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Bush's Budget: The Bad Math Is No Secret
Published on Tuesday, February 8, 2005 by The Nation
Bush's Budget: The Bad Math Is No Secret
by David Corn
 

If it's budget time, it must be disinformation time. That's how it goes in the Bush II era. George W. Bush released a budget today that he claims is responsible, honest, and designed to cut the $400 billion-plus deficit in half by 2009. Not so. By now, you probably have heard the obvious criticisms. The budget does not include the $80 billion Bush is asking for the wars in Iraq and Afghanistan. (And that probably won't cover the full tab.) It doesn't account for the $1 trillion to $2 trillion that Bush needs to pay for the private investment accounts he wants to carve out of Social Security. It also doesn't recognize that several hundred billion dollars will disappear from the revenue stream when the government rejiggers the alternative minimum tax--which it must--to prevent this tax (written to apply to corporations that make creative use of loopholes) from hitting middle-class individual tax filers.

There are few secrets about Bush's budgetary shenanigans. While the military gets a hefty boost, housing, education and environmental protection gets hammered. Every advocacy group concerned with federal spending was issuing press releases today. Folks on Capitol Hill were doing the same. Senator Jim Jeffords, the Republican-turned-independent from Vermont, put out a short list of the worst of Bush's proposed cuts. Here it is:

  • Environment. Cuts the Environmental Protection Agency (EPA) budget by 5.6 percent from $8.02 billion to $7.57 billion, culminating in an almost 10 percent cut over two years. Most cuts come in efforts to maintain and improve the nation's clean water infrastructure.
  • Veterans. More than doubles the co-payment charged to many veterans for prescription drugs and would require some to pay a new fee of $250 a year for the privilege of using the Veterans health care system.
  • Health Care. Cuts Medicaid funding by $45 billion over 10 years and eliminates 28 health programs, totaling $1.36 billion. These programs range from rural hospital grants (cuts $39.5 million) to emergency medical services for children (cuts $20 million).
  • Job Training. Cuts federal spending on job training by a half-billion dollars. Federal job training programs, including dislocated-worker training, will be cut by $200 million. Federal aid to states for job training, including funding to train veterans, will be cut by $300 million.
  • Amtrak. Eliminates all funding for Amtrak, calling bankruptcy proceedings as the solution for our nation's rail system.
  • Low Income Home Energy Assistance (LIHEAP). Cuts LIHEAP by over 8 percent, from $2.2 billion to $2 billion.
  • Parks. Cuts the National Park Service by 3 percent from $2.31 billion to $2.24 billion.

The Bush White House defends its cuts, claiming it is targeting programs that don't work. Could it be that the Bushies are right? That those darn bureaucrats running the clean water programs at the EPA are flushing taxpayer dollars down the drain? Perhaps. But here's the thing: if Bush is not being honest about the macro dimensions of his budget--and he's not--then how can he be trusted on the details? Short answer: he cannot. I am willing to believe waste and unnecessary spending can be found throughout government. Maybe even at the Pentagon. (Gosh, no!) But I am not willing to hand the scalpel to Bush and his lieutenants when they spin numbers and refuse to acknowledge the true budgetary problems that they have caused and overseen. For a (relatively) easy-to-follow analysis of Bush's budget proposal, I turn to the Center on Budget and Policy Priorities. Yeah, they're a bunch of liberals over there. But they know their math. Here are some excerpts from the center's first review of Bush's budget:

The Priorities of the Budget

The budget makes very substantial cuts in domestic spending at the same time that it calls for large additional tax cuts. If defense, homeland security, and international affairs are funded at the levels the President proposes, then by 2010, funding for domestic discretionary programs (outside homeland security) would have to be cut about $65 billion, or 16 percent, below the 2005 levels, adjusted for inflation. These cuts hit program...such as education, veterans' health care, and environmental protection....

The budget proposes tax cuts costing $1.6 trillion over 10 years (including interest), even though the paucity of revenues is the main reason behind the rise in the deficit. Revenues are now lower, as a share of the economy, than in any year in the 1960s, the 1970s, the 1980s, or the 1990s. Yet the Administration's budget would make its tax cuts permanent and add a number of new tax cuts on top. It proposes, for example, a series of new tax cuts related to savings that, according to an analysis by the Tax Policy Center of the Urban Institute and the Brookings Institution, would go overwhelmingly to those with incomes above $100,000....The Congressional Research Service has estimated that these new tax cuts eventually cost the equivalent today of $300 billion to $500 billion over ten years.

Key low-income programs would be hit even though these programs have contributed little to the return of the deficit, and since 2000, poverty has risen and the number of Americans without health insurance has climbed. The number of poor went up for the third straight year in 2003, the share of total income that goes to the bottom two-fifths of households has fallen to one of its lowest levels since the end of World War II, and the number of people lacking health insurance rose to 45 million in 2003, the highest level on record. Yet the budget proposes food stamp cuts that will eliminate benefits for 200,000 to 300,000 people primarily in low-income working families and a five-year freeze on child care funding that, according to tables in the Administration's budget, will result in cutting the number of low-income children receiving child care assistance by 300,000 in 2009. The budget also proposes to reduce Medicaid funding by at least $45 billion over 10 years; such a proposal would almost certainly push hard-pressed states to eliminate coverage for a substantial number of low-income people, increasing the ranks of the uninsured and the underinsured.

Effects on the Deficit

Despite cuts to scores of domestic programs, the Administration's budget increases rather than decreases the deficit over the next five years. As shown by its own figures, the effect of the Administration's budget is to increase total deficits over the next five years from $1.364 trillion under current law to $1.393 trillion. A main reason for this outcome is the tax-cut proposals the Administration has included in its budget.

Over the longer run, by proposing to make its tax cuts permanent, the Administration's budget proposals would dramatically swell the deficit. In 2015 alone, the Administration's tax proposals -- including the cost of making the 2001 and 2003 tax cuts permanent -- would increase the deficit by $358 billion. If relief from the Alternative Minimum Tax that is due to expire at the end of this year is extended, as is widely expected, this would add another $163 billion to the deficit in 2009. The Administrations proposal to replace part of Social Security with private accounts also would swell deficits further. It would add $1.4 trillion to deficits in its first ten years (2019 to 2028) and another $3.5 trillion in the decade after that. In 2015 alone, it would add $177 billion.

By the way, the Center also notes that for the first time since 1989 this budget "fails to provide information about the funding of specific discretionary programs beyond the upcoming budget year, thereby hiding the impact of the large discretionary cuts it is proposing." That is, the Bush White House is hiding the greater hits to come to education, veterans' health care, and many other programs after 2009. The White House, according to the Center, also "insists on its practice of budgeting for only five years, masking the full cost of its tax cuts, while it simultaneously insists on using 'infinite' or 75-year time horizons" when discussing such programs as Social Security. How convenient.

Bush is not playing it straight on the big numbers. He never has. So the dramatic budget cuts he now proposes cannot be accepted as a good-faith fix for the mess that he helped create.

David Corn, the Washington editor of The Nation magazine, has spent years analyzing the policies and pursuing the lies that spew out of the nation's capital. He is a novelist, biographer, and television and radio commentator who is able to both decipher and scrutinize Washington.

© 2005 The Nation

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