An intersting budget analaysis

There is a very interesting analysis of Bush's ideas of fiscal restraint by Edmund Andrews in the 3/21/04 NY Times - Managing the Deficit With Plans to Spend. Many have been screaming for some time about the massive growth of the deficit. Arguments have raged from massive tax cuts for the wealthy, to social programs suffering under and expanded defense budget, to the implications of the new Medicare bill - or all of the above. This is an election year however, and Bush has been talking "fiscal restraint."

In a what has become a typical move of Bush Jrs policy approach, he has stolen a page from the policy book of a former president - this time his father (he also likes resuscitating Reagan policies) - pulling out the Balanced Budget and Emergency Deficit Control Act of 1985 which was modified by Bush Sr. in 1990. But Bush Jr. has made an important shift in that policy (emphases mine):

But the House bill makes one basic switch: where the old law attacked measures that would lead to a "net deficit increase,'' the new one attacks measures that lead to "an increase in direct spending.''

Put another way, the prime concern is not a balanced budget. It is growth in government spending. Unlike the "pay as you go'' rules of the 1990's, Congress would not have to offset the costs of new tax cuts.

And put another way, the deficit could grow in a relatively unchecked manner.

Andrews points out that the top economic priority for Bush is making permanent his "temporary tax cuts" (and you thought it was getting the economy running again) which will add $1.3 TRILLION in debt in the next ten years. This is the largest single contributor to the deficit. The proposed Congressional legislation would not hinder the Medicare bill, or supplemental spending for "sudden or unforeseen" events. (Andrews notes that ongoing spending in Iraq, but notes that the White House says the wording would not impact supplemental allocations for Iraq.)

So if the budget must be balanced, where would the money come from? You guessed it:

IF Mr. Bush and Republican Congressional leaders prevail, the burden of reducing the federal budget deficit will fall primarily on domestic discretionary programs - housing vouchers for low-income families and public housing, grants to local police and fire departments and block grants for child care assistance.

Hey! More "compassionate conservatism"!

As Anderson notes, according to the Center on Budget and Policy Priorities, the plan would cut "domestic discretionary spending by $120 billion below the levels needed to keep up with inflation." Given that "domestic discretionary programs account for only about 17 percent of the federal budget", then that is unlikely to have much affect on stopping deficit growth. (Not to mention reduce it).

So here we go again. The Bush Administration has put forward their best effort at milking the treasury for pet programs at the expense of the health of the nation. I am sure the plan will be pushed as a bold and dramatic step. It is indeed that - a step towards destroying the quality of life for 80% of the population. It is also a step that fits nicely with the privatization of government services. Those services include: health care (both Medicare and Medicaid), all of the education system, and prisons/corrections to name a few. Of course, we are already moving rapidly down this path. Meanwhile, what about programs such as food stamps, or assistance to needy families, or (gasp) unemployment? Well, you either eliminate them (already in process), or you turn them over to religious groups (faith-based initiatives) or volunteer activities (Bush Senior's "thousand points of light').

I really can't believe that this is the future that most in the US want to go to ... or pay for.

Center on Budget and Policy Priorities has some nice analyses of the new proposal:

Do Tax Cuts Pay For Themselves? Economists Say No.

HOUSE BUDGET COMMITTEE PROCESS PROPOSAL WOULD NOT RESTRAIN THOSE
AREAS OF THE BUDGET THAT HAVE CONTRIBUTED MOST TO THE DEFICITS

MANY LOW-INCOME FAMILIES WOULD LOSE FEDERAL HOUSING ASSISTANCE UNDER PROPOSED FUNDING CUTS

CHAIRMAN NUSSLE’S DISCRETIONARY SPENDING CAP PROPOSAL REPRESENTS UNSOUND POLICY

HOUSE BUDGET COMMITTEE PAY-AS-YOU-GO PROPOSAL WOULD EXEMPT ALL TAX CUTS AND MAKE A MOCKERY OF EFFORTS TO RESTORE FISCAL DISCIPLINE

Posted by rowan at March 21, 2004 8:05 AM | TrackBack | [eMail this article!] |