There is an economic
and social legacy of slavery for the African American community , and
for the country as a whole, that continues to this day . It is outlined in
Robinson’s book.
In addition, the statue on top of the Capitol — called the Statue
of Freedom — was cast by slave Philip Reed and assembled and placed
atop the Capitol by slaves. On the Architect of the Capitol website,
the statue is described as “a classical female figure of Freedom wear-
ing flowing draperies. Her right hand rests upon the hilt of a sheathed
sword; her left holds a laurel wreath of victory and the shield of the
United States with thirteen stripes. Her helmet is encircled by stars
and features a crest composed of an eagle’s head, feathers, and talons,
a reference to the costume of Native Americans.”
This reminds us of another reality we need to be aware of as 
we think about where the budget is prepared: the systematic wars
against, forced dislocations of, and stealing of land from the dozens
of Native American tribes that populated North America. The early
days of this history are depicted prominently in the Capitol in four
reliefs sculpted over each of the rotunda doors: “Landing of the
Pilgrims, 1620”; “Conflict of Daniel Boone and the Indians, 1773”;
84 Women and the U.S. Budget
“Preservation of Captain Smith by Pocahontas, 1606”; and “William
Penn’s Treaty with the Indians, 1682.” They were all completed in the
1820s, the decade leading up to the Indian Removal Act of 1830. The
Powhatan Nation and the Piscataways were just two of the Maryland
and Virginia tribes who had inhabited the area where Washington,
DC, now sits. Similar to the unresolved legacy of slavery , there is also
an unresolved legacy from the destruction of Native American lives
and culture perpetrated by those who came later.
We need to be aware of the government’s profound impact on the
city in which it is located. The people of Washington, DC, who are
predominantly people of color, with 60 percent of the population
made up of African Americans, continue to be denied their basic
political rights to elected representation and control over their own
resources by the US government. The District of Columbia is pro-
hibited from becoming a state, which means that 560,000 people in
the US are not allowed to elect a true representative, but only a non-
voting “delegate,” similar to Puerto Rico or Guam. This delegate can
cast votes in committees but is not allowed to vote for legislation on
the floor of the House of Representatives, the heart of the legislative
power. And because the District of Columbia is not a state, residents
have no representation in the Senate.
Residents of DC have also been systematically denied their basic
economic rights and are dictated to by members of Congress from
around the country . The city’s finances are overseen and ultimately
controlled by committees in the House and Senate. It was not until
Who Decides? 85
PI Pointer
Many residents of Washington, DC, have
worked for decades to achieve full political
rights through statehood. They are tired of
having taxation without representation —
paying hundreds of millions of dollars to 
the federal government but having no vote
in Congress.
the 1960s that residents of DC were allowed to vote for the president,
and only in the 1970s did they elect their own mayor and city coun-
cil for the first time.
Thousands of employees work in the government buildings — as
legislative and administrative staff to members of Congress, for com-
mittees of Congress, and as cafeteria workers, security personnel, and
cleaners. Until 1995 these workers were exempted from all the laws
that Congress had passed over the years to protect every other
worker in the United States against employment discrimination, age
discrimination, unsafe and unhealthy working conditions, and unfair
labor practices. On January 23, 1995, President Clinton signed the
Congressional Accountability Act, which applied 11 existing employ-
ment, civil rights, health, and safety-related statutes and regulations
to employees in the legislative branch.
History of the Budget Process
The Constitution does not include any provision requiring a budget.
It also does not require the president to make recommendations con-
cerning the revenues and spending of the federal government. Over
time, however, a complex and mysterious process has evolved that 
is now used to approve how the government collects and spends 
its income.
Until 1921 the federal government operated without a compre-
hensive presidential budget process. Chairmen of congressional com-
mittees started to exercise tremendous control over the business of
Congress — and therefore gained control over the taxation and
spending process — in the early 20th century. The Budget and
Accounting Act of 1921 created a national budget system that
required the president to prepare and submit a budget to Congress
each year. It also established the Bureau of the Budget (now named
the Office of Management and Budget or OMB) to help the president
prepare the budget proposal each year and to implement 
the budget once passed, and established the General Accounting
Office (GAO — now the Government Accountability Office) to pro-
vide oversight.
The 1946 Legislative Reorganization Act set the foundation for
the committee system used today — a key component of producing
86 Women and the U.S. Budget
the budget — which gives the House and Senate their own procedures
and allows each committee to set its own rules within those proce-
dures. The Legislative Reorganization Act of 1970 revised committee
procedures to provide more transparency and accountability . Provisions
of the law “encouraged open committee meetings, required that com-
mittees have written rules, required that all committee roll call votes
be made public, allowed radio and television coverage of committee
hearings, and safeguarded the rights of minority party members on
the committee.”
3
In the 1970s, congressional reform activists worked to make the
committee system more democratic by challenging the system of senior-
ity . This system allowed the most senior member of a committee to
dominate the leadership of the committees, which disproportionately
affected the committee’s legislation. There were also cases of senior
members of Congress heading powerful committees when their
health was declining and they were barely able to function.
Standing committees have legislative jurisdiction, and most oper-
ate with subcommittees that handle the committee’s work in specific
areas. Select committees have narrower legislative jurisdiction. Joint
committees deal with oversight or housekeeping issues. The chair of
each committee and a majority of its members come from the majority
party. There are approximately 2,000 staff members to assist com-
mittees, and most staff members are controlled by the majority party .
The basic budget process used today and described below was put
into place by the Congressional Budget and Impoundment Control
Act of 1974. It took 21 months, the attention of five committees in
the Senate and the House, and lengthy debate in both chambers of
Congress to pass it. The act was designed to streamline the budget
process and give more power to committees — the budget committees
in particular — and less to powerful individual leaders of Congress. It
also created the Congressional Budget Office (CBO) to assist the House
and Senate budget committees (also created by this act) with timely
analyses and data for economic and budget decisions. There were major
changes to the act in 1985, 1987, 1990, and 1993 in conjunction
with legislation establishing and extending the Gramm-Rudman-
Hollings Act and the Budget Enforcement Act. Additionally, some
rules of the congressional budget process have been incorporated
into or augmented by the standing rules of the House and Senate.
Who Decides? 87
The Budget Train
In this section I will outline the current budget process that the pres-
ident and Congress are required to follow . Then we will look at some
of the pressures on this system. The grunt work of preparing and
monitoring the budget is done in the subcommittees and committees
of the House and Senate, and your representative and senators sit on
some of these bodies. It is there that they can become experts on cer-
tain budget issues and can also influence (depending on the politics
in their committee) whether programs are funded (or not) and how
much money they receive. They can also vote for the budget on the
floor of the House and Senate, but by then decisions have usually
been made and the compromises hammered out.
We are going to look at the budget process as if it were a series
of stops for the budget train. This train can drop off and pick up
information, decisions, and political realities, taking them from one
stop to another. Sometimes the train has to rush back and forth
between stops, and sometimes it gets stalled altogether at a stop. In
the end, though, all of these stops have to be visited because if the
budget is to pass and be signed by the president, it has to have all the
right cargo.
Stop 1: The White House
The president proposes a budget for the coming fiscal year. (The fed-
eral fiscal year starts October 1 and runs through September 30.)
This budget has been prepared over the previous year by the presi-
dent’s budget office, known as the Office of Management and Budget.
OMB staff keep track of all income and expenditures for the overall
budget and for each government agency . Then OMB puts together a
publication called Budget of the US Government, which consists of sev-
eral volumes. This book includes not only the proposal for the next
fiscal year’s budget, but also many pieces of information including
historical tables of all the things the government has funded since 1948.
The president releases the budget proposal in early February,
shortly after the annual State of the Union speech — an address to a
joint session of the House and the Senate that is broadcast live to the
country — in late January . This allows the president to highlight in
that speech any major initiatives or changes in budget policies.
88 Women and the U.S. Budget
Stop 2: The Budget Committees
Congress uses the president’s budget as a starting point, but the bud-
get committee in the Senate and its counterpart in the House will
produce their own proposals, known as budget resolutions, that may
or may not conform to what the president wants. The budget resolu-
tions set out the basic overall priorities for the next fiscal year and
several years to come. They are supposed to be finalized by April 15,
but are not always ready by then.
The budget resolutions set the broad framework for the budget,
including the following details:
❖ Total revenues
❖ Total new spending for programs (mandatory and discretionary
spending)
❖ Total loan obligations
❖ The amount of the deficit or surplus
❖ The debt limit.
The figures in the budget resolutions are binding, which means
the committees that put together the details of the budget have to
stay within their limits. However, the budget resolutions are not laws;
they cannot be signed or vetoed by the president, and no money can
be raised or spent as a result of them.
A vital part of the budget resolutions is Congress’s agreement on
“spending allocations,” which are the limits on the amount of money
that can be spent on discretionary programs (as opposed to entitlements
Who Decides? 89
PI Pointer
The State of the Union speech is really a 
declaration of presidential intentions. The 
congressional budget process reveals which of
those intentions will become national policy.
like Medicare and Social Security) during the coming fiscal year.
(There are also projections of spending limits for at least the next five
fiscal years.) After the budget committees in the House and the
Senate have finalized their budget resolutions, a conference commit-
tee — made up of members of both the House and Senate — takes
the two versions and produces the final budget resolution, known as
the concurrent budget resolution, which both houses approve. This
means both House and Senate are working within the same frame-
work as they iron out the details of the budget. (To see a concurrent
budget resolution, go to <http://frwebgate.access.gpo.gov/ cgi-bin/get-
doc.cgi?dbname=109_cong_bills&docid=f:hc95rh.txt.pdf>.)
Stop 3: Authorization Subcommittees
There are two main components of the Congressional budget pro-
cess — authorization and appropriation. Authorization is an act of
Congress that establishes, or continues the operation of, a federal
agency or program An appropriation is an act of Congress that pro-
vides the legal authority for federal agencies to make payments for
specific things (i.e., administration or programs) — in other words,
to spend federal money . The authorization process sets a ceiling on
the amount of money that can be spent on a particular program.
No appropriation is supposed to be passed without an authoriza-
tion, but this rule is often waived. Although technically the autho-
rization component of the budget process takes place “first,” in
reality authorization and appropriations subcommittees and com-
mittees are often meeting at the same time. This is where the budget
train may end up shuttling furiously back and forth between stops.
Most of the committees of Congress are the authorizing committees;
they are grouped under broad program areas and are named for those
program areas (they are not actually called authorization commit-
tees). Each chamber has one large appropriations committee, which
is called an appropriation committee.
Some authorizations are “permanent” (i.e., Social Security and
other entitlements) and do not go through the appropriations process.
In addition, some spending is funded directly by the authorization
committees. The two thirds of spending that is not funded by appro-
priations bills is called direct spending. This includes Social Security ,
Medicare, and federal employee retirement payments. Medicaid and
90 Women and the U.S. Budget
some veterans’ programs are funded through the annual appropria-
tions process even though they are entitlements.
The authorization subcommittees make recommendations to 
the authorization committees. This is one point at which input and 
lobbying from interested organizations — both nonprofit and busi-
ness groups or individuals — can influence the fate or funding level
of a program.
Stop 4: Authorization Committees
The authorization committees in both the House and Senate deter-
mine funding levels for programs (based on the recommendations of
the subcommittees) and pass authorizing legislation. This allows for
the next step: deciding on appropriations for each authorized program.
Stop 5: Appropriations Subcommittees
Once the overall targets are adopted in the budget resolution, the
subcommittees of the large appropriations committees in both the
House and the Senate propose how much they want to spend on spe-
cific programs. The House and Senate appropriations committees
each have 13 subcommittees. Every program that is funded each year
comes under one of the subcommittees. These 13 subcommittees do
not correspond exactly to the budget functions that provide the orga-
nizing structure for the president’s budget proposal.
The 13 appropriations subcommittees draft legislation that allo-
cates funds to government agencies within their jurisdictions. These
subcommittees are responsible for reviewing the president’s budget
Who Decides? 91
PI Pointer
Although entitlements like Social Security are
referred to as “permanent,” we must remem-
ber that nothing is permanent in government.
Anything can be changed through legislation.
But permanent programs tend not to change
from year to year.
request, hearing testimony from government officials, and drafting
the spending plans for the coming fiscal year. Once they are finished,
they pass their recommendations on to the full House or Senate
appropriations committees, which review and modify the bills and
forward them to the floor for consideration.
The appropriations subcommittees are another point where inter-
est groups and business lobbyists can make their views heard on
funding for specific programs. They can provide written testimony ,
present testimony at hearings, and directly lobby members of the
subcommittees.
Stop 6: Appropriations Committees
After the appropriations subcommittees “report out” their bills, the
appropriations committees consider each one, make any changes
they want to within the overall budget resolution guidelines, and
then pass them along to the House and Senate chambers. Thirteen
appropriations bills are then put together in the following areas:
❖ Agriculture
❖ Commerce/Justice/State
❖ Defense
❖ District of Columbia
❖ Energy and Water
❖ Foreign Operations
❖ Homeland Security
92 Women and the U.S. Budget
PI Pointer
Appropriations subcommittees and commit-
tees decide on funding for human needs 
programs, but they are subject to little
scrutiny. Do you know what your repre-
sentative and senators do when they are 
in Washington?
❖ Interior
❖ Labor/Health and Human Services/Education
❖ Legislative Branch
❖ Military Construction
❖ Transportation/Treasury/Postal Service
❖ Veterans Affairs/Housing and Urban Development.
If separate bills are not passed, they are put together in what is
called an omnibus bill.
The Budget Act allows the appropriations committees from May 15
until June 10 to finalize the 13 appropriations bills or the omnibus bills.
Stops 7 and 8: The House and Senate Chambers
Each of the 13 appropriations bills has to be approved by votes in the
House and Senate. The bills have to be passed by a majority of both
houses of Congress.
Stop 9: Conference Committee
If, as usually happens, all the bills are not passed, they are then sent
to conference committees to come to compromise. After the confer-
ence committees have reached an agreement, they forward the new
bills to the House and Senate, which still must approve them by a
majority vote.
Stop 10: Budget Committees
At this point the budget committees (one in the House and one in the
Senate) compare the expenses set out in the appropriations bills to the
revenues the government expects to receive in the next fiscal year
and “reconciles” them. This means they make sure all the spending
and tax legislation relating to that year’s budget (including entitle-
ments) conforms to the budget resolution. At this point, appropria-
tions committees may have to have to redo their bills to stay within the
limits. When the appropriations committees have made their changes,
the budget committees report the results in what is known as the “rec-
onciliation bill.” This is supposed to happen by September 30.
The two budget committees meet in a conference committee to
come to a compromise, which then must be signed by the president.
Who Decides? 93
Stop 11: The White House
If the president signs the reconciliation bill, the government’s spend-
ing is set for the fiscal year. Under law , the president can veto the rec-
onciliation bill. If he does, and Congress overrides his veto by a
two-thirds majority, the bill becomes law anyway. If the president
vetoes the bill and Congress can’t override his veto, then the confer-
ence committees have to reconvene and do some more work on it.
When the process goes as planned, all 13 spending bills will have
been signed by the president and become law by October 1, the start of
the new fiscal year. The direct spending portion of the budget will have
been determined through the authorization process, as noted above.
After all this, your money is now available to be spent on all 
those programs!
Unscheduled Stops
It sometimes happens that the train stops before it’s supposed to, and
Congress does not pass all the appropriations bills in time for the
start of the fiscal year. In that case, Congress must pass a continu-
ing resolution that temporarily funds programs, usually at the cur-
rent levels of funding, until the final budget is passed. If Congress
cannot agree on a continuing resolution, or if the president vetoes it,
then government spending on these programs has to stop. This has
happened five times since 1981.
In addition to interrupting the work of hundreds of thousand of
government employees, government shutdowns cost the American
people. For example, when the government shut down for six days
94 Women and the U.S. Budget
PI Pointer
President Bush wants to resurrect the “line-
item veto” so he can take programs he 
doesn’t like out of the budget without 
stopping the whole budget process. The
Supreme Court declared the line-item veto
unconstitutional after it had been in force for
one year in 1999.
in 1995, the Clinton administration estimated the financial cost
included over $400 million in lost income to the Treasury , $800 mil-
lion in home loans to low- and moderate-income families delayed,
and two million visitors turned away from national parks.
4
The Budget and Democracy
When we look at the actors at each stop of the budget train, what do
we see? They are mostly white males sitting around tables, dividing
up our resources. They have developed rules and procedures and pro-
cesses for making these resource allocations. These rules, procedures,
and processes can be, and have been, changed many times according
to political pressures within Congress for more power sharing.
However, the rules and procedures have not resulted in a truly trans-
parent or democratic process. As we just saw , the process can even
hold the country hostage when political conflicts lead to a govern-
ment shutdown.
In order for the budget process to be more democratic, it needs to
be “transparent.” Transparency means that the rules, procedures, pro-
cesses, and final product — the budget — must be accessible and
easy for anyone to understand. The question of transparency leads
directly to the question of democracy . The process is democratic only
if it is truly participatory — decision makers must represent and be
responsive to the people, and the process must be free from pressure
from powerful outside constituencies.
We have a long way to go to meet these two criteria. There is a
crisis in our political culture, with half the potential voting popula-
tion not even bothering to take part in the rituals of democracy such
as voting and communicating with elected representatives. There are
indications that voter disenfranchisement is a frightening reality , as
we saw in the last two presidential elections (in Florida in 2000 and
Ohio in 2004). Several organizations have filed lawsuits question-
ing the legality of the 2004 election results in Ohio, claiming that,
some Ohio voters were given false information about voting times,
were forced to wait in lines for hours, and in some cases were harassed.
A congressional inquiry released in January of 2005 by democrats on
the House Judiciary Committee found “numerous, serious election
irregularities in the Ohio presidential election, which resulted in a
Who Decides? 95
significant disenfranchisement of voters. Cumulatively , these irregu-
larities, which affected hundreds of thousands of votes and voters in
Ohio, raise grave doubts regarding whether it can be said the Ohio
electors selected on December 13, 2004, were chosen in a manner
that conforms to Ohio law , let alone federal requirements and con-
stitutional standards.”
5
The many pressures on this congressional system as it works to
prepare the budget each year also compromise democracy . Pressure
itself is not a bad thing — elected representatives need to hear the
views of their constituents and understand the issues they face.
However, the power of business and corporate interests to be heard
and to buy influence with their contributions far outweighs the abil-
ity of regular citizens and most nonprofit organizations to influence
the process.
One particular pressure that hangs over members of Congress and
the president is the unrelenting stress of raising the money they need
to win election or re-election. A look at the amount of money incum-
bents attract tells the story . In the 2004 election cycle, incumbents in
the Senate raised an average of $8.6 million, with challengers collect-
ing an average of $969,000. In the House, incumbents raised an aver-
age of $1.1 million; challengers, an average of $192,000. Those who
do get elected to Congress tend to stay there — in 2004, incumbents
in the House had a 98 percent re-election rate, while those in the sen-
ate had an 85 percent rate. (Comprehensive information on money
in politics is available from the Center for Responsive Politics <www .
opensecert.org>, which is where much of the information in this sec-
tion came from.)
Of the billions spent each election cycle, most is donated in checks
exceeding $1,000, but less than 1/10 of one percent of the general
population make individual contributions at this rate. This means
that extremely wealthy individuals and corporations are making most
of the contributions, which gives them a disproportionate influence
on the politicians. Y ou can tell who the powerful members of Congress
are by the size of donations they receive from political action com-
mittees (PACs) and individuals. Among group contributions, more
than 90 percent come from corporations.
Raising this money not only takes an enormous amount of energy
that would be better spent making the momentous decisions required
96 Women and the U.S. Budget
of a senator or representative, but it also leaves members of Congress
vulnerable to the influence of corporate lobbyists and agendas. For
instance, members of the House Financial Services Committee —
formerly known as the Banking Committee — which has jurisdiction
over policy related to banks, savings and loan institutions, insurance,
and securities — received $10 million from the banks, finance, and
insurance, PACs in the 2004 election.
The huge amounts of money needed to finance a run for Congress
have produced a bizarre yet predictable situation. In 2002, almost 43
percent of the incoming freshmen members of Congress — 27 law-
makers — were millionaires, even though millionaires make up only
one percent of the American population. The Senate is now so full of
wealthy people that it has been dubbed the Millionaires’ Club. At
least 40 out of the 100 senators are millionaires, and many are multi-
millionaires. We know this because each member must file a financial
disclosure form. However, these forms can be vague, and they do not in-
clude information on the pensions and salaries members of Congress
receive, so there are probably many more millionaires in the group.
The three wealthiest senators as of 2003 were Democrats: John Kerry of
Massachusetts, with a net worth of at least $164 million; Herb Kohl
of Wisconsin, with a net worth of at least $111 million; and John “Jay”
Rockefeller of West Virginia, with a net worth of at least $82 million.
6
Many members of Congress are not only extremely wealthy , but
they also sit on the boards of, own stock in, and/or have influence
with companies that have a large stake in the proceedings of Congress.
T wo prominent examples are the pharmaceutical and oil industries.
This interconnection is obviously a factor as the House and Senate
deliberate on issues such as the Medicare drug benefit, and drilling
for oil in the Alaskan wilderness.
Who Benefits? The Power Elite
As PIs, we may notice that the people sitting in the House and the
Senate are not representative of the population. This is another indi-
cation that the system is not functioning in a truly democratic way .
Besides being unfair in terms of excluding people from taking part in
decisions, it also means that the voices of those most negatively
affected by key budget decisions are not heard.
Who Decides? 97
The first thing we notice is that women are severely underrepre-
sented. They constitute 51.3 percent of the population, but only 13.8
percent of the Congress (13.7 percent of the House and 14 percent of
the Senate). This would be striking enough on its own, but when
compared to women’s representation in other national parliaments, it
is astounding.
According to the Interparliamentary Union in Geneva, Switzerland,
the United States ranks 59th in the world in terms of the percentage
of women in its national legislative bodies. The top five countries —
all with women making up over 35 percent of their legislatures — are
Rwanda, Sweden, Denmark, Finland, and the Netherlands. Rwanda
and Sweden have over 45 percent representation by women, and there
are more than 16 countries that have 30 percent or more. Countries that
have a higher percentage than the United States include: the United
Kingdom, Trinidad and T obago, Mexico, Vietnam, South Africa, and
Bulgaria. Women in the United States were only granted the right to
vote in 1920 after a bitter struggle, and clearly there is a long way to
go to insure full participation of women in governing the nation.
According to the 2000 census, the population of the United States
is 69.1 percent white; 12.1 percent African American; 12.5 percent
Hispanic; 3.7 percent Asian or Pacific Islander; 0.7 percent American
Indian; and 0.2 percent some other race. Just over 1.5 percent indi-
cated that their heritage included two or more races.
However, here is the makeup of the Congress: 86.7 percent white;
7.2 percent African American; 4.6 percent Hispanic; 0.93 percent
98 Women and the U.S. Budget
PI Pointer
Research on men and women legislators 
carried out in Britain in 1996 showed that
although both women and men viewed 
economic issues as a priority, women were
more concerned about part-time work, low
pay, and pension rights, while men were 
more concerned about unemployment.
7
Asian or Pacific Islander; and 0.56 percent American Indian. As of
2000 there were no Hispanics, African Americans, or Asian or Pacific
Islanders in the Senate.
One of the main reasons our political system is not yet fully demo-
cratic is that a small elite of the upper class dominates the economy
and politics. According to G. William Domhoff, a leading theoretician
studying class influence in politics, the upper class makes up about
0.5 percent of the population and generally consists of those people
who attend particular schools, join certain clubs, and participate in
common social activities. The members of the upper class own 20 to
25 percent of all privately held wealth and 45 to 50 percent of all pri-
vately held corporate stock.
Domhoff calls this group “relatively fixed,” meaning that although
there is some change, essentially it continues functioning in the
same way over time. He defines the power elite as a small group 
of Americans who own and manage large banks and corporations,
finance the political campaigns of conservative Democrats and virtu-
ally all Republicans at the state and national levels, and serve in gov-
ernment as appointed officials and military leaders. We can see from
the statistics above that although some women  and people of color
have been allowed to join, white males of the upper class still dominate
the economy and government.
The power elite retains its control of the federal government
through a variety of organizations and methods including an inter-
locking set of policy discussion groups, foundations, think tanks, and
university institutions. These provide social cohesion and a common
economic outlook, and have a huge impact on social policy , even if
popular opinion differs from the views of the corporate elite. Also,
because our society puts high value on privately owned property and
individual wealth, those who run the power structure will reflect
those values in the public policy they create. In a book he wrote with
Richard L. Zemiegenhoff, Diversity in the Power Elite, Domhoff pointed
out that “those who have more of what is valued have more power.”
Another reason the political power elite stays relatively fixed is
the structure of the US electoral system. The winner-take-all system
is one of the major challenges women and people of color face when
they try to gain representation in the political system that is in pro-
portion to their representation in the population. There is a range of
Who Decides? 99
proposals for changing voting systems and encouraging higher voter
participation. These include proportional representation or instant
run-off elections, and all are combined with true campaign finance
reform. These strategies could change the lock the two parties now
have on the system and would go a long way to finally achieving the
democracy we say we value in the United States. More democracy , in
turn, would lead to better debate, and decisions, about what should
be funded by the national budget.
100 Women and the U.S. Budget
101
Part 2
❖
Connecting the Dots
I
N PART ONE WE LOOKED AT the basics of the budget as public investi-
gators (PIs) and uncovered many of the hidden realities of income,
expenses, debt, surplus, and the budget process. Now in Part T wo we
will examine two aspects of the larger context of the budget: in
Chapter 6 we will look at how the budget interacts with the economy
in the United States, and in Chapter 7, how the US budget interacts
with the global economy .
103
Chapter 6
❖
The Budget and the US Economy
T
HE FEDERAL BUDGET DOES NOT EXIST IN A VACUUM. It is part of a
value system, a worldview, and a set of relationships that are
known as “the economy .” News reports about the economy often use
jargon and complex analyses that can make the rest of us feel we
don’t really understand it. Yet understanding the economy is as sim-
ple as really noticing what is going on around you.
As you look at your community or city, these are some of the
things you might notice: some people have lots more income and
wealth than they require to meet their basic needs; some have
enough income and wealth to meet their basic needs; and some do
not have enough income and wealth to meet their basic needs. You
will see that most people work for pay for a company or organization,
but their relationships with their employers vary widely . Some work-
ers have high pay and benefits from their jobs, some have low pay
and no benefits, and some are not able to work or cannot find work.
You will notice that banks, government, and large companies have a
lot of influence on how things evolve in your community. People
who own property, especially in more expensive neighborhoods,
often have more say about the quality of the schools and community
infrastructure in their neighborhoods than people who don’t own
property — and the result is that schools and infrastructure in
wealthy neighborhoods are often better and better funded than is the
case in lower-income neighborhoods.
As you look around, you will also notice how race, class, and 
gender interact within the economy. When I was growing up in
Washington, DC, I remember taking the bus to public junior high
school from an upper-middle-class neighborhood. Our bus was filled
with students and with professionals, mostly white, going to work
from our neighborhood to various government agencies downtown.
As we passed buses going the other way , we saw they were filled with
African American women on their way to clean the houses of the
professionals on our bus. This was my introduction to the economy
in a city that was officially non-segregated but was, in fact, segregated
by race, class, and gender.
Capitalism in the United States
The economic system we live under is called capitalism. It came into
being during the 16th century as a result of historical, social, geo-
graphic, and other factors as Europe, particularly England, began to
dominate economic relations around the world. Capitalism is based on
the premise that capital (land, buildings, machines, other equipment,
and wealth in the form of stocks, bonds, and bank accounts) is pri-
vately owned, and that economic activity involves the interaction of
buyers and sellers (or producers), organized in markets. The key
point that PIs need to recognize is that, under capitalism, the owners
of land and capital have the freedom to pursue profit using their
resources and the labor of workers.
As we saw when we looked around our communities, different
people have different relationships to this economic system: some are
owners with a lot of wealth and income; some are managers with an
excess of wealth and income; some are workers who may or may not
have enough wealth and income; and some are poor and unem-
ployed, with few economic resources.
Capitalism has evolved since it came into being and is still evolving.
Capitalism in the United States in the early 21st century is character-
ized by the dominance of large multinational corporations, some of
which have incomes larger than many countries. The law gives these
corporations protection to pursue these profits without regard to human
or environmental impacts, and economists still tell us today that allow-
ing the market to be “free” — to operate without any governmental
restrictions on the interactions between producers and consumers —
will result in the greatest good for all. They imply that government has
no role to play in regulating these interactions or protecting consumers,
104 Women and the U.S. Budget
but in reality there never has been a free market. Government has
always subsidized corporations, as we saw in Chapter 1.
There are a few things we need to keep in mind about how our
economic system evolved. Corporations did not always enjoy the
legal protection they have today , nor did they always have the privi-
lege to pursue profit at the expense of workers, communities, and the
environment. In the early years of our country’s history , states had the
authority to charter corporations, and for a hundred years after the
signing of the Constitution, citizen vigilance and activism forced leg-
islators to keep corporations on a short leash. Because of widespread
opposition to corporations, early state legislators granted few charters.
They denied charters altogether when communities opposed the
plans of prospective corporations. Citizens governed corporations by
specifying rules and operating conditions, not just in corporate char-
ters, but also in state constitutions and laws.
However, some corporations still managed to become large and
powerful. Because the national government was small in the 19th
century — partly due to the great power invested in the states —
there were powerful corporations before there was a large national
government. This meant that those who ran the corporations had a
lot of input into the direction the national government took when it
began to grow , and they made sure one of its major focuses was to
uphold the right to private property , and to provide law and order, so
that capitalism could function freely .
The Program on Corporations, Law and Democracy (www .poclad.
org) provides some history of the laws that helped corporations gain
power as the country evolved. POCLAD’s research shows that the
biggest blow to citizen control of our democracy came in 1886, when
the US Supreme Court ruled in Santa Clara County v . Southern Pacific
Railroad that a private corporation was a “natural person” under the
US Constitution, sheltered by the 14th Amendment, which requires
due process in the criminal prosecution of “persons.” Following this
ruling, huge and wealthy corporations were allowed to compete on
equal terms with neighborhood businesses and individuals. Sixty
years later, Supreme Court justice William O. Douglas wrote: “There
was no history , logic, or reason given to support that view .”
1
It was not until the 1930s, during the Great Depression, that the
federal government began to intervene in the capitalist economy on
The Budget and the US Economy 105
behalf of workers. Under the New Deal administration of President
Franklin Roosevelt, the government introduced Social Security and
Unemployment Insurance to provide a minimum of protection to
workers and their families. The debate about how much the govern-
ment should intervene in the economy on behalf of the general well-
being of the people of the United States is still very much alive in the
early 21st century .
US capitalism also grew hand in hand with a strong military and
international intervention that enhanced the country’s economic
position globally . In the 19th century the US military intervened in
several countries in Latin America and Asia. The national govern-
ment was greatly expanded during World War I and World War II in
order to coordinate the country’s participation in the wars and to
secure global influence afterwards. After World War II, the military
establishment stayed large as it maintained military bases and engaged
in military actions around the world. Ever since then, military spend-
ing has been a large portion of discretionary budget expenses (as dis-
cussed in Chapter 2), with the amount spiking during wars.
These two aspects of capitalism in the United States — govern-
ment support of corporations and a large military — are interwoven
because the recipients of most military spending are big corporations
that make weapons. This has had a huge impact on how the national
budget evolved. Since World War II, trillions of dollars have gone to
the military , and defense contractors have made huge profits from
taxpayers’ money . As we have seen in previous chapters, there are tax
breaks and subsidies for corporations on both the income and
PI Pointer
The Supreme Court declared corporations
“natural persons,” protected under the
Constitution, years before women could 
even vote.
106 Women and the U.S. Budget
expense sides of the budget, and these have been knit into the very
fabric of the budget. The national government and giant corporations
have developed together.
How these priorities affect the national budget and our commit-
ments as a country was brought home to me many times when I
worked in Washington as a lobbyist for peace and women’s organiza-
tions. All too frequently , funding for programs that made a difference
in people’s lives, particularly the lives of low-income women and
their children, were cut or limited while military spending increased.
When the military was cut back, it was often at the expense of benefits
or equipment for soldiers on the ground.
During preparation for the Gulf War in 1990, Congress voted an
increase in military spending to cover the costs of the war. I was
executive director of the Women’s International League for Peace and
Freedom at the time, and I was mystified by this increase because it
came on top of huge annual military spending that was supposed to
prepare the Department of Defense to fight wars. At the same time,
the Department of Agriculture announced a cutback in the number
of people who would be served by the Women’s Infants and Children
program (WIC), which provides crucial nutritional support and
information to low-income mothers and their infants. The program was
cut back because the price of milk had increased. Instead of increasing
the funding for the program to pay for the milk, WIC was forced to
absorb the milk price increase at the expense of mothers and children.
Billions of dollars of US taxpayers’ money is being spent in Iraq
when millions of people here at home have no health insurance and
inadequate food and housing. Most of the money set aside to help
Iraq will end up going to private contractors — corporations — who
get government contracts to rebuild Iraq’s roads, retrain its police
force, operate its airports, service US troops, and make a profit. The
most prominent of these corporations is Halliburton, which is mak-
ing huge profits from its work in Iraq and which received contracts
without going through a competitive bidding process. The govern-
ment/military/corporate connections insure that taxpayers heavily
subsidize corporations.
According to writer William Greider, capitalism has had another
effect on the United States in this phase of history . “National govern-
ments have lost ground on the whole, partly because many have
The Budget and the US Economy 107
retreated from trying to exercise their power over commerce and finance.
In advanced economies most governments have become mere sales-
men, promoting the fortunes of their own multi-nationals. Evidence
it’s not working for all people is the condition of labor markets —
either mass unemployment or declining real wages.”
2 
In the US we
have had both high unemployment and declining wages for years,
while many US multinational corporations, including banks and
mutual fund companies, have made huge profits playing in the
global economy .
The Federal Budget and Economic Equity
Although economic equity is not the focus of the federal budget, the
budget can be, and in the past has been, used to lessen economic
inequality . In fact, the idea of consciously using the budget to enact
economic policy promoting equality has been the focus of a major
debate in economics. John Maynard Keynes, a prominent economist
in the first half of the 20th century , advocated that the government
use its money to achieve full employment, even if it created a deficit.
Full employment would be a boon to the economy, according to
Keynes, and the fact that employed people would pay taxes and buy
goods and services made it well worth the investment. He also argued
against cutting wages, saying that the decrease in workers’ buying
power would hurt the economy .
Social Security was enacted in 1935 to insure that elderly Americans
did not live in dire poverty and that a pension was guaranteed for
108 Women and the U.S. Budget
PI Pointer
The Women’s Infants and Children’s Program
(WIC) ensures mothers are healthy, gives infants
and children a good foundation, and saves
money on future health care. Yet there is not
enough money currently in the budget to 
support all who are eligible. We could fund all
the women and infants who need the program
for the cost of a few Abrams tanks.
working Americans. The Social Security Act also mandated the pro-
vision of disability and survivors’ benefits. After World War II, the
government created grants to allow returning GIs to buy homes, and
it created safety nets in the form of welfare, unemployment compen-
sation, and public service jobs that helped to ensure people would
still be able to purchase goods and services when the economy hit a
downward cycle. These programs provided a minimum of protection
to single mothers and recently unemployed workers. If the programs
were often inadequate and didn’t reach all who were eligible, at least
they kept many people from having to live in complete economic cri-
sis. Medicare, Medicaid, and tax credits for low-income working peo-
ple (such as the Earned Income Tax Credit, described in Chapter 2)
are examples of more recent programs that have been created to pro-
vide a safety net for people when the economy alone does not.
The budget is also used to increase class inequality . In the last 20
years, many of these safety net programs have been cut, and tax poli-
cies have been revised to benefit the wealthy and corporations at the
expense of people at the bottom of the economic ladder. These
national policy decisions have contributed to the increasing gap
between the haves and the have-nots in America. Since the 1970s,
the top one percent of households have doubled their share of the
national wealth.
In the last 25 years labor unions have been under attack, and
many have been broken, which leads to a reduction in the number of
jobs that pay well and provide good benefits. The federal minimum
The Budget and the US Economy 109
PI Pointer
The combined wealth of the top 5 percent of
American families is more than the wealth of
the remaining 95 percent of the population,
collectively. This is the highest wealth inequality
of any industrialized country, and the greatest
wealth gap in the US since 1929.
wage has been held at $5.15, welfare and housing programs have
been cut, and many government services have been taken out of the
public sector and put into the hand of private corporations. As men-
tioned in Chapter 1, when government services are privatized and
government spending reduced, many women and people of color
lose good public sector jobs that pay higher wages than other jobs
they would otherwise have access to.
The Federal Budget and the States
The federal government has always been economically intertwined
with the states. Originally , states were given land and received aid to
help with natural disasters and security issues. The grants-in-aid sys-
tem began to take shape in the early 20th century , when the govern-
ment required matching funding from the states for some programs
and began to set conditions for receiving grants. This grants-in-aid sys-
tem was used extensively to implement policy during the Great
Depression and the New Deal era, while the Great Society programs
of the 1960s invested in urban areas and provided assistance for poor
and low-income people.
The Nixon administration implemented a program of block grants
and revenue sharing, which gave the states money with no condi-
tions on how they spent it. In recent decades, some of the big federal
programs, such as Medicaid, food stamps, and Section 8 subsidized
housing, have been set up as joint federal/state programs. This means
that both levels of government contribute funding, and the state has
to meet certain conditions to receive the federal money .
If the program is set up as an entitlement, then all eligible people
who are registered will receive the service, no matter how much it
costs. Many programs, including welfare (now known as T emporary
Assistance to Needy Families), have been converted from entitle-
ments to block grants. Block grants give the states more leeway to
decide how to spend the money , and when the money runs out, eli-
gible people can lose the service. Because many states have faced fis-
cal crises in recent years, they have been forced to cut money from
valuable programs. Partly this is due to the fact that most states are
required by law to balance their books, so they cannot run a deficit
in order to invest in programs or services when the economy is in
110 Women and the U.S. Budget
recession. If states do not maintain contingency funds for times of
high unemployment (when fewer people are paying taxes and more
people are using government programs), and if they are not willing
to raise taxes, they may find they cannot maintain much-needed social
programs, and will end up cutting them. In addition, states are subject
to the shifting relationship with the federal government — different
administrations have different views of federal/state/local relationships
— and this may affect the funding they receive from Washington.
In the first years of the new millennium, many states have been
reeling from dire fiscal crises, and the federal government has not
been coming forward to help. Budget shortfalls have caused some
states to reduce the numbers of teachers or firefighters they employ ,
stop buying textbooks, cut or stop after-school programs, release
prisoners early , and cut police protection at a time when we are sup-
posed to be focusing on “homeland security.” According to OMB
Watch, in 2003 almost every state cut Medicaid eligibility , thereby
endangering the health of children, poor adults, pregnant women,
and disabled people.
Medicaid is one of the states’ largest expenditures, coming right
after education. President Bush proposed cutting $60 billion from
Medicaid in his fiscal 2006 budget proposal. This kind of federal policy
will further stress state budgets and will force them to cut benefits.
Women are the vast majority of recipients of Medicaid, either as single
heads of households or in nursing homes. The Bush administration has
also floated proposals for ending Medcaid’s status as an entitlement
and converting it to a block grant. This would be a disaster for mil-
lions of low-income Americans, as Medicaid is the only guaranteed
health insurer for people who do not have the money to pay for
health insurance or who are not covered through their employment.
Federal Reserve System
It is impossible to understand the US economy without understand-
ing the Federal Reserve system and how it functions. Congress estab-
lished the Federal Reserve — or the “Fed” as it is known — when it
passed the Federal Reserve Act of 1913. The Fed was intended to cre-
ate a stable banking system for the country . It was a response to the
upheaval caused by bank crises and monetary collapses during the
The Budget and the US Economy 111
late 1800s and early 1900s. The act created a central banking system
divided into regional Federal Reserve banks.
The Banking Act of 1935 and the Monetary Control Act of 1980
added provisions and responsibilities to the Fed’ s original mandate. The
Banking Act of 1935, coming on the heels of the Great Depression,
gave the leadership of the Fed to a centralized board of governors,
appointed by the president and approved by the Senate. The Monetary
Control Act of 1980 made some further changes in the system,
including giving the Fed authority to charge a fee for services it pro-
vided to member banks.
So what is the Fed? It is a bank that issues the national currency ,
exerts control over the direction and extent of changes in the national
money supply , plays a major role in the supervision and regulation of
banks, and is the bank for the federal government and the banking
community. The Fed is similar to what is known as the “central
bank” of other major industrialized capitalist countries.
A board of governors — a group of bankers appointed by the pres-
ident for 14-year terms — controls the Fed from its base in Washington,
DC. The president appoints one member of the board to serve as Fed
chairman for a four-year term. Those terms can be renewed (for exam-
ple, Alan Greenspan has been Fed chairman since 1987). The major-
ity of the Fed’s day-to-day operations are in the hands of the officers
of 12 district Federal Reserve banks, located throughout the nation.
Most commercial banks are members of the Fed, and those that are
members of the Fed own stock in these Federal Reserve banks.
The reason this central bank is called the Federal Reserve is because
all banks are required to put a percentage of their deposits — the
money people and businesses put into the banks — in reserve with
the Fed. The banks are then allowed to lend and invest the rest of
their funds, paying depositors interest for the use of their money . The
percentage of this “reserve requirement” changes, but is currently
approximately 10 percent. The purpose of the reserve requirement is
to make sure banks do not lend out or invest all their deposits, which
could lead to bank failure and insecurity among depositors.
One of the Fed’s major responsibilities is to decide on monetary
policy , which means it decides how much money will be in circulation
at any given time. The Fed can affect the flow of money in several
ways. First, it can change the reserve requirement for banks, allowing
112 Women and the U.S. Budget
them to lend or invest more or less money . Second, the Fed can change
interest rates on the money it lends, which affects all interest rates
offered by banks and financial institutions. However, the main way
the Fed influences the supply of money is through open market oper-
ations, which are small adjustments conducted several times a week.
The Fed is allowed to buy or sell US government bonds, which
changes the supply of reserves and the circulation of money through-
out the system. The Fed buys bonds when it wants to lower interest
rates, and sells bonds when it wants to raise interest rates.
The Fed is sometimes referred to as the fourth branch of govern-
ment because its actions can have such a profound impact on the
economy . Yet it is not subject to the checks and balances and account-
ability that the other branches of government are. The board of gover-
nors is formally independent of the executive branch and protected
by tenure. And although the Fed was created by Congress and is
dependent upon it for its continued existence, it is self-financing and
so is not subject to scrutiny under the budget process.
The Fed tends to be shielded from public attention because most
people know little about it. Politicians who have tried to address the
extraordinary power of the Fed find it difficult to get attention from
the media and the public, and as a result, they rarely achieve concrete
results. For instance, Representative Wright Patman (D-TX), former
chair of the House Banking Committee and a member of Congress
from 1929 to 1976, made change in the Fed his major priority. He
and others after him introduced legislation each year to make the Fed
more democratic and less subject to the influence of major banks. Yet
no Fed reform legislation has ever succeeded. Patman observed:
There should be no mystery whatsoever — no secrecy
— concerning the control of money supply, interest
rates, or credit ... These are matters affecting the public
from the time they get up in the morning until they
retire at night. For the Federal Reserve and the banker-
oriented Open Market Committee to cloak the working
of the money system in a mantle of secrecy is to violate
the prime rule of a free society ... The Constitution
wisely provides that Congress shall coin money and
regulate its value ... If monetary matters are left to the
The Budget and the US Economy 113
Federal Reserve, insulated from the people, then the
public will have no way to express its approval or dis-
approval of their actions. The fact is an independent
Federal Reserve means something that is not in the
framework of our constitutional system, which says
that Congress will make the laws and the President
shall execute them. Those who desire a dictatorship on
money matters by a “bankers club” — away from the
Congress and the President — are in effect advocating
another form of government alien to our own.
3
Other than being concerned about the Fed’s undemocratic nature,
why should we care about monetary policy and the role of the Fed in
our nation’s past, present, and future? In recent decades the Fed has
had as a primary goal of keeping inflation down. If there is too much
money in circulation, inflation — a general increase in prices — can
be a result. At a certain point this can cause sales to lag and corporate
profits to slow. Before that point is reached, the Fed might increase
interest rates so it is harder for people to get credit. This generally
decreases the amount of money available. This is called a “tight
money” policy , and because it makes it harder for businesses to get
credit, it can lead to wage cuts and layoffs. The effect of a tight money
policy is often an increase in unemployment, and higher unemploy-
ment is seen as a necessary sacrifice to make it possible to “wring
inflation from the economy .”
One of the problems with this approach to dealing with inflation
is that inflation, if it is not too extreme, actually improves the finan-
cial situation of huge numbers of working-class and middle-class
people. Those who own their own homes and are dependent on their
wages for income benefit from stable or increasing wages. The oppo-
site of tight money is easy money — in other words, low interest
rates that make credit cheaper and easier for people to borrow .
People with fixed financial assets — for example, investments and
huge savings — rely on high interest rates to give them a bigger
return on their investments. So the Fed, with its tight money policy ,
can be seen as protecting banks, other creditors, and wealthy people
who benefit from high interest rates. Legally , the Fed has the power
to decide how high interest rates will be. Keeping them high is a big
114 Women and the U.S. Budget
advantage to those who are primarily creditors, but it is a disadvan-
tage to those who are primarily debtors, which is the majority of peo-
ple. According to the Fed’s own figures, more than half of American
households are net debtors.
The Full Employment and Balanced Growth Act of 1978 (known
as the Humphrey-Hawkins Act) was an effort by Senator Hubert
Humphrey (D-MN) and others to focus government policy on the
suffering of jobless workers. One provision of the bill gives the Fed a
mandate — in other words, it is required by law — to include full
employment in its goals as it implements monetary policy . Under the
Humphrey-Hawkins Act, the Fed chairman is required to come
before the House and Senate banking committees twice a year to
explain the Fed’s monetary goals and to demonstrate how achieving
these goals will affect employment.
In recent years the definition of “full employment” has changed,
with 4 or 5 percent unemployment considered close enough to full.
As of 2004, the unemployment rate is 5.4 percent, which means that,
according to the Fed, there is full employment. One of the problems
with this definition, though, is how the numbers are measured.
Official government statistics measure only those people who are
looking for full-time work. This leaves out those who have stopped
looking for work or who work in part-time or contingent jobs but
would prefer full-time jobs with benefits. The Fed actually came up
with a new measure — the Augmented Unemployment Rate — that
includes the discouraged and the underemployed. In 1999 the Fed
The Budget and the US Economy 115
PI Pointer
Although the Fed is required by law to view
return on investment and full employment 
as equal goals, Fed monetary policy 
consistently puts return on investment ahead
of full employment.
began to include this augmented unemployment rate in its Humphrey-
Hawkins report. Currently , the augmented unemployment rate is 9
percent. The real unemployment rate is probably much higher.
What the Fed does has a profound impact on the federal budget.
Remember the discussion of the national debt in Chapter 4? When
interest rates go up or down a few percentage points, it translates into
billions of dollars lost or gained by those who lent the money to the
government. It also means billions of dollars more or less that the
government has to pay in interest. And if the Fed’s actions cause
unemployment to rise, the federal budget must increase its social
welfare payments to cover unemployment and other assistance.
GDP and Unpaid Work
As modern capitalism and the field of economics have evolved, new
ways to measure the economy and new terms to describe it have also
emerged. These terms may intimidate or confuse us, but they have
also come to influence the way we think about ourselves and our
relations with others in our country and with other countries.
It is important to keep in mind that this is only one way of
describing the world, and as we will see, it is not the most accurate
or inclusive way . If we can see and describe the world differently , we
can create a different reality .
One of the terms that we hear over and over is GDP , which stands
for gross domestic product. This is a measure of the value of the total
amount of goods and services produced within the country over a
specified time, normally a year. It is used to measure the productiv-
ity of the economy . The GDP is calculated by adding personal spend-
ing, government spending, investment, and net exports (exports
minus imports). In 2004 the United States GDP was $10.9 trillion.
Included in the calculation of GDP are consumer goods (things
that households buy) and investment goods (things such as machines,
office buildings, and bridges). These are two kinds of output, and the
GDP adds these two basic kinds of output together, along with pub-
lic sector or government purchases and investments (i.e., teacher 
services and roads). The GDP gives us a large view of the economy ,
what economists call macroeconomics. This view lets us see patterns
in the economy, such as unemployment, inflation, and growth.
116 Women and the U.S. Budget
Microeconomics shows us the effect individual buying, saving, and
investment decisions have on the economy .
You may have also seen references to GNP , which stands for gross
national product. GNP is a measure of the goods and services pro-
duced by the residents of a country , regardless of where the assets are
located. It includes income from US investments aboard. Although
GNP is often measured, GDP is the figure usually used internation-
ally to compare the economies of countries. GDP measures only
moneymaking activities. The goods and services that are exchanged
in the market for money are considered productive. It defines what
businesses produce as wealth, and it defines a “good” economy as
one that has a rising GDP .
One important thing to know about the GDP is that it is the “offi-
cial” figure used to compare the productivity of different countries.
In order to compile the GDP figure, each country uses a formula
called the System of National Accounts (SNA), which has been
accepted by most nations and is the international standard used by
the United Nations (UN), the Commission of the European
Communities, the International Monetary Fund, the Organization for
Economic Co-operation and Development, and the World Bank to do
international comparisons.
The SNA reflects a particular value system that has profoundly
affected how we all see the world. The methodology that underlies it
was developed by an assistant to economist John Maynard Keynes
when Keynes was charged with providing the British government
with a detailed analysis of the nation’s wartime economy. So the
framework was created during World War II, when what was con-
sidered most valuable was items produced for use in the war. These
national accounts have therefore institutionalized the value of mili-
tary production and preparation. As we saw in Chapter 3, this influ-
ence is visible in the way government itemizes non-mandatory
expenses, which are divided into “defense” and “nondefense.” When
the SNA was put in place, the United States stopped officially calcu-
lating national wealth and used this more narrow measure of worth
and value.
As Marilyn Waring points out in her book Counting for Nothing,
huge chunks of reality are left out of the national accounts and so, in
effect, “don’t count.” Some of the parts left out include the Earth, the
The Budget and the US Economy 117
environment, unpaid labor (most of which is performed by women),
and all sorts of activities that women (and many men) consider to be
productive. Because these are not included in the official measure,
they are devalued, and the result is a bizarre accounting. The GDP
may be going up, thus indicating growth and an improving economy ,
while forests are being destroyed, high-wage jobs are disappearing,
and government services to communities are being cut back. The
idea that growth itself is good, separated from the context of what is
actually happening in the real world, is absurd.
Although women have different roles and status depending on
age, class, race, and other factors, most women make major contri-
butions to the national wealth — other than as workers and taxpayers
— that go unrecognized or for which they do not receive monetary
compensation. Women’s childbearing, childrearing, care of the family
(which often includes elderly parents in addition to children), house-
hold chores, and volunteer work in the community provide the foun-
dation for economic productivity , but are not valued in the official
statistics. According to the UN Development Program, the value of
women’s unwaged work worldwide is estimated at $11 trillion.
A study by Britain’s Office for National Statistics focused on the
amount of unpaid work that takes place in the British economy.
According to the study , GDP would have been between 44 and 104
percent higher if unpaid work such as babysitting, childcare, and
household maintenance were included. (Although women do not do
all that work, they do most of it.) The study also found that the average
118 Women and the U.S. Budget
PI Pointer
The value of housework in the US is estimated
at $1.4 billion a year. The unpaid and officially
uncounted contributions of women to the
economy are a massive subsidy. When gov-
ernment services are cut back, it is assumed
that women will do more in their communi-
ties and homes to make up for the loss of
public support.
adult spends almost twice as much time each day performing unpaid
work as he or she does doing paid work. Activities the study defined
as unpaid work included gardening, looking after children, volunteer
work, and transportation, such as bringing children to school. Similar
time-use studies are now being done in many countries, thanks to
organizing by women around the globe, and the data they produce
will be included in what are called satellite accounts in the official
national accounts. The US government conducted its first time-use
study in 2003.
Many economists now call this realm of uncounted and uncom-
pensated labor the care economy . Economist Diane Elson describes it
this way:
The care economy produces family and community-
oriented goods and services as part of the process of
caring for people. Work in the care economy is not
paid, though it may be supported by transfer payments
from the government (such as pensions and child ben-
efits). It is regulated by social norms rather than by
commercial or bureaucratic criteria. This economy is
excluded, as a matter of principle, from the UN System
of National Accounts. Both men and women work in
the care economy , but overall it is relatively intensive in
the use of female labour. The care economy contributes
to the welfare of the individuals receiving care, but it
also contributes to the activities of the commodity
economy and the public service economy by supplying
human resources and by maintaining the social frame-
work (supplying what some economists call human
capital and social capital to the commodity economy
and public service economy). [emphasis in original]
Public policy does not take into account what women need in
order to be able to perform these tasks when public support is cut
back or eliminated. If the full breadth of women’s contribution to the
productivity of the economy were counted, we would need a differ-
ent measure than the GDP or SNA to reflect it.
It is important for women to understand that what are called “trans-
fer payments” (in other words, the support for families and elderly
The Budget and the US Economy 119
people provided by social programs like housing assistance, which
are funded by national resources in the budget) are also not included
in the GDP. Within the official framework, “transfer payments” 
for military contractors building weapons systems are productive.
Investments in individuals and families that enable people to live bet-
ter lives and participate more fully in the economy and in their com-
munities are not productive.
If women’s main contributions to the economy and the national
community are invisible in the official economic measures, women
are denied recognition and compensation for their contributions, but
they also lose the chance to have greater visibility , power, and influ-
ence in the larger social/economic arena. The lack of visibility , recog-
nition, and compensation is internalized and, along with other
internalized messages from a male-dominated society , keeps women
silent and without the financial independence that would enable
them to take action on their own behalf and on behalf of their fami-
lies and communities.
One example of how women’s lack of visibility and power denies
them financial independence is the absence of pay equity in the econ-
omy . Equal pay has been enshrined in law since 1963, but today , 38
years later, women are still paid less than men — even when they
have similar education, skills, and experience. Women are paid 75
cents for every dollar men receive That’s $25 less to spend on gro-
ceries, housing, childcare, and other expenses for every $100 worth
of work they do. Over a lifetime of work, the 25 cents on the dollar
that women are losing adds up. Working families in the US lose $200
120 Women and the U.S. Budget
PI Pointer
According to the Coalition of Labor Union
Women, the average 25-year-old working
woman will lose more than $523,000 to
unequal pay during her working life.
billion of income annually to the wage gap. If the pay equity law were
enforced, women in the labor force would be able to support their
families and would move towards financial independence.
Alternatives to the GDP
Many organizations have been working to create alternatives to the
GDP that can be used to measure productivity , development, and value.
One that is now widely used internationally is the Human Development
Index (HDI) of the UN Development Program. The HDI is a sum-
mary composite index that measures a country’s average achieve-
ments in three basic aspects of human development:
❖ Longevity , which is measured by life expectancy at birth
❖ Knowledge, which is measured by a combination of the adult lit-
eracy rate and the combined primary, secondary, and tertiary
gross enrollment ratio
❖ Standard of living, which is measured by GDP per capita.
The United States is first in the world if GDP is used as a measure,
but the HDI looks at how that wealth is used within the country . The
United States ranks 6th in the world on the HDI, and when that
index is adjusted for indicators of poverty (the HDI 2) the United
States is ranked 17th in the world.
On the Gender-related Development Index (GDI), which adjusts
for inequality between men and women, the US ranks 4th. The GDI
is a composite indicator that measures the a country’s average achieve-
ment in the same three areas as the HDI, but it also considers gender
inequalities. The Gender Empowerment Measure (GEM) measures
whether women and men are equally able to participate in economic
and political life. On this scale, the United States ranks 10th.
Another international indicator is the Environmental Sustainability
Index (ESI), which is a measure of overall progress towards envi-
ronmental sustainability in 142 countries. The United States ranks
45th. ESI scores are based on a set of 20 core “indicators.” This per-
mits cross-national comparisons of environmental progress in a sys-
tematic and quantitative fashion. It represents a first step to a more
analytical approach to environmental decision making. The ESI is
the result of collaboration among the World Economic Forum’s
Global Leaders for Tomorrow Environment Task Force, the Yale
The Budget and the US Economy 121
Center for Environmental Law and Policy, and the Columbia
University Center for International Earth Science Information Network.
The Total Economy
Another way to get a perspective on what we are taught about the
economy is to put it in a larger context. The “official” economy (as
measured by the GDP) is only one part of a full picture of productive
activity and resources in our society .
The GDP includes the production of goods and services that 
are sold in order to make money . As pointed out in this chapter, the
following items are some of the things left out of this official eco-
nomic measure:
❖ The resources of the Earth
❖ Unpaid labor (mostly supplied by women)
❖ Volunteer and community work
❖ The informal cash economy .
Figure 6.1 shows the multifaceted nature of the full economic pic-
ture. It starts from the bottom (#1) and goes up.
The earth and ecosystem are the foundation for all the economy’s
productivity . They provide the resources on which everything else rests.
The next level of the foundation is labor, paid and unpaid. This
includes all the home, family , and community work that is performed
mostly by women, the whole care economy .
The “official” economy (on which the GDP is based) is made up
of the two top levels, the public and private sector and the formal
cash economy . The private sector is considered the most valuable part
of the official economy , and the other levels serve it.
In an alternative framework, one that respected and valued all
productive resources and activities, all levels would be valued, and
the private sector would be grounded in the others.
122 Women and the U.S. Budget
The Budget and the US Economy 123
The Total Economy
figure 6.1
125
Chapter 7
❖
The Budget and
the Global Economy
T
HE US BUDGET IS SO VAST, and the economic, military , and politi-
cal position of the United States in the world is so central, that
the US national budget actually affects everyone in the world. Some
of these effects are direct and funded through expenses in the budget
— for example, military interventions or foreign aid programs — and
some are written into the tax code, such as tax breaks for US corpo-
rate operations that encourage exploitative labor practices in other
countries. Although the budget is a tool that creates, funds, and
maintains programs and policies that have a profound effect on oth-
ers in the world, most Americans are unaware that these things are
included in the budget or funded by tax money .
In this chapter we will examine some of the components of the
budget that affect the global economy . Then we’ll take a look at some
of the efforts in countries around the world to create national budgets
responsive to issues surrounding gender, poverty , and the environment.
Financial Institutions
In order to understand the interaction between the US budget and
the global economy , we need to travel back to 1944, near the end of
World War II. In July of that year, representatives of 44 industrialized
countries gathered at Bretton Woods, a resort in New Hampshire, to
create structures for managing the world economy in the aftermath
of the war’s destruction. The participants at this Bretton Woods Confer-
ence set up an international monetary system, adopting the US dollar
as the world’s currency for two reasons: most countries defined their
own currencies in terms of the dollar; and the United States held most
of the world’s gold supply , which was used as the exchange commod-
ity . The participants at the conference also created two institutions: the
International Monetary Fund (IMF) and the International Bank for
Reconstruction and Development, now known as the World Bank.
The IMF was set up to promote international monetary coopera-
tion and facilitate the growth of international trade. The fund’s
resources were to be made available to all countries. The World Bank
was designed to facilitate investment in countries and to provide
loans to members for development projects. Originally most of the
World Bank’s loans went to the European countries rebuilding after
the war. Since the 1960s, however, most of the bank’s loans have
gone to developing countries in Africa, Asia, and Latin America. The
World Bank and the IMF have emerged as central institutions in the
global economy , and, along with the World T rade Organization (WTO),
they dominate economic relations between the North and the South.
The programs and policies of these institutions have been harm-
ful to many people in the world. When they were created, their man-
date was to help prevent future conflicts by lending money for
reconstruction and development and by smoothing out temporary
problems in the balance of payments. (“Balance of payments” refers
to the relationship between the amount of money a nation spends
abroad and the income it receives from other nations.) At that time
they had no control over individual governments’ economic decisions
and they did not have a license to intervene in national policy .
However, over the last 20 years the IMF and World Bank have
joined forces with international “global free market” financiers to
take more and more of the power over financial decisions such as
budgets, currency, interest rates, and trade policies away from the
people affected and away from national governments.
Although the World Bank in particular was formed to help poor
nations develop, there is now a wider gap between the wealthy and
the poor throughout the world than when these institutions were set
up. In addition, instead of resources flowing from the wealthy coun-
tries to the poorer countries, there is actually a net transfer of
resources from the poorer countries to the industrialized countries.
According to UN secretary general Kofi Annan, “many poor countries
126 Women and the U.S. Budget
are so indebted that the net transfer of resources, in the form of inter-
est and repayment, leads to a net outflow into industrialized coun-
tries instead of the other way around.”
1 
Many countries, especially in
Africa, continue to sink deeper and deeper into debt to individual coun-
tries, private banks, and the World Bank.
According to Soren Ambrose of the 50 Years is Enough network,
an international coalition of organizations formed on the 50th anniver-
sary of the founding of the World Bank and IMF , “in most of a group
of 83 poor countries that have received substantial IMF financing
between 1978 and 1997, unemployment increased, real wages fell,
income distribution became more unequal, poverty rose, food pro-
duction per capita declined, external debt grew , and social expendi-
tures were cut during those years.” IMF and World Bank programs have
also devastated healthcare systems in Africa, making people there more
susceptible to the spread of HIV/AIDS.
Structural adjustment programs (SAPs) are conditions the IMF
sets that developing countries must agree to if they want access to
loans from industrialized countries and international trade institutions.
These conditions include devaluing currency , reducing wages, priva-
tizing state-owned industries, cutting social service employment, and
cutting social spending. In addition, the developing countries’ econ-
omies must be opened to foreign investment and must emphasize
exports so that foreign currency can be used for servicing the debt.
Countries are often caught in a catch-22. If they agree to the IMF
conditions, their internal economies are weakened, but if they reject
the conditions they remain impoverished, without access to financing.
The Budget and the Global Economy 127
PI Pointer
The Philippines pays out $28 in debt service
for every $1 received in aid grants. That makes
it hard for the government to invest in health
and education.
The economic standing of women in developing countries has
worsened under SAPs, partly because women still make up 70 per-
cent of the world’s poor. When scarce resources are diverted from
education and healthcare to pay for the debt, it means women and
girls have fewer educational opportunities, their health is threatened,
and women face an increased burden as caregivers in the home and
providers of formal or informal education. According to Peggy Antrobus
of Development Alternatives with Women for a New Era (DAWN),
“Underlying these policies (SAPs) is a set of assumptions about
women’s work: that women are housewives, do not work and there-
fore, that women can fill the gap created by cuts in social services ...
The governments must not spend money on health, education, and
human infrastructure, this must be left to the private sector or the
household, meaning to women. The foundation is that women’s time
and labour can be exploited.”
2
In Zambia, for example, SAPs have meant that less money is spent
on education. Since families currently pay most primary school costs,
and since women are responsible for school fees, this means the bur-
den of paying falls on them. On the African continent, where women
produce three quarters of the food, SAP policies promoting exports
forced women to devote their land and unpaid labor to export crop
production. This shift has increased hunger and decreased per capita
food production in the country . The SAPs and high debt levels have
also had a serious impact on children. Prenatal care and health funds
are often the first things cut from public budgets.
The World Bank and IMF policies are harmful to people around
the world, but they also harm people in the United States. By enforc-
128 Women and the U.S. Budget
UNHAPPY BIRTHDAY
On April 21, 2004, in a park across from the World Bank headquarters in Washington,
DC, activists, students, and people of faith concerned about the impact of interna-
tional debt on impoverished nations threw an “unhappy 60th birthday” party for the
IMF and World Bank. They delivered to a representative of the World Bank the first
shipment of more than 10,000 “unhappy birthday” cards signed and sent by citizens
from 23 countries and more than 40 US states. The cards called on the institutions to
cancel all debts of impoverished nations without imposing harmful conditions.
ing draconian policies on countries so they can pay off their debts,
the IMF helps to keep wages down in many countries. This in turn
encourages corporations to move operations to those countries to use
the cheaper labor, contributing to downward pressure on US wages.
Lower wages in other countries, produced by IMF policies, reduce
foreign demand for US-made goods, thereby endangering jobs and
factories in the US
What is the connection between the institutions set up at Bretton
Woods and the US national budget? Both the IMF and the World
Bank are located in Washington, DC. Their budgets are structured so
that US taxpayers pay a large portion of their expenses and loans.
This means that US taxpayers are subsidizing the activities of these
institutions, without fully understanding their missions or the impact
they are having on others and on our own economy. The United
States, because its financial contribution is the largest, carries the
most weight in decisions of the institutions.
Globalization
Trade policies which the US took a lead in promoting also exemplify
the harmful effects around the world. Following World War II, Western
industrialized countries established international organizations to
promote trade that would benefit the West. In 1947, 23 countries
signed the General Agreement on Tariffs and Trade (GATT). GATT
removed barriers to free trade, which sounds good but has resulted
in a worsening position for smaller countries in the global economy .
In 1994, GATT member nations signed an agreement to establish the
World Trade Organization (WTO), which took over the activities of
GATT. The WTO focuses on corporate-managed trade, economic effi-
ciency , and short-term corporate profits. It gives the private sector a
lot of control over economic policy , while social and environmental
costs are borne by the public.
One problem with the WTO is that the rules it establishes for
trade between nations supersede the laws of individual countries.
The US Constitution grants Congress exclusive authority to set US
trade policy , but the WTO overrides that power, which means that
our elected representatives, and therefore the people, cannot make
decisions on matters that affect our economy. According to Public
The Budget and the Global Economy 129
Citizen, WTO dispute settlement panels have ruled that US policies
ranging from tax laws to antidumping measures and regulations to
protect everything from clean air to sea turtles are illegal, and the US
government has changed domestic policies to conform to many of
these rulings. Certainly there are international standards and agree-
ments that should supersede US laws (see the sidebar on CEDAW
later in this chapter for information on some of the United Nations
conventions, for instance) but it is always important to look at whose
interests the overriding laws are supporting.
The North American Free T rade Agreement (NAFTA) was the next
phase of trade agreements, negotiated in 1994 between the United
States, Mexico, and Canada. Its purpose is to integrate the three coun-
tries’ respective economies by lowering, and eventually removing, tariff
barriers. According to the Economic Policy Institute, there has been a
net loss of 766,000 jobs in the United States that can be directly attri-
buted to the NAFTA.
There is a growing realization in this country that free trade poli-
cies are hurting US workers. Paul A. Samuelson, a Nobel Prize-win-
ning economist and professor emeritus at the Massachusetts Institute
of Technology , has questioned whether the global trade regime will
end up helping the US economy , as free trade advocates claim. The
loss of US jobs to call centers and computer programmers in China
and India in particular — known as “outsourcing” — is the latest
example of “job flights” (manufacturing and professional jobs leav-
ing the country) that have forced US workers to take wage cuts.
Using real-world terms, Samuelson explained in an interview that
“being able to purchase groceries 20 percent cheaper at Wal-Mart
does not necessarily make up for the wage losses.”
3
The workers
who are getting the jobs may be no better off if they are forced 
to work long hours for very low wages, or if they are employed in
unsafe workplaces.
The evolution of global financial institutions and current global
trade trends are all part of what has come to be known as globaliza-
tion. Economic globalization is characterized by more freedom of
trade and corporations’ use of financial and legislative means to cir-
cumvent local and national laws and standards. The current era of
globalization was promoted by a school of economic thought known
as neo-liberalism.
130 Women and the U.S. Budget
In her “Short History of Neo-Liberalism,” political economist
Susan George describes how the neo-liberals expanded from a tiny
group, which formed at the University of Chicago around philosopher-
economist Friedrich von Hayek and students like Milton Friedman,
to a huge international network of foundations, institutes, research
centers, publications, scholars, writers, and public relations compa-
nies that developed, packaged, and pushed their ideas. The “impli-
cation of competition as the central value of neo-liberalism is that the
public sector must be brutally downsized because it does not and
cannot obey the basic law of competing for profits or for market
share,” George writes. “Privatisation is one of the major economic
transformations of the past twenty years. The trend began in Britain
and has spread throughout the world.”
The Budget and the Global Economy 131
JUBILEE 2000
The historic National Forum on Poverty Reduction took place in April 2000 in La Paz,
Bolivia. It was the culmination of a nationwide dialogue that involved ordinary
Bolivians in decisions on how to spend money released through debt cancellation.
There were regional consultations throughout the country, and the people who
attended them chose delegates to take their conclusions to the national forum.
Irene Tokarski, co-coordinator of the Bolivian Jubilee 2000 Campaign, said that
it was “the biggest event of this kind that has ever taken place in Bolivia. In total, an
amazing 4,000 participants and over 800 organizations participated ... The Bolivian
Government must respond to this and take our collective voice into account.”
4
The
declaration issued at the end of the forum called for civil society to participate in
drawing up and monitoring the country’s debt-reduction strategy.
The Bolivian Jubilee 2000 Campaign is part of a worldwide campaign, Jubilee
2000, calling for cancellation of the debt of developing countries. Jubilee 2000
draws its inspiration from the book of Leviticus in the Hebrew Scriptures. According
to Leviticus, every 50th year is a Year of Jubilee in which social inequities are recti-
fied, slaves are freed, land is returned to original owners, and debts are cancelled.
The Jubilee 2000 campaign is based on the premise that many of the debts of
impoverished countries are unpayable and drain resources from healthcare, edu-
cation and other socially beneficial programs. Since 1996, impelled in part by the
massive Jubilee campaign, the World Bank and International Monetary Fund have
been pursuing a new poverty-reduction strategy to reduce the debt of the world’s
poorest countries (the Heavily Indebted Poor Countries or HIPCs).
Neo-liberalism also advocates moving money up the economic
ladder, which has led to stock market bubbles, untold paper wealth
for the few , and financial crises. We see the most recent US manifes-
tation of this trend in the large tax breaks George W . Bush has given
the wealthy .
Foreign Aid
One of the ways the US participates in the global economy is through
foreign aid programs. The US national budget includes expenditures
for foreign aid, which are among the discretionary expenses (see
Chapter 2). This foreign aid goes to other countries and is in the
form of money , food, economic aid, development assistance, military
aid, and loans. The United States gives around $15 billion in foreign
aid each year, or less than one percent of the budget.
Foreign aid became a regular part of the national budget following
World War II. Since then it has been designed to meet political objec-
tives of the US government and is not primarily based on the needs
of most people in countries receiving the aid. In addition, the amount
of US aid is small given the size of the country’s budget and economy .
US foreign aid expenditures are a combination of military assis-
tance and social and economic assistance. The criteria the govern-
ment considers when it decides to send military aid are whether the
country in question is friendly to the US government and to American
business and corporate interests. The two countries that receive the
most military and economic aid are Israel and Egypt, which are both
132 Women and the U.S. Budget
PI Pointer
If income is redistributed towards the bottom
80 percent of society, it will be used for consump-
tion and consequently benefit employment. If
wealth is redistributed towards the top, where
people already have most of the things they
need, it will not go into the local or national
economy, but to international stock markets.
viewed as central to US strategic interests in the volatile Middle East.
Much of US military aid money is used by the recipient country to
buy US-made weapons or to set up its own weapon production.
US military aid contributes to a diversion of resources the country
could be spending on education, housing, and healthcare, which has
a direct negative impact on quality of life for women and their fami-
lies. High levels of military aid also increase the likelihood of war,
violence, and disruption of communities. A study by the Latin
America Working Group Education Fund found that total US mili-
tary aid to Latin America now almost equals the amount of money
devoted to social or economic development there.
5
In 1961 Congress passed the Foreign Assistance Act, creating the
Agency for International Development (AID) to coordinate develop-
ment aid, humanitarian assistance, food aid, and business-promotion
programs. Although it sounded like a good thing, AID programs
tended to create problems rather than addressing poverty or under-
development in other countries. Aid went to regimes in Asia and
Latin America that oppressed, or even tortured, their own citizens.
Food aid often caused a country to become dependent on US goods
instead of supporting local agriculture. Support that benefited US
businesses often undermined local organizations trying to organize
for better working conditions and grass-roots programs.
In the 1980s, foreign aid was used to subsidize private sector
development in other countries. To ensure that business interests
were supported, US aid was often linked to structural adjustment
programs of the World Bank and IMF . This meant that many countries
The Budget and the Global Economy 133
PI Pointer
In total funding, US foreign aid contributions
rank fourth behind Japan, Germany, and France.
As a percentage of gross national income,
though, the US contribution ranks dead last
among the 22 wealthiest nations, behind 
such countries as Portugal, New Zealand, 
and Ireland.
could not receive aid unless they made changes in their economy and
budget that hurt the majority of the people.
In addition to the aid that goes from the United States to other
countries (known as bilateral aid), there is also aid given in conjunc-
tion with other countries (multilateral aid), often through the United
Nations. The UN, including all its agencies and funds, spends about
$10 billion each year, or about $1.70 for each of the world’s inhabi-
tants. This is a very small sum compared to most government bud-
gets, and it is a tiny fraction of the world’s military spending. In
recent years the UN has faced a financial crisis and has been forced
to cut back on important programs in all areas. Many member states
have not paid their full dues and have reduced their donations to the
UN’s voluntary funds. As of 2004, the United States alone owed $557
million — 53 percent of the UN’s regular budget — even though a
majority of Americans favor the US paying its UN dues in full. The
United States has also failed to pay what it promised to support par-
ticular UN programs and now owes close to $1.5 billion for all inter-
national organizations, including the regular UN budget, UN
peacekeeping, and several specialized UN agencies.
One UN agency that is of particular importance to women around
the world, especially the poorest women, is the Population Fund
(UNFPA), which provides family planning and reproductive health
134 Women and the U.S. Budget
THE CURRENCY TRANSACTION TAX
In the late 1980s, James Tobin, a Nobel laureate economist, proposed putting a sales
tax on currency trades across national borders. Since then, activists and economists
have taken up this concept and are campaigning for this tax to be enacted. The pro-
posal would redirect a tiny portion of the $1.8 trillion a day that is traded in the
volatile international currency market. Money from the tax would go to projects that
address disease, poverty, hunger, debt, and environmental crises. If the tax took in
20 cents on the dollar, it would yield $150 billion annually.
The trade in currency is dominated by exchange rate speculations, which are
short- and long-term profit-seeking transactions. Money managers buy and sell mas-
sive amounts of currency around the globe every day to seek profit from small fluc-
tuations in value. This kind of speculation plays havoc with national budgets,
economic planning, and allocation of resources. It can contribute to shockingly quick
services. The UNFPA works to prevent 500,000 unwanted pregnan-
cies and 200,000 abortions annually. The United States has con-
tributed unevenly or not at all in recent years because conservatives
in Congress claim the program supports abortion.
Gender Budgets Around the World
Women have responded to the globalization of the world economy
by developing national budgets responsive to gender, poverty , and
environmental issues. This movement gathered steam in September
1995 when 32,000 women from all over the world gathered in Beijing
and Hairou, China, for the United Nations Non-Governmental Organi-
zation (NGO) Forum, which was held in conjunction with the Fourth
World Conference on Women (the official UN governmental confer-
ence). The Forum was truly a “village of women,” filled with the
sights, sounds, energy , heartbreaking stories, and inspirational expe-
riences of women from all parts of the globe. This was the largest UN
gathering ever, and certainly the largest gathering of women in history .
I led a workshop at the NGO Forum on “Women’s Budgets.”
Women came from many countries, including Denmark, Georgia, 
the United States, New Zealand, France, Canada, and Japan, to
attend. One of the participants in the workshop — Keti Dolidze, a
The Budget and the Global Economy 135
currency devaluations for developing countries (such as happened to Mexico in
1994) and the increases in poverty and unemployment that result.
Many nongovernmental organizations, including the World Council of Churches,
the AFL-CIO, and War on Want in Britain, are calling on national governments to
enact a unilateral tax and then push for cooperation with other countries to produce
a global tax. The Canadian government has voted in favor of the tax, 100 Brazilian
parliamentarians have initiated a campaign to get parliamentarians around the
world to support it, and the European parliament is considering it. The prime min-
ister of Malaysia has said that “currency trading is unnecessary, unproductive, and
totally immoral. It should be stopped. It should be made illegal.”
6
In July 2004, Belgium became the first country to enact legislation for a currency
transaction tax.
Georgian actress, filmmaker, and aide to Georgian president Eduard
Shevardnadze — revealed that it was difficult to think about what
kind of budget her government should have, since they had virtually
no income at the time. Many countries’ budgets may be in crisis, or
tax and expense figures may be unavailable to the public, but times
of crisis or political change often provide an opening for new under-
standing of the budget challenges, and they may give women a
chance to take a bigger role in determining priorities.
The increasing power of multinational corporations and their
impact on women was a theme running through the conference. Of
particular concern was the concentration of women in low-paying
jobs with unsafe conditions, especially in the sweatshops and home
work of the garment industry . Workers, primarily women, in the 130
poorest countries endure exploitative labor practices to provide
goods for people in the 30 richest countries. In spite of these realities,
there was tremendous excitement at the forum about women gaining
“economic literacy” and working for a change in economic and bud-
get policies at the national level. We also recognized the need to build
our political and organizing capacity so that women could start set-
ting the agenda for all aspects of national budgets. Several women
pointed out that, at Beijing, many women from the United States got
a real education about how important their country and the US bud-
get are in the lives of women all over the world.
At the end of the conference, delegates from 189 countries unan-
imously adopted the Beijing Declaration and a Platform for Action to
improve the status of women worldwide. Although these documents
are not binding, they indicate an international consensus on key
issues affecting women. The countries that signed agreed to implement
recommendations on a range of issues as they concerned women, from
poverty , health and education to armed conflict, the media, and the
environment. You can read the full text of the Beijing Declaration and
the Platform for Action on the UN website <www.un.org/women-
watch/daw/beijing/platform/index.html>.
The platform includes the following strategic objectives for national
governments related to women and budgets:
1. Restructure and target the allocation of public expenditures to
promote women’s economic opportunities and equal access to
136 Women and the U.S. Budget
productive resources and to address the basic social education
and health needs of women.
2. Facilitate more open and transparent budget processes.
3. Review , adopt, and maintain macroeconomic policies and devel-
opment strategies that address the needs and efforts of women in
poverty .
In addition, the document states that
the primary responsibility for implementing the strategic
objectives of the Platform for Action rests with Govern-
ments. T o achieve these objectives, Governments should
make efforts to systematically review how women bene-
fit from public sector expenditures; adjust budgets to
ensure equality of access to public sector expenditures,
both for enhancing productive capacity and for meeting
social needs; and achieve the gender-related commit-
ments made in other United Nations summits and
conferences. T o develop successful national implemen-
tation strategies for the Platform for Action, Govern-
ments should allocate sufficient resources, including
resources for undertaking gender-impact analysis.
Governments should also encourage non-governmen-
tal organizations and private sector and other institu-
tions to mobilize additional resources.
These strategic objectives, combined with increasing gender- and
class-based critiques of economic and development policy among
NGOs, have encouraged women to focus on and organize around
budget processes and content in many countries. The United Nations
Development Program and UNIFEM, the United Nations women’s
fund, have worked to coordinate a wide range of gender-sensitive,
pro-poor, pro-environment budget initiatives. They have held con-
ferences for budget practitioners from around the world. Participants
at the conferences were from academia, civil society organizations,
UN agencies, and governments, illustrating the broad range of
involvement and strategies now being brought to budget work.
In addition, in a major international campaign, UNIFEM, the
Commonwealth Secretariat (the primary coordinating agency of the
54 member governments of the Commonwealth), and the Interna-
The Budget and the Global Economy 137
tional Development Research Center (IDRC) in Canada are cospon-
soring a campaign to get all countries to incorporate gender analy-
sis into their national budget processes by 2015. Noeleen Heyzer,
executive director of UNIFEM, has said that “ignoring the gender
impact of the budget is not neutrality . It is blindness. And blindness
has a high human and economic cost: lower productivity; lower
development of people’s capacity and lower levels of well being.”
7
According to UNIFEM, gender-responsive budgets promote:
❖ Equality: Gender equality becomes a goal and an indicator of eco-
nomic governance. Governments and NGOs can use CEDAW
(see sidebar) and other human rights instruments to see if the
rights of women are being promoted in public budgeting.
❖ Accountability: Countries are held to the commitments they made
in international agreements because the budget makes national
priorities and the effects of decisions clear.
❖ Efficiency: Gender inequality is bad economic and social policy ,
slowing development and productivity for the country as a whole.
❖ Transparency: More open, participatory , and responsive budgets
engage more people in crucial economic and budget decisions. 
138 Women and the U.S. Budget
CEDAW
The Convention on the Elimination of All Forms of Discrimination Against Women
(CEDAW) is the most comprehensive and detailed international treaty to date that
addresses the rights of women. It was adopted by the UN General Assembly in 1979
and entered into force in 1981, bringing to a climax UN efforts to codify interna-
tional legal standards for women.
President Jimmy Carter signed this human rights treaty in 1980, and it was sent
to the US Senate Foreign Relations Committee for ratification. Despite tremendous
pressure from many organizations and prominent individuals in the United States
since then — including Hillary Rodham Clinton and President Bill Clinton when they
were in the White House — ratification is still pending. The United States made 
ratification of CEDAW by the year 2000 one of its public commitments at the UN
Fourth World Conference on Women but was unable to achieve that. As of 2004,
177 countries — over 90 percent of the members of the United Nations — are party
to the Convention.
Women have been often left out of these decisions, so opening
up the budget processes and decisions is crucial for encouraging
full civic participation.
The South African Women’s Budget Initiative (WBI) has been one
of the most inspiring women’s budget efforts, involving both NGOs
and parliamentarians since 1995. Each year they do a gender analy-
sis of the budget from both inside and outside the government. The
budget studies contain analyses of taxation, public sector employment,
and the budget process and have contributed to gender-sensitive eco-
nomic theory. The WBI has also developed case studies from local
budgets and produced grass-roots budget literacy materials.
Debbie Budlender, who has worked with the WBI, emphasizes
that “even parliamentarians have limited say in budget matters. The
WBI has strengthened gender advocacy in the country . But the advo-
cacy has been strong because it has been based firmly on the under-
standing that budgets do not stand alone — that while no policy can
be effective without an adequate budget, similarly budgetary battles
can only be won if they are waged on the basis of the policies and
principles underlying them.”
The Budget and the Global Economy 139
By accepting the Convention, states commit to end discrimination against
women in all forms, by implementing a series of measures, including the following:
� Incorporate the principle of equality of men and women in the legal system,
abolish all discriminatory laws, and adopt laws prohibiting discrimination against
women
� Establish tribunals and other public institutions to ensure women are effectively
protected from discrimination
� Work to end all acts of discrimination against women by persons, organizations,
or enterprises
The Convention provides the basis for realizing equality between women and
men by ensuring women’s equal access to, and equal opportunities in, political and
public life — including the right to vote and to stand for election — as well as edu-
cation, health, and employment. States that are party to the Convention agree to
take all appropriate measures, including legislation and temporary special measures,
so that women can enjoy all their human rights and fundamental freedoms.
This reminds us how important it is for women to get involved in
reinventing economics so that it reflects the reality of women’s lives
and contributes to equity for everyone. We also should not forget that
countries are forming their budgets in the context of larger macroe-
conomic policies, so efforts to change budgets benefit from being
connected to the fight to change global economic policies.
The first women’s budgets were produced in Australia in the mid-
1980s. They were the inspiration for several of the current initiatives.
Gender-responsive budgeting is happening all over the world now ,
including in Sri Lanka, Bangladesh, Russia, Brazil, Mexico, Peru, Chile,
and India.
140 Women and the U.S. Budget
141
Part 3
❖
Creating the Future
W
E ARE NOW ON THE THIRD PART OF OUR JOURNEY into the land of
the national budget. As public investigators, we have shed
light on some mysteries about the budget. As we learned in Part One,
the national budget represents the receipt and allocation of abundant
resources that belong to the people of the United States. In Part T wo
we learned that the national budget is embedded in and affects a wide
range of national and international economic patterns and policies.
In Part Three we will do two things: look at the values, guiding prin-
ciples, and frameworks that could be used to create a new , gender-
responsive budget for the United States; and learn about actions we
can take and resources we can use to address budget and economic
issues. This section of the book is called “Creating the Future”
because the future is open and subject to our influence.
143
Chapter 8
❖
A New Budget
for the United States
Law is always someone’s desire — it is always the
desire of the powerful: let’s demonstrate this desire,
let’s make our desire become law too!
— Augusto Boal, Legislative Theater
E
VERY CHILD GOES TO BED SAFE, HEALTHY, AND WELL-NOURISHED.
Everyone learns preventive healthcare, and various methods of
treating injury and disease are available to all. Births take place in a
warm, gently lighted, peaceful, drug-free environment. Every teenager
and adult contributes his or her unique talents to the community,
takes part in the educational resources of the community as desired,
and has access to paid employment that meets financial needs. Support
services for families, such as childcare, paid family leave, and after-
school programs, are all available. The elderly are respected for their
wisdom and cared for with grace and love. Every family , no matter
what its configuration, has a properly heated and cooled home 
with plenty of room for its members. Food is plentiful, healthy , and
everyone has enough. Political participation skills are taught and
practiced everywhere, and anyone can afford to run for public office.
There is a participatory process for determining how community
and national resources will be used. People from other countries
come freely to visit, and they welcome us warmly to their countries.
We are partners with every other country in the world to make sure
that all people have their needs met, safety is provided for all
144 Women and the U.S. Budget
DREAMSTORM: CREATING THE VISION
Seventeen women sit in a circle in a room at Boston City Hall. The women in the
room are students, activists, staff members of organizations.
1
It is a hot day in July
1997. We build our energy together and begin to imagine what our national bud-
get and national economic policies could be if they met our deep needs. We call out
the visions that come up for us as we allow ourselves to enter the Dreamstorm, a
combination of brainstorming and dreaming about future possibilities.
� Publicly funded elections
� Moratorium on prisons
� Tax deductions for using sustainable
transportation
� Natural resources reflected as assets
in budget accounting
� Reduction in funding to the Inter-
national Monetary Fund (IMF) and
the World Bank
� Guaranteed livable wage
� Democratically selected council of
national economic advisors
� Guaranteed housing for all
� Paid maternity and family leave
� Programs to build self-esteem for
and empower young people
� National healthcare system so
everyone is covered
� Recognition in tax and accounting
structures of the wealth built on
unwaged work
� Foreign aid that addresses the true
community-based needs of people
in other countries
� Special tax on arms manufacturer
and exporters to pay for social pro-
grams
� Restructuring of public education
system in inner cities
� Debt relief for countries in Africa,
Asia, and Latin America
When the group took another step and prioritized these budget/economic poli-
cies, the top issues were those related to guaranteeing adequate income; provid-
ing better public education, healthcare and wellness; progressive tax structures; and
paid maternity and family leave.
We also did a Dreamstorm for the state budget of Massachusetts and related
economic policies. Some of the following visions came up:
� No more tax breaks for Raytheon
and Fidelity
� Restore the capital gains tax
� Divest state funds from banks that
invest in armaments
� Provide adequate state subsidies 
for housing
A New Budget for the United States 145
There were many more ideas that came up during our Dreamstorm, but this
gives you an idea of the breadth of concerns and passions. One woman liked that
this was “gut-informed” not “head-informed.” We all know in our gut what is 
most important to us, and if we don’t get too much into thinking about it, we know
at a deep level what would reflect that nationally. What comes out in a Dreamstorm
also reflects how our values might appear in policy. We felt the power of being in a
place of possibility, thinking about what we wanted rather than what we didn’t
want. The power that will create a new budget comes from dwelling in that place of
compelling vision that brings together the perspectives and experiences of a 
variety of women.
One student at a Dreamstorm at Smith College told the story of her father, who
died because of inadequate healthcare when he needed it. To her, national health-
care was something that her heart, trained by her experience, demanded. Millions
of people in the United States have experienced this lack of good healthcare and
share in her desire to throw out a net so that no more people have to suffer from a
lack of healthcare in a land of plenty.
The concept of the Dreamstorm was created by another group of women rep-
resenting a wide variety of organizations who gathered in October 1996.
2 
They met at
the Jane Addams House, a woman-owned building that is the national headquarters of
the US section of the Women’s International League for Peace and Freedom (WILPF).
That meeting continued for three days, taking us deep into the implications of
changing the budget and economic policies. We dreamed specific things we wanted
in the national budget and in national economic policies, similar to those brought
forward at the Boston meeting. As we were brainstorming, someone pointed out
that we were brainstorming and dreaming at the same time. Thus was born the
Dreamstorm.
The Dreamstorm taps into life knowledge and passion, and creates a powerful
vision that is the first step to having an impact on the future direction of the United
States. Several Dreamstorms conducted by the Women’s Budget Project helped
develop the values, guiding principles, and structure for the new budget that are
contained in this chapter.
� Provide free higher education
� Allocate more money for mass 
transit
� Cancel the real estate tax exemp-
tion for private universities and 
hospitals
through international cooperation, and the ecosystem and other species
are protected.
As PIs, we have looked into the mysteries of the current national
budget and learned that we have the resources to make this vision 
for our country a reality . As we consider the content of a new budget
for the United States that will meet the needs of all people, the cen-
tral question is: How do we want to gather and use our common
resources as a nation, both for ourselves and as part of a global com-
munity and web of life? We have learned that the national budget does
not exist in a vacuum; it is a powerful part of the national and global
economy and a reflection of values and priorities. Rethinking the
budget can be one tool to move the country in a different direction.
Values, Guiding Principles, and Structure
First we need to decide what values, guiding principles, and budget
structure would meet the needs of women and all people in the
United States. The suggested values, guiding principles, and structure
I describe here were developed by women who participated in work-
shops and consultations organized by the Women’s Budget Project in
the 1990s. Women at these sessions used a “Dreamstorm” process to
tap into their visions and values (see sidebar below).
Values Underlying the New Budget
❖ Interdependence: All life is sacred and all people contribute to,
receive from, and are fully interdependent with the human com-
munity and the Earth’s resources.
❖ Abundance: There is an abundance of financial resources, human
creativity , and cooperative energy available for meeting all chal-
lenges.
❖ Democracy: True participatory democracy in which the people,
not corporations, are in charge is essential for setting national
priorities and social and economic policies.
Guiding Principles for the New Budget
The following principles will guide the creation of a budget that
meets the needs of all people. Realizing this vision may require 
146 Women and the U.S. Budget
economic policies rather than a direct infusion of funds, but it indicates
what reality should look like after the new budget is implemented.
❖ Commitment to meet the basic human needs of all people for
food, housing, healthcare, education, protection from violence,
jobs at good wages, and adequate social safety nets for those who
can’t work.
❖ Equitable distribution of the nation’s resources, income, and
wealth.
❖ Financial self-sufficiency for women and people of color, as well
as the full development of young people.
❖ Peace-directed foreign policy , with an emphasis on working within
multilateral institutions such as United Nations bodies and agen-
cies, and the International Criminal Court.
❖ Public life and discourse that are democratic, welcome diversity ,
and dismantle discrimination based on race, ethnicity, gender,
age, class, ability , and sexual orientation.
❖ Support of the variety of economic, cultural, spiritual, and artis-
tic expression of communities.
❖ Harmony with ecological processes and sustainability of natural
resources.
These principles create a framework in which we can think about
and produce a new national budget and economic policies. They will
also help guide us through a transition from the old budget to the
new one. For example, in the old budget paradigm, the concept of
scarcity is an overriding feature. If we believe that scarcity is real, the
possibilities shrink and we can come to believe that not much change
is possible. A belief in abundance, however, opens the door to many
different outcomes: anything is possible.
According to Webster’s Dictionary, the Latin word “unda,” which
means “wave,” is the root of the word “abundance.” The preposition
“ab” in Latin means, among other possibilities, “on” or “as a result
of.” Waves are ever-renewing and ever-forming, whether they are
ocean waves or waves of electrical vibrations or human energy. 
This echoes the metaphor of the river we used to think about
income and expenses in Chapters 2 and 3. What streams do you
want to feed into our mighty river of national resources? In which
A New Budget for the United States 147
directions and for what purposes do you want the resources to flow
back out?
Figure 8.1 compares the paradigms of the old budget and the new
budget.
Structure for the New Budget
These values, principles, and new paradigm demand a new vision
and structure for the budget itself in order to make it transparent and
understandable, and to create a context for incorporating the values
and guiding principles. The Women’s Budget Project also developed
the structure suggested in Figure 8.2. This structure makes explicit
the larger context for creating national budgets that are equitable and
meet the needs of all the people in the United States.
We are obviously far from having this structure for the budget
right now, but it provides a vision of where we want to get to and
will help us create strategies for moving in this direction. This is not
an attempt to put together an annual national budget, with line-
by-line taxation and expenses, but rather an alternative method of
budget presentation that changes the way the budget is formulated,
developed, presented, and evaluated. Annual budgets with line-by-
line program funding can then be prepared within the context of
this structure.
148 Women and the U.S. Budget
Old Budget vs. New Budget Contributions
The old budget contributes to: The new budget contributes to:
Survival of isolated individuals and Individuals and communities thriving and 
communities interdependent
Scarcity of community resources Abundance of community resources
(economic and non-economic) (economic and non-economic)
Corporate subsidies from public resources Public resources invested in community needs
Women’s financial dependence Women’s financial self-sufficiency
Ecological destruction Ecological sustainability
Inequitable distribution of resources Equitable distribution of resources
Militarism/war/violence Human rights, demilitarization, peaceful 
resolution of conflict
Racism/patriarchy/class system Inclusion/democracy/justice
figure 8.1
A New Budget for the United States 149
Examples:
� Progressive income tax
� Tax on corporate profits
� Payroll tax for social security
� Tax breaks for low-income working
parents
� Other taxes/tax breaks
� Include value of unpaid home and
community economic contribution
� Include underlying value of
earth/ecosystem 
Examples:
� Housing
� Community health care
� Education, including Head Start
� Nutrition, including Women, Infants
and Children (WIC) program
� Child care
� Employment and training
� Community development
� Transportation
� Clean water
� Clean air
� Sustainable energy
� Regional/state and local support
� Gender specific initiatives such as vio-
lence against women programs
� Paid family leave
� Public safety and security
� Military spending
� Disarmament initiatives
� United Nations and other interna-
tional program contributions
� Foreign Aid
� Peacemaking training
� Public financing of elections
� Popular education in democracy skills
� National government administrative
expenses 
Examples:
� National health insurance (all people
covered)
� Social security
� Reparations for slavery and for Native
Americans
� Education infrastructure
� Public transportation infrastructure
� Housing infrastructure for low-
income people
� Public infrastructure: roads, bridges,
sewer, water systems
� Research and development
Examples:
• Surplus (if any in given year)
� Deficit (if any in given year)
� National wealth, including land, finan-
cial assets such as gold and mortgages,
physical assets, research and develop-
ment capital, education capital
� Public debt
� Social and economic indicators
� Gender and race impact analysis
� Environmental sustainability 
indicators
� International indicators
Structure for the New Budget for the United States
Income Expenses Capital Budget Surplus/Debt/National Wealth
(Contributions/Resources) (Investments/Responsibilities) (Long-Term Investments) (Assets/Liabilities)  
This new budget structure includes aspects of gender-responsive
and inclusive budgeting practices such as the following:
❖ It measures the care economy in the budget statement and account-
ing.
❖ It uses government-conducted time-use studies and other data
collection to calculate the value of unpaid work.
❖ It includes indicators of the budget’s impacts on gender and race.
❖ It includes the environmental costs of programs in the accounting.
❖ It uses internationally recognized social and economic indicators
for part of the budget evaluation, such as the Human Develop-
ment Index and the Gender-Related Development Index.
❖ It uses the Environmental Sustainability Index (see Chapter 6 for
more about these indexes).
❖ It carries out a gender audit preceding and following budget deci-
sions on tax and expense allocations. The following are some of
the questions to ask in a gender audit:
� How does taxation policy affect women?
� Who is the intended beneficiary of each budget line?
� Who needs the service funded by each budget line?
� Who will actually benefit from the service?
� Who will provide the service?
� Who will find employment thanks to the budget line?
� Will the budget line benefit disadvantaged groups?
� How will the budget affect the care economy?
� Are there better alternatives to each budget line?
150 Women and the U.S. Budget
Structure for the New Budget for the United States (cont’d)
Key Related Economic/Social Policies  
� Affirmative Action � Labor policy
� Pay equity implementation � Native American land and tribal issues
� Immigration policy � Foreign/international policy
� Monetary policy � Defense/human security policy
� Trade policy � Corporate governance  
� Wage policy 
figure 8.2
❖ It includes a review of the provisions of CEDAW , the Beijing Plat-
form for Action, the Convention on the Elimination of All Forms
of Racial Discrimination (CERD), and the Convention on the
Rights of the Child, to ensure the budget provides for the human
rights of all.
❖ It ensures the full participation of women in the development,
evaluation, and implementation of the national budget, address-
ing the following questions:
� What are the obstacles to women fully participating in budget-
ing at all levels, and how can these be addressed in ways that
move change in the direction of implementing key policies?
� What are the pressure points where community-based women
can presently participate in the budgeting process at local, state,
and federal levels?
� Who are the organizational and individual allies who can enhance
women’s participation?
❖ It uses the Gender Empowerment Measure (GEM) to compare
the US budget to budgets of other countries The GEM is a com-
posite indicator that captures gender inequality in three key areas:
� Political participation and decision making, as measured by
women’s and men’s percentage shares of parliamentary [con-
gressional] seats
� Economic participation and decision-making power, as mea-
sured by two indicators: women’s and men’s percentage shares
of positions as legislators, senior officials, and managers; and
women’s and men’s percentage shares of professional and tech-
nical positions
� Power over economic resources
❖ It uses the Family Self-Sufficiency Standard in place of traditional
poverty measures.
Because women are currently concentrated in lower-paying jobs,
with less income and wealth than men, and bearing more responsi-
bility for family service tasks, including childcare and elder care, it
means that national budgetary and related economic policies can
have a disproportionate impact on their financial position. Certain
policies are particularly important to women’s overall financial well-
A New Budget for the United States 151
being, and it is crucial that they are implemented within the new bud-
get or as supporting economic policies. These key policies include
the following elements:
❖ Equal pay/comparable worth implementation
❖ Work and family benefits, such as paid leave, childcare, control
over work hours
❖ National healthcare
❖ Retirement security
❖ Training and education for jobs at good wages
❖ Increase in public sector jobs
❖ Affordable housing
❖ Tax reform to assist women’s self-sufficiency
❖ Increase in unionization and work-related benefits
Strategies for Creating the New Budget
The following strategies suggest some of the ways we can begin to
create a new US budget that takes into account the current budget’s
impact on gender and race.
1. Provide a research base, do data and indicator development, and
incorporate gender responsiveness into budgetary practice.
One of the most important things we need as we create a new
budget is a basis of information that will help us decide how to make
the collection of taxes and the allocation of resources more equitable.
After we have this information, we can begin to look at specific num-
bers for taxation and investment that will be gender responsive.
Because women of color can experience several levels of discrimina-
tion in the budget, we also need to determine how to collect data
showing race-based inequities in taxation and budget expenditures.
In an article they wrote for Public Administration Review , Marilyn
Marks Rubin and John R. Bartle call for gender budgeting to become
a budget reform in the United States, following a long line of simi-
lar efforts such as planning programming budget systems (PPBS),
management by objectives (MBO), zero-based budgeting (ZBB), tar-
get-based budgeting (TBB), and performance budgeting. They believe
152 Women and the U.S. Budget
that gender inequities in the budget can be addressed by starting with
the audit/evaluation phase of the budget cycle, as most gender bud-
get initiatives around the world have done.
According to Rubin and Bartle, “a full-fledged gender budget would
require measuring expenditure incidence for all functions of govern-
ment from fire protection to higher education to clean water to national
defense. Ultimately , gender analysis would have to be at the program
level and would require a detailed examination of the incidence of
each program in each function. After enough analysis was completed,
it would enable comparisons of the gender impact of programs.”
In addition, we have to decide how to measure the care economy
and how to relate it to the budgetary accounting and process. In an
interview with Cathy Cavanaugh, Marilyn Waring (author of Counting
for Nothing) pointed out that the Australian government has been
able to demonstrate that household production is the single largest
productive sector of the Australian economy . It exceeds the value of
all manufacturing by a multiple of ten, and the value of all mining
and mineral extraction by a multiple of three. Obviously this can
affect the allocation and distribution of public funds and has implica-
tions for labor, wage, job training, and family-friendly national policies.
2. Mobilize women and men to get involved in opening up the bud-
get process at all levels, and collect best practices.
Budget transparency can be a powerful tool and motivator for
change. When people see how their public resources are being used
at all levels of government, when they see what programs are avail-
able and better understand the decision-making process, they’re more
likely to be inspired to redirect those resources and/or get new deci-
sion makers into office. (See the sidebar on the experiment at the city
level in Porto Alegre, Brazil.)
The more we become familiar with and understand budgets and
budget processes, the easier it will be for us to demand gender respon-
siveness at all levels, including the national government. Issues of
transparency and accountability exist at every level of government —
city , county , state, and federal — and there are various levels of pub-
lic scrutiny around the country and throughout the world.
A New Budget for the United States 153
3. Change the federal poverty measure and replace it with the
Family Self-Sufficiency Standard or another standard based on the
actual cost of living and taking into account a variety of factors.
The federal poverty measure was developed in the 1960s, when
families looked very different — there are many more households
headed by a single parent today . In addition, families spend more of
their income on housing, healthcare, and transportation than they
used to, and less on food. Families also spend more on certain items,
like childcare, due to the increased number of women in the labor
force. The poverty measure needs to be revised to take all of this into
account.
The poverty measure is important because it can determine what
government-funded programs, at what level of support, people can
access. This is a particularly urgent issue for women who head house-
holds on their own and generally have lower wages and fewer benefits.
Unlike the federal poverty standard, the Self-Sufficiency Standard
(described in Chapter 3) accounts for the costs of living and working
according to family size/composition and geographic location. The
standard defines the amount of income necessary to meet basic needs
(including paying taxes) in the regular “marketplace” without pub-
lic subsidies (such as public housing, food stamps, Medicaid, or
childcare) or private/informal subsidies (such as free babysitting by
a relative or friend, food provided by churches or local food banks, or
shared housing). It estimates the level of income necessary for a
given family type — whether working now or making the transition
to work — to be independent of welfare and/or other public and pri-
vate subsidies.
The standard guides policy makers and program providers as they
decide how to target their education, job training, workforce devel-
opment, and welfare-to-work resources. It also shows policy makers
how subsidizing childcare, transportation, or healthcare affects the
amount of wages working families need to make ends meet.
4. Promote Senate ratification of CEDAW and adherence to other
key international human rights conventions.
The Senate still has not ratified the Convention on the Elimination
of Discrimination Against Women (CEDAW). This is an important
human rights treaty , as it affects over half of the world’s population.
154 Women and the U.S. Budget
It sets standards that will be crucial to ensure that all government
laws and regulations, including national budgets, are in accord with
international antidiscrimination statutes.
The San Francisco Commission on the Status of Women has brought
CEDAW down to the municipal level. In April 1998, San Francisco
became the first city in this country to adopt an ordinance imple-
menting CEDAW locally . It also established a task force that works
with the commission and city departments to identify discrimination
against women and girls and to implement human rights principles.
In addition to CEDAW, other important UN conventions for
women and girls include the Convention on the Elimination of All
Forms of Racial Discrimination (CERD), the International Covenant
on Economic, Social and Cultural Rights (CESCR), and the Convention
on the Rights of the Child (CRC). For most women, the intersection
of race and gender are crucial to understanding and dealing with the
barriers to full economic and social equality and flourishing. These
conventions are important tools for education — everyone must
know what rights they have — and for advocacy — to ensure gov-
ernments are following internationally agreed upon standards of
human rights.
5. Monitor US government progress on implementing Beijing Plat-
form for Action recommendations on budgeting and economic policy .
Countries will be coming together in 2005 to celebrate 10 years
of the Beijing Platform for Action, to discuss plans for another World
Conference on Women, and to evaluate global progress towards the
mandates in the Platform for Action. We need a high-level govern-
ment commission to review the progress the country has made
towards implementing the objectives set out in the Platform for
Action from the Fourth World Conference on Women, especially in
the areas of budgeting and economic policy. Such a commission
could monitor progress, as well as recommend how government
agencies and Congress can incorporate the platform into goals and
processes. We need to make the case for how a gender-impact analy-
sis of the budget will benefit society at large, as well as fulfill our
commitments to people from other countries.
A New Budget for the United States 155
6. Re-establish the President’ s Interagency Council on Women and the
Office of Women’s Initiatives and Outreach in the White House and
end the downgrading of women’ s concerns at the administration level.
President George W . Bush has shown a direct disregard for the
continued economic and social progress of women. According to the
National Council for Research on Women (NCRW), in the first Bush
term the administration deleted and altered information on women’s
issues that was posted on government agency websites. NCRW
believes the deletion of information on subjects including pay equity
and childcare was done to advance a political agenda. At least 25
publications have been removed from the website of the Department
of Labor’s Women’s Bureau alone.
The NCRW reported that key government offices such as the
Office of Women’s Initiatives and Outreach in the White House and
the President’s Interagency Council on Women have been disbanded.
The President’s Interagency Council on Women was established in
1995 to ensure US implementation of the Platform for Action from
the Fourth World Conference on Women. The council consisted of
high-level representatives from federal agencies working together to
develop policies and programs for the advancement of women and
girls within the government, and to do public education and out-
reach. The Office of Women’s Initiatives and Outreach served as a
liaison between the White House and women’s organizations, listen-
ing to women’s concerns and proposals and bringing these ideas to
the president and others in the administration. Its staff reviewed leg-
islation and administration proposals to gauge their impact on
women and make recommendations.
7. Work for election and campaign finance reform.
In order for democracy to have any meaning, people need to be
involved in decisions about how their resources are collected and dis-
bursed. Our current political system is distorted by the huge amount
of money going to members of Congress and the high cost of running
for office. If we are going to insure more diverse representation and
the full rights of every voter, we will need to change the current elec-
toral system. There are many proposals for changes, from electoral
college reform to national funding of parties and congressional elec-
tions. (See resources in Chapter 9.)
156 Women and the U.S. Budget
A New Budget for the United States 157
PARTICIPATORY BUDGETS — PORTO ALEGRE
An experiment in participatory budgeting has been unfolding in a city in Brazil for
fifteen years. Porto Alegre, a city the size of Boston, has been using participatory
budgeting to determine municipal priorities and public investment. As of 2005,
50,000 people are participating in the process.
In 1989 the newly elected Workers Party mayor was committed to giving people
a say in the way resources were distributed. He wanted the process to be participatory,
rather than consultative. This means that all constituencies in the city participated in
the actual decisions, and their voices were present in the discussions leading up to the
decisions. The commitment to participation extended to those living in the poor-
est areas of the city, who had been totally left out of the city in terms of services.
The Workers Party initiated participatory budgeting to make the budget process
transparent and also to let people have a say in how limited public funds were dis-
tributed. Mayoral resources had to be committed for organizing the communities,
insuring that this process became a reality.
In order to maximize participation, the city is divided into regions and large
regional meetings — called plenaries — are organized. Each year, everyone is invited
to attend their regional plenary, and each constituency is invited to have a certain
number of representatives at the meetings. The highest turnout has been in the poor-
est areas, since they have the most to gain from a change in municipal priorities.
Each plenary sends representatives to the citywide meeting. They are required to
vote the way the regional plenary had decided and to report back on the outcome.
The votes in the citywide meeting set the priorities for the annual municipal budget.
This process has resulted in more productivity, less corruption, and more account-
ability on the part of public workers and officials. Although critics have charged that
it helps to re-enforce business as usual, participatory budgeting has clearly been
effective as a tool for organizing and mobilizing communities and has increased the
technical understanding of community members.
Some form of participatory budget process has now been initiated in 100 munic-
ipalities throughout Brazil. The process has also become a best practice in public
administration case study internationally.
159
Chapter 9
❖
What You Can Do
N
OW THAT WE HAVE UNCOVERED some of the mysteries of the
national budget and reflected on the values, principles, and
structure for a new budget and economic policies for the United
States, it is time to move into action. In this chapter I suggest some
ways you can become involved in working on the national budget
and economic issues, and I list resources for further investigation and
action.
Working on the budget and economic issues can be overwhelm-
ing. Y ou’ll feel it’ s too big to get your head or your hands around. When
this happens, take a deep breath and focus on the following questions:
❖ What is one thing you can get your hands around, that means
something within the context of your own life?
❖ How do you use your skills and talents to have an impact on that
one thing, however large or small?
Every change begins with small steps taken by ordinary people.
The giant Social Security program began after workers and the unem-
ployed marched, walked off the job, staged sit-ins in factories,
endured violence, and fought for a broad social agenda. The govern-
ment-sponsored pension that was enacted, as well as things like child
labor laws and minimum wage laws, though imperfect, have made a
difference for millions of people.
Civil rights laws were passed after thousands of small actions in
southern communities — in large part led by women — gained
momentum, and the government had to respond. Women earned the
right to vote after decades of many women holding to the vision, 
taking step after step, not getting discouraged by harsh treatment,
and organizing new women to work on the campaign. There is a
dynamic connection between local and community actions and nation-
ally coordinated campaigns, and all of them are needed.
Women and men all over the world are working to make their
national and local budgets more transparent and accountable. They
are holding out a vision for what the public sphere can and should
provide for the people to whom it belongs. The huge size of the US
budget and economy pose a special challenge, but the principle is the
same: start weaving the threads and the pattern will take shape.
We are weaving a beautiful giant tapestry. We know the overall
theme and the colors we want to emphasize, but the tapestry will
only become a reality if each of us picks up a thread to work on and
gives it our full attention, seeing the intricate overall pattern later. We
don’t know how the images in the tapestry will come together until
we are into the work. For now , decide what thread you want to pick
up, focus on that, and see where it takes you. I’ve provided questions
and exercises in this chapter to help you find your thread if you don’t
already know what it is, or if you want to rethink your thread or
renew your energy for what you are already doing.
The best way to decide which thread you should take up is to see
what is right in front of you, what you care about, what you are
drawn to do. Then you will start to see how you can connect with
others who also want to do that work. There is no right or wrong way
to do the work, and often fresh energy and insight move the work
forward in ways that sticking to the same strategy cannot. On the
other hand, it can be helpful to find out what others have already
done and learned and to join with larger movements for change.
One of the things that becomes obvious when you look at history
is that it has often been difficult to work across the lines of class and
race in the United States. Sometimes the strategies the women’s
movement pursued did not include issues that were of central con-
cern to women of color and low-income women. Sometimes it did
not stand up against racism. If you take the time to reflect on how
race and class have affected all of us, and if you make an effort to go
outside your comfort levels, you can ultimately take effective action
that will make a deeper difference in the long run. (I’ve listed some
resources that can help you with these explorations.)
160 Women and the U.S. Budget
Taking Action
Taking action is always more fun and more effective if you join with
others, though there are always many things you can do on your own
as well. Taking action can take as little or as much time as you can
spare or want to invest — the important thing is to be participating
and working towards your vision of how you want things to be. I’ve
listed just a few of the possibilities for action below:
❖ Join an organization (see the resource list for lots of possibilities)
❖ Volunteer with an organization
❖ Donate to an organization
❖ Start an organization
❖ Gather a group
❖ Bring undo-racism training to your community
❖ Take action against something in your community you want to
change
❖ Start a cross-class group
❖ Hold a workshop about the economy for your community and/or
train yourself in economic and budget literacy
❖ Put on a Legislative Theater event (see sidebar) in your commu-
nity to illuminate the key issues
❖ Share success stories, gather links to resources, ask questions,
give feedback about Women and the US Budget, and participate in
an online Dreamstorm (what do you want to see in the national
budget and related economic policies?) at <www .womenandtheus
budget.com>.
❖ Set up a Budget Literacy and Action Group to work with this book
❖ Analyze your city or state budget and take action
❖ Contact your congressperson about economic and budget issues
that concern you
❖ Contact your state representatives, senators, city councilors, and
mayor about budget and economic issues that concern you
❖ Write letters to the editor
❖ Call in to talk shows
❖ Run for office
What You Can Do 161
❖ Contribute to people running for office
❖ Volunteer for people running for office.
Questions and Exercises
The following questions and exercises are designed to help you
expand your awareness of how the issues raised in Women and the
US Budget affect you. The more we can understand the impact of
money and resource distribution at all levels of our lives, the more we
can take our full power. Read through the following questions and
exercises and do the ones that stand out for you. It can be helpful to
do them with a friend or to get a group together. If you want to start
a Budget Literacy and Action Group to read and discuss the book, or
do the exercises together, and move into action, contact me through
<www .womenandtheusbudget.com>.
Reflection Questions
❖ What caught your attention as you read W omen and the US Budget?
162 Women and the U.S. Budget
LEGISLATIVE THEATER
Theater director, playwright, author, and founder of the international movement of
“Theater of the Oppressed,” Augusto Boal was elected to the city council of Rio de
Janeiro, Brazil, from 1993 to 1996. With his theater colleagues, he developed a pro-
gram to teach Theater of the Oppressed to various communities within Rio — teachers,
doctors, workers, students, farmers, and domestic servants. The purpose was to
encourage people to act out their community’s needs and wants. They created plays
that addressed the concerns of the group and presented various solutions to the
problems. This process is now known as Legislative Theater.
Using Legislative Theater, people from different communities and constituencies
developed 13 laws that addressed their issues. These laws were then written and
passed by the Parliament. Boal writes, “We do not accept that the elector [voter]
should be a mere spectator to the actions of the parliamentarian, even when these
actions are right. We want the electors to give their opinions, to discuss the issues,
to put counter-arguments, we want them to share the responsibility for what their par-
liamentarian does.” This process is now being used in several countries to help com-
munities and constituencies clarify their needs and priorities and translate them into
the policy-making arena.
❖ What did you notice in the book that affects you, that you care
about, or that you know is important to you or those you love?
❖ Is there a particular issue that tugs at you and that you want to
investigate more deeply?
❖ What made you angry/sad/excited?
Economic Life Story
❖ Write down (or tell a friend) your life story, using money and
class as the focal point. Some things to consider:
� How did your family deal with/think about money?
� What has your relationship with money been like?
� What are the positives and negatives of the economic class you
were born into/the class you are in now?
� How do you think being a woman has shaped your economic
life story?
� What would you like the next chapter of your economic life
story to be?
Personal Budget Overview
1) Where does your money come from?
� Write down all your sources of income (for example, salary , fees,
public assistance, Social Security , disability payments, interest,
dividends gifts, loans) and how much they totaled last year.
� Notice and make a note of which of these income sources are
connected to the national budget or government.
� Are you able, as a woman, to build the financial life that you
want and that would support you in the event of a separation,
divorce, death of a spouse, disability of yourself or a spouse,
need to care for an elderly parent or relative, or retirement?
2) Where does your money go?
� Write down all your expenses, dividing them into mandatory
— those things you have to pay every month — and discretionary .
� Write down the taxes you pay (if any) or the tax expenditure
programs you use, such as home mortgage tax deduction or
Earned Income Tax Credit.
What You Can Do 163
3) Debt or surplus?
� Write down all the things that fill out your economic picture,
including debts you owe, debts people owe to you, assets you
have (i.e., real estate, stocks and bonds, savings).
� If you have debt: Do you have a plan in place to repay that
debt? Do you save at the same time? How do you decide how
big a priority you want to make debt repayment?
Personal Dreamstorm
❖ What are three things you want to see (or support) in the national
budget?
Budget Action Plan
❖ Based on the three things you want to see (or support) in the
national budget, what is one thing you could do now to move
toward making them a reality?
❖ What is some information you need or connections you could make
to help you? (See resources below for ideas if you need them.)
❖ List three action steps you will take in the next six months, list-
ing the step, with whom, and a timeline.
National Debt Questions
If you pay taxes, you pay about $1,468 each year to interest on
the national debt (this amount varies from state to state — this is the
figure for Illinois).
❖ How do you feel about this?
❖ Are there some things you are willing to pay interest on the debt
for? What are they?
❖ Are there some things you don’t want to pay interest on the debt
for? What are they?
❖ We had a surplus a few years ago in the national budget. What
would you have spent that surplus on?
Personal Income and Tax Analysis
❖ Do you feel you pay too many taxes? If so, why?
❖ Do you think some people should pay less or some people should
pay more?
164 Women and the U.S. Budget
❖ Would you be willing to pay more if you felt that the programs
your taxes were used for benefited people in your community
who had fewer resources than you or provided community pro-
grams that are needed by all?
Resources for Taking Action
This is not a comprehensive list but a jumping-off place. Refer also to
the “Sources” section of this book for more resources and back-
ground information. If you know of any other good resources, let me
know — send an e-mail from my website <www.womenandtheus
budget.com>.
The resources listed below are organized according to the guiding
principles for a new budget from Chapter 8.
1. Commitment to meet the basic human needs of all people for food,
housing, healthcare, education, protection from violence, jobs at
good wages, and adequate social safety nets for those who can’t work.
What You Can Do 165
AFL-CIO
815 16th Street NW
Washington, DC 20006
(202) 637-5000
Fax (202) 637-5058
www .aflcio.org
Campaign for America’s Future
1025 Connecticut Avenue NW 
Suite 205
Washington, DC 20036
(202) 955-5665
Fax (202) 955-5606
www .ourfuture.org
Campaign for a National Health
Program NOW!
339 Lafayette Street
New York, NY 10012-2725
(212) 475-8350
(800) 453-1305
www .cnhpnow .org
Coalition on Human Needs
1120 Connecticut Avenue NW 
Suite 910
Washington, DC 20036
(202) 223-2532 x 29
Fax (202) 223-2538
jbeeson@chn.org
www .chn.org
Economic Policy Institute (EPI)
1660 L Street NW , Suite 1200
Washington, DC 20036
(202) 775-8810
Fax (202) 775-0819
epi@epinet.
www .epinet.org
Families USA
1334 G Street NW
Washington, DC 20005
(202) 628-3030
Fax (202) 347-2417
info@familiesusa.org
Food Research and Action
Center
1875 Connecticut Avenue NW
Suite 540
Washington, DC 20009
(202) 986-2200
Fax (202) 986-2525
2. Equitable distribution of the nation’ s resources, income, and wealth.
166 Women and the U.S. Budget
webmaster@frac.org
www .frac.org
Good Jobs First
1311 L Street NW
Washington, DC 20005
(202) 626-3780
Fax (202) 638-3486
info@goodjobsfirst.org
www .goodjobsfirst.org
National Low Income Housing
Coalition (NLIHC)
1012 Fourteenth Street NW 
Suite 610
Washington, DC 20005
(202) 662-1530
Fax (202) 393-1973
info@nlihc.org
www .nlihc.org/
National Priorities Project
17 New South Street, Suite 302
Northampton, MA 01060
(413) 584-9556
Fax (413) 58-9647
info@nationalpriorities.org
www .nationalpriorities.org
National Welfare Rights Union
4750 Woodward Avenue 
Suite 402
Detroit, MI 48201
(313) 832-0618
Fax (313) 832-1409
info@nationalwru.org
www .nationalwru.org
UNITE HERE Headquarters
(formerly the Union of
Needletrades, Textiles and
Industrial Employees and the
Hotel Employees and Restaurant
Employees International Union)
275 7th Avenue
New York, NY 10001-6708
(212) 265-7000
info@behindthelabel.org
www .unitehere.org
Urban Institute
2100 M Street NW
Washington, DC 20037
(202) 833-7200
paffairs@ui.urban.org
www .urban.org
Center on Budget and Policy
Priorities (CBPP)
International Budget Network
820 1st Street NE, Suite 510
Washington, DC 20002
(202) 408-1080
Fax (202) 408-1056
center@cbpp.org
www .cbpp.org/
Citizens for Tax Justice (CTJ)
1311 L Street NW
Washington, DC 20005
(202) 626-3780
Fax (202) 638-3486
www .ctj.org
Dollars & Sense
The Magazine of Economic
Justice
740 Cambridge Street
Cambridge, MA 02141
(617) 876-2434
Fax (617) 876-0008
dollars@dollarsandsense.org
www .dollarsandsense.org
International Association For
Feminist Economics (IAFFE)
PO Box 9430
Richmond, VA 23228
Fax (313) 731-0174
clsmith@iaffe.org
www .iaffe.org
Union of Radical Political
Economists (URPE)
Gordon Hall, University 
of Massachusetts
418 North Pleasant Street
Amherst, MA 01002-1735
(413) 577-0806
urpe@labornet.org
United for a Fair Economy
37 Temple Place, 2nd Floor
Boston, MA 02111
(617) 423-2148
Fax (617) 423-0191
info@faireconomy .org
www.faireconomy .org
What You Can Do 167
3. Financial self-sufficiency for women and people of color, as well
as the full development of young people.
Center for the Advancement 
of Women
25 West 43 Street, Suite 1120
New York, NY 10036
(212) 391-7718
info@advancewomen.org
www .advancewomen.org
Center for Policy Alternatives
1875 Connecticut Avenue NW
Suite 710
Washington, DC 20009
(202) 387-6030
Fax (202) 387-8529
www .cfpa.org
Children’s Defense Fund
25 E Street NW
Washington, DC 20001
(202) 628-8787
cdfinfo@childrensdefense.org
www .childrensdefense.org
Church Women United
The Interchurch Center
475 Riverside Drive, Suite 1626
New York, NY 10115
(212) 870-2347
(800) 298-5551
Fax (212) 870-2338
cwu@churchwomen.org
www .churchwomen.org
Feminist Majority Foundation
1600 Wilson Boulevard 
Suite 801
Arlington, VA 22209
(703) 522-2214
Fax (703) 522-2219
www .feminist.org
Institute for Women’s 
Policy Research
1707 L Street NW , Suite 750
Washington, DC 20036
(202) 785-5100
Fax (202) 833-4362
iwpr@iwpr.org
www .iwpr.org
National Committee on 
Pay Equity
1925 K Street NW , Suite 402
Washington, DC 20006-1119
(202) 223-8360, Ext. 8
Fax (202) 776-0537
fairpay@pay-equity .org
www .pay-equity .org
National Organization for 
Women (NOW)
1100 H Street NW , 3rd Floor
Washington, DC 20005
(202) 628-8669
Fax (202) 785-8576
now@now.org
www .now .org
United Methodist 
Women’s Division
General Board of 
Global Ministries
United Methodist Church
475 Riverside Drive
New York, NY 101151
(800) 862-4246
http://gbgm-umc.org/umw
United Nations Commission 
on the Status of Women
2 UN Plaza, DC2-12th Floor
New York, NY 10017
Fax (212) 963-3463
daw@un.org
www .un.org/womenwatch/daw
UNIFEM Headquarters in New
Y ork
United Nations Development
Fund for Women
304 East 45 Street, 15th Floor
New York, NY 10017
(212) 906-6400
Fax (212) 906-6705
Wider Opportunities for Women
1001 Connecticut Avenue NW ,
Suite 930
Washington, DC 20036
(202) 464-1596
Fax (202) 464-1660
info@WOWonline.org.
www .wowonline.org
Women’s Economic Agenda
Project
Women and Family Center
449 15th Street, 2nd Floor
Oakland, CA 94612
(510) 451-7379
Fax (510) 986-8628
weap@weap.org
www .weap.org
Women’s International Coalition
for Economic Justice (WICEJ)
12 Dorgan Place, Suite 206
New York, NY 10040
(212) 304-9106
Fax (646) 349-2195
info@wicej.org
www.wicej.org
168 Women and the U.S. Budget
4. Peace-directed foreign policy, with an emphasis on working
within multilateral institutions such as United Nations bodies
and agencies, and the International Criminal Court.
American Friends Service
Committee
1501 Cherry Street
Philadelphia, PA 19102
(215) 241-7000
Fax (215) 241-7275
afscinfo@afsc.org
www .afsc.org
United for Peace and Justice
PO Box 607
Times Square Station
New York, NY 10108
(212) 868-5545
www .unitedforpeace.org
Win Without War
(202) 822-2075
www .winwithoutwarus.org
Women’s Action for New
Directions (WAND)
691 Massachusetts Avenue
Arlington, MA 02476
(781) 643-6740
Fax (781) 643-6744
info@wand.org
www .wand.org
Women’s Edge Coalition
1825 Connecticut Avenue NW ,
Suite 800
Washington, DC 20009
(202) 884-8396
edge@womensedge.org
www .womensedge.org/index.jsp
Women’s International League
for Peace and Freedom (WILPF)
US National Office
1213 Race Street
Philadelphia, PA 19107
(215) 563-7110
wilpf@wilpf.org
www.wilpf.org
What You Can Do 169
Applied Research Center
3781 Broadway
Oakland, CA 94611
(510) 653-3415
Fax (510) 653-3427
www .arc.org
Association for White Anti-
Racist Education (AWARE)
PO Box 1372
Brentwood, TN 37024-1372
(615) 463-2689
warn@home.com
Center for Public Integrity
910 17th Street NW , Suite 700
Washington, DC 20006
(202) 466-1300
www .publicintegrity .org/
Center for Third World
Organizing
1218 East 21st Street
Oakland, CA 94606
(510) 533-7583
Fax (510) 533-0923
ctwo@ctwo.org
www .ctwo.org
Coalition of the Moving Ideas
Network
2000 L Street NW , Suite 717
Washington, DC 20036
(202) 776-0730
Fax (202) 776-0740
movingideas@movingideas.org
Colorado Women’s Agenda
400 Corona Avenue, Suite B
Denver, CO 80218
(303) 863-7336
Fax (303) 830-1502
Fair Vote — Center for Voting 
and Democracy
6930 Carroll Avenue, Suite 610
Takoma Park, MD 20912
(301) 270-4616
www .fairvote.org
50 Years is Enough Network
3628 12th Street NE
Washington, DC 20017
(202) 463-2265
info@50years.org
www .50years.org
Indigenous Women’s Network
Alma de Miyer
13621 FM 2769
Austin, TX 78726
(512) 258-3880
Fax (512) 258-1858
info@indigenouswomen.org
www .indigenouswomen.org
National Association for
Commissions of Women
(NACW)
8630 Fenton Street, Suite 934
Silver Spring, MD 20910
(301) 585-8101
Fax (301) 585-3445
nacw@nacw.org
www .nacw .org
National Coalition of Blacks for
Reparations in America 
(N’COBRA)
PO Box 90604
Washington, DC 20090-0604
(202) 291-8400
Fax (202) 291-4600
www .ncobra.com
National Voice
2105 First Avenue South
Minneapolis, MN 55404
(612) 879-7500
(866) 428-7228
www .nationalvoice.org
Office of the High
Commissioner for Human
5. Public life and discourse that are democratic, welcome diversity ,
and dismantle discrimination based on race, ethnicity , gender,
age, class, ability , and sexual orientation.
Rights
8-14 Avenue de la Paix
1211 Geneva 10
Switzerland
(41-22) 917-9000
Fax (41-22) 917-9016
www .unhchr.ch
The People’s Institute for
Survival and Beyond
1444 North Johnson
New Orleans, LA 70116
(504) 944-2354
www .thepeoplesinstitute.org
Program on Corporations, Law
and Democracy (POCLAD)
PO Box 246
S. Yarmouth, MA 02664-0246
(508) 398-1145
Fax (508) 398-1552
people@poclad.org
www .poclad.org
Women of Color Resource
Center
1611 Telegraph Avenue, 
Suite 303
Oakland, CA 94612
(510) 444-2700
Fax (510) 444-2711
info@coloredgirls.org
www .coloredgirls.org
170 Women and the U.S. Budget
6. Support of the variety of economic, cultural, spiritual, and artistic
expression of communities.
Action Without Borders
360 West 31st Street, Suite 1510
New York, NY 10001
(212) 843-3973
Fax (212) 564-3377
info@idealist.org
www .idealist.org
Art for the World
28 rue de l’Athenée
Clt-1206 Geneva
Switzerland
(41-22) 789 15 55
infor@artfortheworld.net
www .artfortheworld.net
Art in the Public Interest
PO Box 68
Saxapanaw , NC 27340
(336) 376-8404
www .apionline.org
Bread and Puppet Theater
Rd #2
Glover, VT 05839
(802) 525-3031
breadpup@together.net
www .theaterofmemory .com/art/
bread/bread.html
Institute for Local Self-Reliance
927 15th Street NW , 4th Floor
Washington, DC 20005
(202) 898-1610
www .ilsr.org
Spirit in Action
274 North Street
Belchertown, MA 01007
(413) 256-4612
Fax (413) 256-4613
info@spiritinaction.net
www.spiritinaction.net
7. Harmony with ecological processes and sustainability of natural
resources.
EnviroLink Network
PO Box 8102
Pittsburgh, PA 15217
www .envirolink.org/
Friends of the Earth
1717 Massachusetts Avenue
NW , Suite 600
Washington, DC 20036-2002
(877) 843-8687
Fax (202) 783-0444
foe@foe.org
www .foe.org
Southwest Research and
Information Center
105 Stanford SE
PO Box 4524
Albuquerque, NM 87106
(505) 262-1862
Fax (505) 262-1864
Info@sric.org.
White Earth Land Recovery
Project
32033 East Round Lake Road
Ponsford, MN 56575
(218) 573-3448
(888) 779-3577
Fax (218) 573-3444
www .welrp.org
Women’s Environment &
Development Organization
(WEDO)
355 Lexington Avenue, 
3rd Floor
New York, NY 10017
(212) 973-0325
Fax (212) 973-0335
www .wedo.org
US Government Resources
US Department of Labor 
Women’s Bureau
Frances Perkins Building
200 Constitution Avenue NW
Washington, DC 20210
(800) 827-5335
www .dol.gov/wb/
United States Office of 
the Treasury
Office of Tax Policy
www .treas.gov/offices/tax-policy/
Assistant Secretary (Tax Policy)
Department of the Treasury
1500 Pennsylvania Avenue NW ,
Room 3120
Washington, DC 20220
General Information: 
(202) 622-2000
A gateway to federal statistics:
www.fedstats.gov/key_stats/
BEAkey .html
What You Can Do 171
WOMEN’S COMMISSIONS
President John F. Kennedy established the President’s Commission on the Status 
of Women in 1961. Eleanor Roosevelt was the chair and Esther Peterson of the 
US Department of Labor’s Women’s Bureau was vice-chair. Now there are approxi-
mately 270 state, county, and local commissions for women in the United States and
its territories.
Commissions advocate for equality and justice for women and serve their com-
munities in a variety of ways. Many maintain shelters for women who have experi-
enced domestic violence, while others run programs for teens and adults, testify
before legislators on issues that affect women and their families, and disseminate
information to their constituency. The National Association for Commissions of
Women (NACW) provides national leadership and focuses the collective concerns of
the commissions. (Visit the NACW website < www.nacw.org> for more information
and to find out if there is a commission in your community.)
173
Notes
❖
Chapter 1
1. Sue T ucker speaking at “The Money Game in Time of War,” a panel presen-
tation put on by the Women’s Action for New Directions (WAND)
Education Fund, December 11, 2001.
Chapter 3
1. Diane Dujon speaking at a panel presentation on human needs budget cuts,
Massachusetts state capitol, Boston, MA, July 1996.
2. Connecticut Attorney General’s Office. “Attorney General Files Suit Against
Bristol-Myers Squibb for Anti-Trust Violations” [online]. [Cited March 22,
2005]. Press release, June 4, 2002. <www .cslib.org/attygenl/press/2002/coniss/
taxol.htm>.
3. Government Accountability Office. “Financial Management: Further
Actions Are Needed to Establish Framework to Guide Audit Opinion and
Business Management Improvement Efforts at DOD.” GAO-04-910R. GAO,
September 20, 2004.
4. Brian Awehali. “David and Goliath in Indian Country” [online]. [Cited
August 10, 2004]. Article posted on AlterNet, October 27, 2003.<www .alter-
net.org/story/17026>.
5. Daniel Pulliam. “Notification of Sale” [online]. [Cited October 10, 2004].
Article posted on GovExec.com, October 8, 2004. <www .govexec.com/dai-
lyfed/ 0904/100804lb.htm>.
Chapter 4
1. William Greider. “The End of Empire” [online]. [Cited March 22. 2005]. Article
in The Nation, September 5, 2002. <www.thenation.com/doc.mhtml?i=
20020923&s=greider>.
173
174 Women and the U.S. Budget
2. Andrew Ferguson. “Bush Harks Back to Reagan’s Legacy of Deficits” [online].
[Cited October 10, 2004]. Article in Los Angeles Business Journal, February
10, 2003. <www .labusinessjournal.com>.
Chapter 5
1. Quoted in Eric Pashnik. “Budgeting More, Deciding Less: Budget Politics
and Social Policy.” Public Interest. Winter 2000. Available online <www.
findarticles.com/p/articles/mi_m0377/is_2000_Wntr/ai_58672901>.
2. Congressional Quarterly . Powers of Congress. Congressional Quarterly Press,
1982, p. 13.
3. Joint Committee on the Reorganization of Congress. “Organization of the
Congress” [online]. [Cited June 10, 2004]. Final report, December 1993.
<www . house.gov/rules/jcoc2c.htm>.
4. Robert Longley . “Government Shutdown?” [online]. [Cited September 13,
2004]. Article posted on about.com, October 24, 1999. <http://usgovinfo.
about.com/library/weekly/aa102499p2.htm>.
5. House Judiciary Committee Democratic Staff. “Preserving Democracy: What
Went Wrong in Ohio?” [online]. [Cited March 15, 2004]. Report issued
January 5, 2005. <www .nvri.org/about/ohio_conyers_report_010505.pdf>.
6. Sean Loughlin and Robert Yoon. “Millionaires Populate US Senate” [online].
[Cited December 10, 2004]. Article posted on CNN website, June 13, 2003.
<www .cnn.com/2003/ALLPOLITICS/06/13/senators.finances/>.
7. Azza Karam and Joni Lovenduski. “Learning the Rules” [online]. [Cited
November 15, 2004]. Section of chapter “Women in Politics: Making a
Difference” in Women in Politics: Beyond Numbers on the International
IDEA (Institute for Democracy and Electoral Assistance) website, June
1998. <archive.idea.int/women/parl/ch5c.htm>.
Chapter 6
1. Richard Grossman and Frank T. Adams. “Taking Care of Business.” Conscious
Choice. January 1996. Available online <www .consciouschoice.com/1995-98/
cc091/takingcareofbusiness.html>.
2. William Greider. One World Ready or Not: The Manic Logic of Global
Capitalism. Simon & Schuster, 1998, p. 24.
3. Representative Wright Patman (D-TX). “The A B C’s Of America’s Money
System.” Congressional Record, 88th Cong., 2nd sess., August 3, 1964.
Chapter 7
1. Kofi Annan. “Transcript of Press Conference by Secretary-General Kofi
Annan on Financing for Development at Headquarters” [online]. [Cited
March 23, 2004]. United Nations Information Service, December 18, 2000.
<www .unis. unvienna.org/unis/ pressrels/2000/sg2750.html>.
Notes 175
2. Peggy Antrobus, quoted in Zonny Woods. “IMF and World Bank Structural
Adjustment Programs and Their Effects on Women” [online]. [Cited
November 10, 2004]. Youth Sourcebook on Sustainable Development,
International Institute for Sustainable Development, 1995. <http://iisd.ca/
youth/ysbk077.htm>.
3. Steve Lohr. “An Elder Challenges Outsourcing’s Orthodoxy.” New York
Times. September 9, 2004. Available online <http://scid.stanford.edu/ pub-
lications/InTheNews/tnsrinivasan090904.pdf>.
4. Jubilee 2000. “Bolivian Civil Society Asserts Demand For Involvement In
Fight For Debt Cancellation And Poverty Reduction” [online]. [Cited
November 15, 2004]. <www.jubilee2000uk.org/ jubilee2000/news/bolivia1
60500.html>.
5. Jim Lobe. “ Sharp Increase in U.S. Military Aid to Latin America” [online].
[Cited March 23, 2004]. Article at Common Dreams News Center, September
23, 2003. <www .commondreams.org/ headlines03/0923-02.htm>.
6. Michael Switow . “Malaysia Mahatir Vs. ‘Immoral’ Markets” [online]. [Cited
December 11, 2004]. Article in the Christian Science Monitor, September
24, 1997. <http://csmonitor.com/cgibin/durableRedirect.pl?/durable/1997/09/
24/econ/econ.1.html>.
7. UNIFEM. “Conference Urges Governments, Multilateral Agencies, NGOs to
Incorporate Gender Analysis in National Budgets” [online]. [Cited
September 20, 2004]. Press release, October 18, 2001. <www .unifem.org/press
releases.php?f_page_pid=6&f_pritem_pid=52>.
Chapter 8
1. The Women’s Budget Project held a joint training session with the
Massachusetts Women’s Economic Agenda Project on July 18, 1997, at
Boston City Hall. Attending were Kelly Bates, Marie T urley , Becky Johnson,
Loretta Williams, George Friday, Gillian Gilhool, Laura Russell, Maya
Hasegawa, Grove Harris, Lisa McGowan, Joanie Cohen, Marian Chatfield-
Taylor, Ann Griffiths, Jane Midgley , Jean Kluver, Joan Miller, Elena Swain.
2. The Women’s Budget Project held a national meeting from October 18 to 20,
1996, in Philadelphia, PA, at the headquarters of the Women’s International
League for Peace and Freedom (WILPF). Those in attendance were Marion
Anderson, Employment Research Associates; Carol Barton, popular eco-
nomics educator; Alisha Berry , student organizer; Marilyn Clement, WILPF;
Jeanne Guanna, Southwest Organizing Committee; L.J. Hopkins, United
Methodist, Women’s Division; Jennifer Jackman, Feminist Majority
Foundation; Marian Kramer, National Welfare Rights Union; Eleanor
LeCain, Women’s Action for New Directions; Ethel Longscott, Women’s
Economic Agenda Project; Miriam Louie, Women of Color Resource Center;
Jane Midgley , Women’s Budget Project; elmira nzombe, National Council of
Churches; Denise O’Brien, National Family Farm Coalition; Robin Randle,
Federation of Southern Co-ops; Edie Rasell, Economic Policy Institute;
Martha Reumann, Evangelical Lutheran Church; and Agnes Williams,
Indigenous Women’s Network (organizational affiliations are those of partici-
pants in 1996). Arlene Allen facilitated. Pam Sparr was instrumental in organiz-
ing the meeting.
177
Glossary
❖
Allocations: In the budget resolution, limits on the amount of money available
for discretionary spending, which are given to appropriations and autho-
rization committees as spending ceilings.
Appropriation: An act of Congress that provides the legal authority for federal
agencies to make payments for specific things (i.e., programs or adminis-
tration). Appropriations must be passed by both the House and the Senate
and signed by the president to become law .
Appropriations committees: Committees in the House and Senate that decide
on the annual spending in 13 areas of federal discretionary spending.
Appropriations committees send their recommendations to the full Senate
and House for further deliberation and eventual passage of 13 appropria-
tions bills.
Authorization: An act of Congress that establishes, changes, or continues the
operation of a federal agency or program. Authorizing legislation is normally
a prerequisite for appropriations. For some programs, mainly entitlements,
the authorizing legislation itself provides the authority to incur obligations
and make payments. Like appropriations acts, authorizing legislation must
be passed by both houses of Congress and signed by the president to
become law .
Authorization committees: Committees in the House and Senate that decide
which agencies and programs will be granted the right to receive funding.
Authorization committees have jurisdiction over mandatory spending in the
federal budget process.
Bond: A certificate that promises repayment of a debt. Bonds can be issued by
the government or by a company; the issuer agrees to pay back the bor-
rowed money at a fixed rate of interest on a specified date.
Budget: A forecast of expenditures and revenues for a specific period of time
that is used to set priorities as well as monitor progress towards goals.
177
178 Women and the U.S. Budget
Budget authority: The authority to make commitments that will result in imme-
diate or future spending of federal funds (everything except trust funds).
Budget authority sets the amount of new commitments that can be made. It
is not the same as actual spending in a given year, which is known as out-
lays.
Budget committees: Committees — one in the House and one in the Senate,
created under the Congressional Budget and Impoundment Control Act of
1974 — that are responsible for preparing budget resolutions for each bud-
get cycle and reconciling differences between House and Senate versions
of the budget.
Budget functions: The categories used to organize the president’s budget pro-
posal. The functions group all federal programs according to their purpose.
Budget of the United States Government: Documents issued by the Office of
Management and Budget each February that include the president’s budget
proposals, supporting documents, charts, analyses, and historical records of
budgets passed.
Budget reconciliation: A legislative process Congress uses to ensure taxes and
spending proposals conform with the targets set out in the budget resolu-
tion — that is, to reconcile tax and spending legislation with the budget.
The reconciliation process primarily affects taxes, entitlement spending, and
offsetting receipts. As a rule, decisions on discretionary programs are deter-
mined separately through the appropriations process.
Budget resolution: The budget resolution sets targets for spending, including
the upper limit of what can be spent in broad program areas. Known as the
Concurrent Budget Resolution, it must be passed in identical form by both
the House and Senate each year, setting forth a congressional budget plan.
The resolution does not require the president’s signature and does not
become law. To be implemented, its directives must be carried out through
subsequent legislation, including appropriations and changes in tax and
entitlement laws.
Capital budget: A plan for capital expenditure (i.e., for investment in long-term
assets such as buildings, plant, and equipment and in multi-year physical
and ongoing projects such as infrastructure improvement). A capital budget
does not include money spent for present needs and current consumption.
Care economy: The care economy produces family and community-oriented
goods and services as part of the process of caring for people. Workers in the
care economy are not paid, though they may be supported by transfer pay-
ments from the government (such as pensions and child benefits).
Conference committee: A conference committee is a temporary panel of House
and Senate negotiators. It is created to resolve differences between versions
of similar House and Senate bills, including those pertaining to the budget.
Congressional Budget Office (CBO): A nonpartisan office serving Congress.
CBO’s role is to provide independent, objective, technical economic and
Glossary 179
budgetary information to Congress. CBO was created by the Congressional
Budget Act of 1974 to free Congress from relying on the administration’s
Office of Management and Budget (OMB) for budgetary and economic
information.
Contingent workers: Part-time and/or temporary workers who perform ser-
vices, often on a contract basis, that were previously performed in-house.
These flexible arrangements, along with other arrangements that do not
involve workers with full-time wages and salaries, have come to be referred
to as “contingent work” by labor market analysts.
Continuing resolution: An appropriations act intended to continue funding for
certain programs when the normal appropriations legislation for those pro-
grams has not been enacted by the start of the fiscal year. Also known as a
“CR,” it provides temporary funding, normally at current levels or less.
Corporate income taxes: Provisions in the US tax code that regulate the amount
and form of taxes corporations owe to the US government.
Corporate profits: Profit, in business, is the monetary difference between the
cost of producing and marketing goods or services, and the price subse-
quently received for those goods or services. The will to make and function by
profits is termed the profit motive.
Custom duties: The money collected from tariffs is called a customs duty . A tar-
iff is a tax levied by a government on imports and exports. Although tariffs
are a source of government revenue, they are also used to carry out political
and economic policies in the international economy .
Debt ceiling: The amount that the country is allowed to go into debt. The debt
ceiling is set in legislation passed by Congress and signed by the president,
usually annually . Congress must enact new legislation to raise the ceiling.
Debt held by the public: The part of the gross federal debt owed to people and
institutions outside the government.
Deficit: The result when spending exceeds income in the annual budget.
Depression: In economics, a period in an industrial nation characterized by low
production and sales and high rates of business failures and unemployment.
Discretionary spending: Spending that the president and Congress decide
through passage of 13 appropriations bills annually. This spending is
optional each year, in contrast to entitlement programs for which funding 
is mandatory .
Entitlements: Programs that legally obligate the federal government to make
payments to any person who meets the legal criteria for eligibility , such as
Social Security , Medicare, and Medicaid.
Excise taxes: Taxes imposed on the sale of specific goods or services, or on
licenses to engage in certain activities. Excise taxes, also called selective sales
taxes, are considered consumption taxes because they raise the prices of 
180 Women and the U.S. Budget
certain commodities for consumers, such as alcohol, tobacco, transportation
fuels, and telephone service.
Federal Insurance Contributions Act (FICA): T wo titles of the Social Security
Act specified the manner in which taxes would be deducted from workers’
earnings to finance both old-age benefits and unemployment compensation.
These tax laws were later written into the code of the Internal Revenue
Service. The Social Security tax became known by the name of one of these
laws, the Federal Insurance Contributions Act (FICA).
Federal poverty measure: The standard used by the US government to classify
people as “poor.” There are two versions: poverty thresholds and poverty
guidelines. Thresholds are standards issued annually by the Census Bureau
for estimating the number of people living in poverty . Guidelines are stan-
dards issued by the Department of Health and Human Services for measur-
ing eligibility for certain federal programs.
Federal Reserve banks: Banks that are part of the Federal Reserve system (the
“Fed”). Most of the Fed’s day-to-day operations are left to the officers of 12
district Federal Reserve banks, located throughout the nation. Most com-
mercial banks are also members of the Fed.
Federal Reserve system: The “Fed,” as it is known, was established by the
Federal Reserve Act of 1913 as a way to create a stable banking system and
monetary policy for the country. The act mandated the creation of a cen-
tral banking system divided into regional Federal Reserve banks.
Federal trust funds: Government accounts, established by law as trust funds,
that collect and spend revenues for specific purposes, such as the Social
Security trust funds.
GDP: GDP stands for gross domestic product, which is a measure of the total
value of goods and services produced within a country over a specified time
period, normally a year. Income arising from investments abroad is not
included.
Globalization: The growing economic, political, technological, and cultural
linkages that connect individuals, communities, businesses, and govern-
ments around the world. Globalization also involves the growth of multi-
national corporations (businesses that have operations or investments in
many countries) and transnational corporations (businesses that see them-
selves functioning in a global marketplace). The international institutions
that oversee world trade and finance (i.e., the World Trade Organization, the
World Bank, and the International Monetary Fund) play an increasingly
important role in this era of globalization.
GNP: GNP stands for gross national product, which is a measure of the value of
the goods and services produced by the residents of a country , regardless
of where the assets are located, over a specified time period, normally a year.
It includes income from US investments abroad.
Glossary 181
Government Accountability Office (GAO): The office in Congress that audits fed-
eral agencies and programs. (This used to be the Government Accounting
Office — the name was changed in July 2004.)
Gross federal debt: The total amount of money the government has borrowed
over time that still has to be repaid.
Individual income taxes: Provisions in the US tax code that regulate the amount
and form of taxes that individuals owe the US government.
Intragovernmental holdings: The amount of the gross federal debt the govern-
ment owes to the federal trust funds. (The trust funds are required to lend
any trust fund excess to the government.)
Macroeconomics: The study of the behavior of the economy as a whole, focus-
ing on variables such as employment, inflation, growth, and stability .
Mandatory spending: Spending that is not controlled by annual decisions of
Congress. The government is automatically obligated to spend this money
because of previously enacted laws. Mandatory spending programs are also
known as entitlements.
Microeconomics: The study of individual decision making in response to
changes in prices and incomes.
Monetary Policy: Economic principles and programs adopted by a government
that manage the growth of its money supply , the availability of credit, and
interest rates. In the United States, the Federal Reserve Board determines
monetary policy .
National Debt: Known in the official budget as the gross federal debt, this is the
accumulation of deficits, minus any surpluses.
National wealth: The total monetary value of all the capital and goods owned
by a particular country at any given time.
North American Free Trade Agreement (NAFTA): A pact that calls for the
gradual removal of tariffs and other trade barriers on most goods produced
and sold in North America. NAFTA became effective in Canada, Mexico,
and the United States on January 1, 1994. It forms the world’s second largest
free-trade zone, bringing together 365 million consumers in the three coun-
tries in an open market.
Off-budget: Describes programs not counted towards budget limits due to pro-
visions in current law. For example, Social Security trust funds and the
postal service are currently off-budget programs. (If the law changes and
these programs are counted towards the budget, they are “on-budget.”)
Office of Management and Budget (OMB): A federal agency that prepares the
president’s budget submission to Congress and provides him with economic
forecasts. OMB serves the president and acts as an advocate for the presi-
dent’s policies.
Omnibus bill: An omnibus bill packages several measures together in one bill or
182 Women and the U.S. Budget
combines diverse subjects into a single bill. Examples are reconciliation bills
and combined appropriations bills.
Open market operations: The Federal Reserve’s principal tool for implement-
ing monetary policy , open market operations involve the purchase and sale
of US Treasury bonds and federal agency securities, which changes the sup-
ply of reserves and the circulation of money throughout the system. The Fed
buys bonds when it wants to lower interest rates, and sells bonds when it
wants to raise interest rates.
Outlays: The amount of money actually spent by the government in a given year.
This may include current budget authority and unexpended budget authority
from past years. Also known as expenditures.
Recession: In economics, a decline in economic activity , a period, shorter than a
depression, during which there is a decline in economic trade and prosperity .
Savings bond: A registered bond issued by the US government in denomina-
tions of $50 to $10,000. Savings bonds yield maximum interest when they
mature after a considerable number of years.
Structural adjustment programs (SAPs): Structural adjustment programs are
conditions that the International Monetary Fund sets that developing coun-
tries must agree to if they want access to loans from international trade insti-
tutions. Measures that developing countries have had to take under SAPs
include devaluing currency , reducing wages, privatizing state-owned indus-
tries, cutting social service employment, and cutting social spending.
System of National Accounts (SNA): A coherent, consistent, and integrated set
of macroeconomic accounts, balance sheets, and tables based on a set of
internationally agreed concepts, definitions, classifications, and account-
ing rules. It is used to calculate GDP .
Tax code: The collection of laws that guide the way taxes are assessed and col-
lected. It includes things such as the rates at which people and corporations
must pay different taxes and when and how the taxes must be paid. It con-
sists of many parts and is 7 million words and thousands of pages.
Tax expenditure: Revenue that does not come to the federal government
because of provisions in the tax laws that allow a special exclusion, exemp-
tion, or deduction from gross income or that allow a special credit, a pref-
erential rate of tax, or a deferral of tax liability .
Underemployed: Employed persons who have expressed the desire to work
additional hours in their present job or in an additional job, or to take a new
job with longer working hours.
Veto: The procedure established under the Constitution by which the president
refuses to approve a bill or joint resolution (including budget-related legis-
lation) and thus prevents its enactment into law. The president usually
returns a vetoed bill with a message indicating his reasons for rejecting the
measure. The veto can be overridden only by a two-thirds vote in both the
Senate and the House.
Working poor: Individuals who spend at least 27 weeks a year in the labor force
(working or looking for work), but whose incomes fall below the official
poverty level.
World Trade Organization (WTO): Established in 1994, the World Trade
Organization (WTO) took over the activities of the General Agreement on
Tariffs and Trade (GATT). The WTO’s system focuses on corporate-managed
trade, economic efficiency , and short-run corporate profits.
Glossary 183
185
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use survey , April 2000. <www .stats.govt.nz/ products-and-services/Articles/
timeusesurvey 1999.htm>.
Public Citizen. “World T rade Organization (WTO)” [online]. [Cited September 15,
2004]. Announcement of new book on WTO, 2004. <www.citizen.org/
trade/wto/>.
Swirski, Barbara. “What is a Gender Audit?” [online]. [Cited September 10, 2004].
Report from the Adva Center, August 2002. <www .adva.org/genderbudgets
english.htm>.
UN Department of Economic and Social Affairs, Economic and Social
Development. “Economic Statistics” [online]. [Cited November 30, 2004].
Web index of international statistics, November 2004. <unstats.un.org/unsd/
nationalaccount/default.htm>.
World Bank Group. “United States Data Profile” [online]. [Cited October 20,
2004]. Profile of economic indicators, August 2004. <devdata.worldbank.
org/external/CPProfile.asp?SelectedCountry=USA&CCODE=USA&CNAME
=United+States &PTYPE=CP>.
Chapter 8
Bartle, John, and Marilyn Marks Rubin. “Gender Budgeting: Looking Through
a New Lens.” Public Administration Review (forthcoming).
Cavanaugh, Cathy. “Aurora Online with Marilyn Waring” [online]. [Cited
September 20, 2004]. Interview with the author of Counting for Nothing:
What Men Value and What Women are Worth, January 1998. <http://aurora.
icaap.org/talks/waring.htm# heading>.
International Budget Project. “The Participatory Budget Process in Brazil” [online].
[Cited March 28, 2005]. Transcript of workshop with Joao Sucupira and Leo
Mello, February 24, 1999. <www.internationalbudget.org/conference/2nd/
brazil.htm>.
Lewitt, David. “Porto Alegre’s Budget Of, By, and For the People” [online].
[Cited March 28, 2005]. YES! Magazine, Winter 2003. <www .yes magazine.
org/article.asp?ID=562>.
Zinn, Howard. A People’ s History of the United States. Harper Perennial, 1980.
Sources 193
195
Index
❖
A
abortion, 135
abundance, 146, 147
accounting methods: off-budget /
on-budget, 46, 47; and tax laws,
21–22, 31
activism: dreamstorm, 144–145,
161; Legislative Theater, 162;
questions and exercises,
162–165; small steps, 159–160;
strategies, 152–157; taking
action, 161–162; see also
resources
affirmative action policy , 10; see also
discrimination
African American women: discrimi-
nation, 3, 9; and Medicaid, 15;
and poverty , 3, 11, 39, 55; pub-
lic sector jobs, 12
Agency for International
Development (AID), 133
Aid to Families with Dependent
Children (AFDC), 3
allocations, 89, 177
Ambrose, Soren, 127
American Express Corp., 14
American International Group 
Inc., 14
Amott, Teresa L., 8
Annan, Kofi, 126
appropriation: bills, 92–93, 94; con-
tinuing resolution (CR), 179;
definition, 90, 177; legal author-
ity , 53
appropriations committees, 91–93, 177
assets, 1–2, 79
Australia (care economy study), 153
authorization, 90, 177
authorization committees, 90–91,
177
B
balanced budget, 65, 66–67
balance of payments, 126
banking: Federal Reserve, 26,
111–116, 180; international
institutions, 125–129
Bartle, John R., 152–153
Beijing Declaration and a Platform
for Action, 136–137, 155
block grants funding, 110–111
Blumenthal, Richard, 59
Boal, Augusto, 143, 162
bonds, 70, 177
Bretton Woods Conference,
125–126
Bristol-Myers Squibb, 59–60
budget, balanced, 65, 66–67
budget, definition, 2, 177
budget, federal: and democracy ,
195
95–96; and disaster relief, 5; dis-
cretionary spending graph, 51;
documents website, 25, 49;
expenses by category , 49, 50;
and full employment, 108,
115–116; funding to states,
110–111; gender analysis,
138–140; history of, 86–87; mil-
itary , 49, 74; new budget struc-
ture, 149–150; presidential veto,
82, 89, 94, 182; process, 50–51,
88–94; receipts by source, 25,
26; spending allocations, 89,
177; tax expenditure, 29; under-
lying values, 4–5, 148; see also
expenditures; taxation
budget authority , 53, 90, 178
budget committees, 87, 89–93, 178
Budget Enforcement Act of 1990
(BEA), 45, 54
budget functions, 51–52, 91, 178
budget literacy groups, 139, 162
Budget of the United States
Government, 88, 178
budget resolution, 89–90, 178
Budlender, Debbie, 139
Bush, George W . (administration):
agenda, 17, 54, 94, 111, 156;
removal of website information,
156; spending priorities, 7, 58,
68, 77; tax changes, 40
C
California, spending choice, 51
capital budget, 178
capital gains tax, 31, 36
capitalism, 104–108
care economy , 37–38, 119, 123, 178
CEDAW , 138, 139, 154–155
Center for Responsive Politics, 96
childcare: expenses, 10, 40; subsi-
dies, 39, 52; unpaid labor, 8, 44,
118–119
children: in developing countries,
128; single parents, 10, 21, 33,
38–39, 154; and social program
cuts, 44; tax credits, 33, 39
Child Tax Credit (CTC), 33, 39
Chile, pension privatization, 14
Cobell, Eloise, 63–64
Cobell vs. Norton, 63
Collender, Stanley , 45
common resources. see public
resources
Community Development Block
Grant (CDBG), 54
conference committee, 82–83, 178
Congress: election expenses, 96–97;
gender and race, 2, 97–100; lob-
bying of, 58, 91, 92, 96; struc-
ture of, 81–83; types of
committees, 87
Congressional Accountability Act, 86
Congressional Budget Office (CBO),
178–179
contingent workers, 10, 115, 179
continuing resolution (CR), 179
Convention on the Elimination of
Discrimination Against Women
(CEDAW), 138, 139, 154–155
corporations: airline industry , 5–6;
garment industry , 136; growth
of, 104–105; income shifting,
31–32; military industry , 11,
56–57, 58–60, 106–107; out-
sourcing, 129, 130; political
contributions, 96–97, 156; 
privatization, 11–17; profits,
179; savings and loan bailout,
60; subsidies, 56, 59–60; taxa-
tion, 27, 28, 179
cost of living, 10, 55, 56, 57, 154
Counting for Nothing (Waring), 
117, 153
currency transaction tax, 134, 135
custom duties, 28, 179
D
debt: poor countries, 126–129, 131;
see also national debt
196 Women and the U.S. Budget
The Debt: What America Owes to
Blacks (Robinson), 84
debt ceiling, 69, 74, 179
debt held by the public, 68–69,
70–72, 179
deficit budget, 6, 65–66, 74–75, 179
Dellums, Ronald, 24
democracy , 95–97, 100, 146
Department of Defense (DOD), 
49, 61
Department of the Interior (DOI), 62
developing countries: debt,
126–129; Jubilee 2000, 131;
social program cuts, 127–128
discretionary spending, 47, 48–52,
53, 179
discrimination: and gender, 43–44;
and race, 8–9, 43–44; resources
list, 169–170
distribution of wealth: and eco-
nomic policy , 103–104, 132; and
interest payments, 75; by race,
4; resources list, 166–167; third
world debt, 126–129, 131;
within US, 35, 109; world’s bil-
lionaires, 17
District of Columbia, 85–86
Diversity in the Power Elite
(Domhoff and Zemiegenhoff), 99
Dolidze, Keti, 135
Domenici, Pete, 81
domestic violence, 11, 171
Domhoff, G. William, 99
double taxes, 40
Dujon, Diane, 44
E
Earned Income Tax Credit (EITC), 33
elderly: and social programs, 12,
15–16, 54; unpaid elder care, 3,
8, 44
election and campaign finance,
96–97, 156
electoral reform, 95–96, 99–100, 156
Elson, Diane, 119
employment: full employment goal,
108, 115–116; part-time work-
ers, 10, 115; underemployed,
10, 182; unemployment, 10,
115–116
Enron scandal, 22
entitlements, 16, 91, 179; see also
mandatory spending
environment, 38, 121–122, 170–171
Environmental Sustainability Index
(ESI), 121–122
estate taxes, 28
excise taxes, 28, 179–180
expenditures: background, 45–46;
budget structure, 47–53; corpo-
rate subsides, 56, 59–60; defini-
tion, 182; discretionary , 47,
48–52, 53, 179; entitlements,
16, 91, 179; impact of spending
decisions, 43–44, 53–55; long-
term investments, 48; manda-
tory , 47, 50, 52–53, 181;
outlays, 48–49, 77, 182; spend-
ing categories table, 49, 50
F
family income: cost of living, 10, 55,
56, 57, 154; poverty line, 36, 39,
55; single parents, 10, 21, 33,
38–39, 154
Family Self-Sufficiency Standard,
56, 57, 154
federal budget. see budget, federal
federal debt. see national debt
federal government: mismanage-
ment of funds, 60–64; size of,
64; see also Congress
Federal Insurance Contributions
Act (FICA), 23, 180
federal poverty measure, 154, 180
Federal Reserve banks, 26, 180
Federal Reserve system, 111–116,
180
federal trust funds, 62–64, 69, 180
Fidelity Investments, 14
Index 197
198 Women and the U.S. Budget
fiscal year, 47, 88
food stamps program, 53
foreign policy: foreign aid, 58,
132–135; military interventions,
7, 11, 58, 106, 107; peace-
directed, 147; resources list, 168
free market system, 104–105
G
Galloway , George B., 81
Gandy , Kim, 13
GDP (gross domestic product),
116–120, 180
gender budgets: gender audit,
150–152; initiatives, 137–140;
new US budget, 152–157; objec-
tives, 135–137; Women’s Budget
Project, 146, 148
Gender Empowerment Measure
(GEM), 121
gender issues. see women
Gender-related Development Index
(GDI), 121
General Accounting Office. see
Government Accountability
Office (GAO)
General Agreement on Tariffs and
Trade (GATT), 129
General Revenue Sharing program, 77
George, Susan, 131
Gingrich, Newt, 14
global economy: financial institu-
tions, 125–129; foreign aid, 58,
132–135; trade, 129–132
globalization, 129–132, 180
GNP (gross national product), 
117, 180
gold standard, 126
Government Accountability Office
(GAO), 4, 61, 181
Gramm-Rudman-Hollings bill
(GRH), 74, 87
Grassley , Charles, 62
Greenspan, Alan, 112
Greider, William, 71
gross federal debt, 68, 181
Guide to the Federal Budget
(Collender), 45
H
Halliburton Corp., 107
Hartmann, Heidi, 9
heads of households, 21, 39, 154
healthcare, 10, 15–17, 111
Health Maintenance Organizations
(HMOs), 16
home mortgage interest deduction,
30, 31
housing subsidies, 3, 11, 30, 110, 120
Human Development Index 
(HDI), 121
Humphrey-Hawkins Act, 115
I
IBM, 31–32
income, definition, 1
individual income taxes: definition,
181; federal budget, 23–24, 25;
tax process, 26–27
inequality . see distribution of wealth
inflation, 114
interest rates, 73, 75, 113, 114–115
Internal Revenue Service (IRS), 23–24
international economic indicators,
121–122
International Monetary Fund
(IMF), 126–129
intragovernmental holdings, 69, 181
Iraq, US intervention, 7, 11, 58, 107
J
Jubilee 2000, 131
K
Kennedy , Magrit, 75
Kerry , John, 97
Keynes, John Maynard, 108
Kohl, Herb, 97
L
labor unions, 9, 10–11, 12, 109
Lassen, Mary M., 57
Legislative Reorganization Act of
1970, 87
liabilities, 79
line items (budget documents),
51–52, 94
local government: accountability ,
160; implementation of UN 
convention, 155; participatory
budgeting, 157
Lockheed Martin Corp., 11, 59
M
macroeconomics, 116, 181
mandatory spending, 47, 50, 52–53,
181; see also entitlements
Matthaei, Julie, 8
McIntyre, Robert J., 31, 32
Medicaid, 15–17, 90–91, 111
Medicare: funding of, 15–17, 23, 90;
as payroll tax, 35–36
Medicare Prescription Drug Improve-
ment and Modernization Act of
2003, 16
microeconomics, 117, 181
military budget: exemption from
cuts, 74; expenses summary , 49
military foreign aid, 58, 132–133
military industry , 11, 56–57, 58–60,
106–107
military interventions, 7, 11, 58,
106, 107
military spending: defense contrac-
tors, 56, 58, 106; increased, 23,
107; and jobs lost, 73; misman-
agement of funds, 60–62; priori-
ties, 6–7, 57–58; tax resistance
to, 23–24
minimum wage, 10–11, 109–110
monetary policy , 111–116, 181
Moynihan, Daniel Patrick, 74
N
Nader, Ralph, 59
National Association for Commissions
of Women (NACW), 169, 171
national budget. see budget, federal
national debt: balance sheet, 78–80;
benefactors, 75–77; current
amount, 68–69; debt ceiling, 69,
74, 179; deficit budget, 6,
65–66, 74–75, 179; definition,
181; foreign investment, 71–72;
growth of, 67–68, 77, 78; impact
of, 72–75; interest payments, 67;
intragovernmental holdings, 69,
181; and pension plans, 13;
public debt, 68–69, 70–72, 179
national economy: and debt of
developing countries, 129;
Federal Reserve, 111–116, 180;
federal spending, 2, 66, 72–73;
history of, 104–108; measure-
ment of performance, 116–122;
and outsourcing, 129, 130; role
of women, 2–5
national security issues, 7–8, 57–58
national wealth, 79–80, 118, 123, 181
Native Americans, 8–9, 84–85
Native American trust fund
accounts, 62–64
natural resources, 38, 123
neo-liberalism, 131–132
new budget: principles, 146–148;
strategies, 152–157; structure,
148–152; for US, 149–150; val-
ues, 146; vision, 143–146
North American Free Trade
Agreement (NAFTA), 130, 181
Norton, Gale, 63
O
off-budget / on-budget, 46, 47, 181
Office of Management and Budget
(OMB), 88, 181
Office of Women’s Initiatives and Out-
reach in the White House, 156
Index 199
Old-Age, Survivors, and Disability
Insurance (OASDI), 23
omnibus bill, 93, 181–182
open market operations, 113, 182
outlays. see expenditures
P
part-time workers, 10, 115
Patman, Wright, 113
pay equity , 43–44, 120–121
pension plans: Chilean system, 14;
women without, 4, 12–15; see
also Social Security
people of color, 3, 9, 11, 15, 39, 76
Philippines (national debt), 127
political contributions, 96–97
Population Fund (UNFPA),
134–135
Porto Alegre, Brazil, 153, 157
poverty: in developing countries,
128, 133; distribution of wealth,
17, 35, 109; and federal income
tax, 36; federal poverty measure,
154, 180; impact of tax struc-
ture, 38–41; measurement of,
56, 57, 154; minimum wage, 11,
109–110; non taxable income,
36; and pension privatization,
15; and race, 3, 11, 15, 39, 76;
resources list, 165–166; tax
credits, 33; US ranking in the
world, 121; and women, 3–4,
8–11, 15; working poor, 10, 39,
183; see also wage gap
poverty line, 36, 39, 55
President’s Interagency Council on
Women, 156
privatization: effects of, 10, 11–12,
17; health insurance, 15–17; of
Social Security , 12–15
Program on Corporations, Law and
Democracy , 105
public resources: care economy ,
37–38, 119, 123, 178; control
of, 45, 64; distribution of, 1–5;
national wealth, 79–80, 118,
123, 181; natural resources, 38;
total economy , 122–123; unpaid
labor, 3, 8, 44, 118–119, 153
public sector jobs, 10, 11–12
R
race: and discrimination, 8–9,
43–44; and poverty , 3, 11, 15,
39, 76; representation in
Congress, 98–99
Race, Gender and Work (Amott and
Matthaei), 8
Reagan administration: national
debt, 71, 73–74, 75; tax
changes, 27; and unions, 10–11;
weapons sales, 58
recession, 46, 182
reconciliation bill, 93, 94
Reed, Philip, 84
regressive taxes, 36–37
resources: activism, 161; Beijing
Platform for Action, 136; budget
documents, 25, 49, 78, 90; bud-
get literacy groups, 162; Center
for Responsive Politics, 96;
Family Self-Sufficiency
Standard, 57; list of, 165–171;
Program on Corporations, Law
and Democracy , 105; tax code,
34; women’s commissions, 171
retirement, 4; see also Social
Security
Robinson, Randall, 84
Rockefeller, John “Jay”, 97
Rubin, Marilyn Marks, 152–153
S
Samuelson, Paul A., 130
San Francisco, 155
Santa Clara County v . Southern
Pacific Railroad, 105
savings and loan bailout, 60
savings bonds, 70, 182
Schwab, Charles, 40
200 Women and the U.S. Budget
senior citizens. see elderly
slave labor, legacy of, 83–84
social programs: cuts to, 6, 7,
43–44, 54; and debt reduction,
76–77; funding of, 23, 35–36,
45–46, 107; joint federal/state,
110–111; not included in GNP ,
120; privatization, 12–15, 17;
role of, 3, 109
Social Security: case study , 12–15;
funding of, 90, 91; history of,
108–109; as payroll tax, 23,
27–28, 35–36, 40
South African Women’s Budget
Initiative (WBI), 139
spending. see expenditures
state budgets: funding, 6, 110–111;
regressive taxes, 36–37
State of the Union speech, 88, 89
State Street Boston Corp., 14
statistical information: expenses by
category , 49, 50; federal budget
totals, 47; federal income totals,
25; foreign aid funding, 132,
133; national debt totals, 68–69;
national GDP , 116; national
wealth totals, 80; receipts by
source, 25, 26; US dues owed to
UN, 134
Steele, James B., 40
stock dividends, 40
strategies.see activism
structural adjustment programs
(SAPs), 127–128, 182
surplus budget, 65, 66–67, 76–77
System of National Accounts (SNA),
117, 182
T
taxation: accounting methods,
21–22, 31; background, 22–24;
corporations, 27, 28, 179; impact
of structure, 38–41; individual
income taxes, 23–24, 25, 26–27,
181; non taxable income, 36;
other taxes, 27–28; policy , 6,
21–22; sources of federal
income, 24–26, 33–34; tax
expenditure, 28–33; tax rates,
34–37
tax code, 23–24, 28, 34, 182
tax credits, 30–31, 33
tax deductions, 30–31
tax exclusions, 31
tax expenditures, 28–33, 182
tax laws, 23–24, 28, 34
Taxol, drug development, 59–60
Tax Reform Act of 1986, 36
Temporary Assistance to Needy
Families. see welfare
terrorism, effect on US budgets, 5–8
Thoreau, Henry David, 24
Tobin, James (Tobin tax), 134, 135
U
underemployed, 10, 182
unemployment, rate in US, 10,
115–116
UNIFEM, 137, 138, 168
unified budget, 46
unions, 9, 10–11, 12, 109
United Nations (UN) programs,
134–135
unpaid labor: Australian study , 153;
care economy , 37–38, 119, 123,
178; childcare, 8, 44; elder care,
3, 8, 44; estimated value of,
118–119; total economy ,
122–123
US economy . see national economy
V
values: setting policy , 17, 64, 146;
survey of women, 7–8
veterans’ programs, 91, 109
veto, presidential, 82, 89, 94, 182
W
wage gap: declining real wages, 108;
by gender, 4, 17; low-paying
Index 201
jobs, 9–11, 136; pay equity , 10,
43–44, 120–121; of women by
race, 8–9; see also poverty
Waring, Marilyn, 117, 153
Washington, D.C.: legacy of, 83–85;
legal status, 85–86
wealth, definition, 1
wealth gap, 109; see also distribu-
tion of wealth
wealthy families: billionaires, 17;
millionaires in Congress, 97;
power elite, 97–100; tax breaks
to, 35
weapons: Cold War-era, 7, 57; global
trade, 58; as military aid, 133
welfare, 3, 32, 55, 110–111
White House, construction, 83–84
Wilson, Edmund, 23
women: in developing countries,
128, 136; discrimination, 43–44;
election of, 97–100; and interest
payments, 76; international eco-
nomic indicators, 121–122; and
national economy , 2–5; and
poverty , 3–4, 8–11, 15; resources
list, 167–168; single parents, 10,
21, 33, 38–39, 154; and tax
structure, 39–40; unpaid labor,
3, 8, 44, 118–119, 153; in US
Congress, 2, 97–100; see also
wage gap
women’s budgets. see gender bud-
gets
women’s commissions, 171
Women’s Infants and Children pro-
gram (WIC), 107, 108
women of color, 3, 39, 76
working poor, 10, 39, 183; see also
poverty
World Bank, 14, 126–129
World Peace Tax Fund Act, 24
World Trade Organization (WTO),
126, 129–130, 183
Z
Zambia (national debt), 128
202 Women and the U.S. Budget
203
J
ANE MIDGLEY IS A LONG-TIME ADVOCA TE
for peace and justice. She began her
organizing efforts in Washington, DC
at the Washington Peace Center where
she focused on the effects of militarism
on women and youth and helped to
organize national demonstrations on a
range of social justice issues. Jane has
also participated in coalition efforts for
disarmament and women’s rights, in-
cluding mobilizing national organiza-
tions to oppose the deployment of the
first-strike Cruise and Pershing II missiles in Europe and attending the
1995 United Nations Fourth World Conference on Women in China.
She has twenty five years’ experience addressing the US national
budget. She focused on budget policy as both legislative and executive
director of the Women’s International League for Peace and Freedom
and has written and spoken extensively about budget priorities. Her
study The Women’s Budget, calling for a 50% cut in military spend-
ing and an investment of those resources into human needs was used
as the basis for citizen hearings around the country .
She received her BA from Carleton College and was a fellow in
Peace Studies at the Bunting Institute at Radcliffe. She currently
directs Strategies for Success, working with nonprofits and executive
directors. She lives in Somerville, MA.
About the Author
❖
203