Blasting the Budget: Bush Asks Congress to Cut More

On February 7, 2005, President Bush submitted his budget proposal to Congress. At $2.57 trillion dollars, the plan sounds quite generous, but actually, it cuts deeply into domestic spending, even eliminating 150 federal programs.

Bush’s proposal for fiscal year (FY) 2006, which begins on October 1, 2005, does not include funding for the operations in Iraq and Afghanistan, nor does it contain the money needed to restructure Social Security, which is Bush’s top legislative priority. These activities would be funded by separate appropriations bills, but should be incorporated into overall government spending estimates. Called "off budget" - but actually requires real tax dollars and real selling of Treasury bonds to borrow the money to pay for them.

What’s getting cut

Roughly only 8 percent of the budget is up for review by Congress each year.This spending, known as discretionary spending, is the primary site of the cutbacks.

Bush’s budget restrains the growth of discretionary spending to 2.1 percent, which is lower than the 2.3 percent rate of annual inflation. Some will say this is an increase; however, because of inflation, this means that many programs that are funded by discretionary funds will have less money to work with in FY 2006 than they did in FY 2005.

Primarily, domestic programs like farmers’ subsidies and housing and education projects will feel the squeeze. Foreign aid, which is also a part of discretionary spending, gets an increase in the Bush plan, as does defense and homeland security spending.

Health care cuts

Bush’s budget also cuts back on health care entitlements by spending less on veterans’ benefits and Medicaid.

The President is seeking a 2.7 percent increase for the Department of Veterans Affairs’ discretionary spending, most of which goes to health care for veterans. But this "increase" will actually result in a cut, since the cost of health care goes up rapidly each year.

To help make up the difference, Bush has proposed that vets pay a $250/year fee for government health care and a $15 co-payment for prescription drugs (up from $7). Though the changes have veterans’ groups groaning, Bush supporters argue that the fees are reasonable, especially when compared with private health care plans.

But opponents say that the changes amount to a hidden health care tax for veterans, who are entitled to benefits after serving their country.

The White House is also recommending cuts to Medicaid, the joint federal-state healthcare insurance program for the poor, elderly, and disabled. More specifically, Bush would reduce the program by $60 billion over the next ten years. Democrats, and Governors from both parties, are likely to forcefully oppose this portion of the budget proposal.

Why cut?

The deep deficit from all the borrowing is the President’s stated primary reason for cutting back on domestic programs. In addition, of course, cutting back on what government does while leaving more responsibility for individuals is a major philosophy of the administration and the Republican party.

During his campaign, Bush promised to cut the deficit in half by 2009. The administration is using the initial 2004 fiscal deficit projection of $521 billion as the figure to cut in half, even though the deficit actually stood at $412 billion by the end of FY 2004. This means that the Bush administration is trying to reach $260 billion by 2009, instead of $206 billion (and $54 billion is hardly splitting hairs).

But if the Bush plan is enacted by Congress and carried through to 2009, the deficit would dip past the President’s goal to $233 billion.

Bush’s budget priorities

The White House budget plan also calls for Congress to make permanent the 2001 and 2003 tax cuts at a cost of $1.1 trillion over the next ten years.

Democrats argue that many of these tax cuts go to the wealthiest Americans, and because the tax cuts are paired with funding cuts for programs like Medicaid that serve the neediest Americans, Democrats say that Bush is giving to the rich and taking from the poor.

The Bush administration contends that the tax cuts give people more money to spend and spending helps businesses and businesses are what cause jobs and that’s what causes the economy to grow -- benefiting all Americans. But Democrats are dubious that general economic growth necessarily trickles down to low-income Americans. Very wealthy people do not have to spend more money. They already have enough for whatever they need or want.

Will the cuts go through?

For FY 2004, President Bush wanted to eliminate 65 programs and deeply cut into the funding for 63 more, but Congress abolished only four programs and cut spending in 20, according to the House Appropriations Committee.

But this year, Republicans have more seats in both the House and Senate, so they have a better chance of passing Bush’s budget priorities.

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Article Posted on: 2/11/2005