Jobs, Taxes & Benefits

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Money: The Latest on the Budget and Iraq Spending

One of Congress’ many duties is to oversee federal spending. So legislators have been scrutinizing the Bush administration’s 2005 budget request submitted in February 2004. Currently, a clash of philosophies in the Senate is keeping the budget from passing; debates over extending tax cuts while military expenses keep growing are played out as "pay-as-you-go" rules. The debates have gone on for six weeks and show no signs of slowing.

What is Pay-as-you-go?

Pay-as-you-go means compensating for new spending or tax cuts by decreasing spending in other areas. Most people use this concept to manage their personal finances. For example, if the price of gas goes up and causes a family’s transportation cost to increase drastically, that family is likely to cut in other areas - fewer dinners out, a shorter vacation, etc. Pay-as-you-go applies the same principle on a federal level. Congress must recompense all new tax cuts and expenditures except for (and this is a very big exception) new spending on defense and security.

In the Senate, all Democrats and four Republicans think that it is a great idea to apply these rules for the next five years. They say it is fiscally responsible because it prevents federal spending from causing deeper deficit. The majority of Republicans think it’s a terrible idea because pay-as-you-go would make it almost impossible to extend the Bush tax cuts, which they say are helping the economy to recover.

Over the next ten years, the Bush tax cuts will cost approximately $2 trillion. Therefore, it would be impractical and undesirable to cut domestic spending to make up for that sum, so pay-as-you-go rules effectively kill the tax cuts. As Robert Bixby, director of non-profit research group the Concord Coalition, told The New York Times, pay-as-you-go "sounds like an obscure technical issue, but is extremely important."

The Republican Senators in favor of pay-as-you-go rules are John McCain of Arizona, Olympia Snowe and Susan Collins of Maine, and Lincoln Chafee of Rhode Island. Senate Majority Leader Bill Frist (R- Tennessee) hopes to settle this matter in early June, after the Memorial Day recess.

More budget concerns - Iraq

On May 20, 2004, the House of Representatives easily passed a spending bill that allots $447 billion to the military. $25 billion of that will pay for military costs in Iraq and Afghanistan from October 1, 2004 until early 2005. The bill has yet to clear the Senate, where war funding is a sticky issue.

Senators on both sides of the aisle would like more detailed information about how the money will be spent. According to The New York Times, The White House did not specifically outline the funding necessary for the Iraq and Afghanistan operations.

At $5 billion a month, the operations are a considerable cost. Deputy Defense Secretary Paul D. Wolfowitz estimates the war spending could cost $60 billion next year. Some senators, like Hillary Clinton (D-NY) suspect it will cost more.

Where the money will go

Lawmakers do know that some of the Iraq/Afghanistan funding will go to maintaining 135,000 soldiers in Iraq until 2005. The Pentagon originally planned to reduce that number to 115,000 troops this summer, but sending soldiers home is not possible because of the increasing security threat in Iraq.

In addition, the bill increases military pay by 3.5 percent and raises hazardous duty and family separation pay. The measure also improves survivor benefits and does away with a limit on the construction of military housing. $1 billion will go for vehicle armor and replenishing arms and ammunition.

How prisoner abuse affects military spending

Some senators are concerned about giving more money to the military when it is likely that the army violated the Geneva Convention, an agreement that makes it a crime to treat prisoners of war inhumanely.

Much of the Senate’s recent debate has centered on the Abu Ghraib prison abuses; the scandal has left some senators wondering if they can trust Wolfowitz, Rumsfeld, and other military officials’ assessment of the war. While the Iraqi prisoner abuse is unlikely to inhibit spending, Congress is more inquisitive about the war operations and exactly where the money will be going.

Turning over power but not cost

Although President Bush plans to restore Iraqi sovereignty on June 30, American soldiers will continue to "support" Iraq. ("Support" is the word carefully chosen by the Defense Department to convey that the military will no longer control Iraq.) This means that the U.S. will continue its billion-dollar tab for the Iraq operation, although American forces will not have power to help govern Iraq during the reconstruction process.

What do you think?

Discuss military spending with other women who care. Log on to one of our WomenMatter online forums; express what you think, find out what others think. Then, contact your representatives and voice your opinion to them. If you want to stay updated on the budget and other issues concerning Jobs, Taxes, and Benefits sign up for an e alert.

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Article Posted on: 5/26/2004

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