Bush’s proposed budget deemed D.O.A.

Did anyone else laugh when it became clear that President Bush’s new budget had a very simple philosophy behind it? Namely being, “If it’s a domestic program we should either kill it or slash it’s funding to the point that we may as well have killed it, but if it’s anything to do with the military or defense then toss more money at it.”

Reaction from lawmakers has been tepid at best, even from his fellow Republicans, and the word from several of them is that this budget is dead on arrival. Which isn’t to say aspects of it won’t be adopted anyway or that there aren’t some good ideas in it, but there’s going to be a lot of cussin’ and spittin’ at the Capitol and many of the bigger requests are unlikely to survive.  Take the farm subsidies, for example, where the President is hoping for some $587 million in cuts to various programs. Personally, I can agree with Bush that there is a need to take a weed-whacker to some of the farm subsidies out there, but I doubt it’s going to happen as there are some powerful special interest groups that have been protecting those subsidies for decades and few senators from farming states are going to risk pissing off their constituents for a lame-duck President.

It probably doesn’t help things any that the budget doesn’t include the costs of the ongoing war in Iraq—Bush has already asked for an additional $80 billion in supplemental funding this year—or the costs involved in implementing Bush’s overhaul of Social Security that is estimated will run between $1 trillion and $2 trillion, assuming that Bush manages to convince Congress it’s a good idea. And if Bush’s tax cuts are made permanent—another of his goals—then there’s added losses of revenue there that should be taken into account, but aren’t, in this budget. Bush’s team doesn’t see those losses as having a real impact until around 2010 and, hell, he won’t be in office by then so what’s the problem? Given that there’s already so much grousing over the budget proposal from both sides it’s probably safe to assume that whatever does get passed won’t resemble this initial proposal all that much so it’s hard to say how much anxiety anyone should have about it. More worrisome is the penchant Bush has for spending money we don’t really have all the while calling for more tax cuts. We’re set to break new records with the deficit for the fourth year in a row and Bush’s only solution to that problem is to try and eliminate as many domestic programs as he can. Even if he did get everything he’s asking for in his budget most economists say it wouldn’t be enough to halve the deficit by 2009 as Bush likes to claim mainly due to open ended spending on the war that has no end in sight.

For those interested in hearing more about the proposed budget, NPR has been doing a great job of explaining the proposal and the reactions from lawmakers on both sides of the aisle that you might want to check out.

3 thoughts on “Bush’s proposed budget deemed D.O.A.

  1. The cost of Bush’s plan to privatize Social Security will not be reflected in any of his budgets. He claims to want to fix the program, but his objective is to eviscerate it. The burden of the privatization cost will be born by future retirees whose benefits will be reduced by the “clawback” provision of the implementation plan. Paul Krugman’s latest Op-Ed columns have been on Social Security. Unfortunately his first two pieces are in the NY Times archives ($). The full text version of his latest article is still available (for the next few days.) The links are

    Jan 21
    http://query.nytimes.com/gst/abstract.html?res=F50E15FC3A5C0C728EDDA80894DD404482
    Feb 2
    http://query.nytimes.com/gst/abstract.html?res=F70C1FFC395F0C728CDDAB0894DD404482
    Feb 8
    http://www.nytimes.com/2005/02/08/opinion/08krugman.html

    As to his budget, it is a continuation of the Republican train wreck that began with the Reagan administration.

    For a course I’m taking, I had to graph National Debt as a percentage of Gross Domestic Product (GDP). During WWII the ratio peaked at 124% and then began to decline – even during the many years when we were running deficits. From 1945 to 1972 our GDP was growing faster than our debt. (The long term growth in GDP – actually GNP – from 1870 on, has been on the order of 3.3% to 3.4%.) During the Reagan years debt, in constant dollars, grew at the rate of about 8.5%. The doubling time for that rate of growth is about 8.5 years. We turned the corner with Clinton’s surpluses, but that trend reversed with the return of the Bush dynasty. The last data point that I have shows the ratio at 64%, which is 4 points below the peak of the Reagan years. It is too soon to tell what the debt’s growth rate will be, but I shudder inwardly.

    The point of expressing debt as a percentage of GDP is to gauge, subjectively, whether the economy can handle debt. (In round numbers about 3% of GDP will go toward debt service.) The real problem, however, is how much of the Federal Government’s revenue stream is consumed by debt service. That is revenue that cannot be spent on something else. Back to Les’s observation on tax cuts, IMO these people are reckless idealogs, not fiscal conservatives.

    By the way the projections on Social Security were prepared by the agency’s actuaries. In the interest of prudence, their assumptions were on the pessimistic side. One assumption being that GDP would only grow at 1% per year. Bush happily used the actuaries pessimistic assumptions to present the need for “reform.” However, the administration projected GDP growth at 3.5% when it calculated its declining budget deficits.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.