Sharp analysis here:
The administration’s new budget proposes spending $5.9 billion to promote math in America. This might not be a bad idea, if only because politicians seemingly cannot count. This year, the president wants to spend $2.77 trillion, including record amounts of money for both domestic programs and national defense/homeland security. The details are even less encouraging. His new budget will add $18 billion for hurricane relief on top of the billions already blanketing the affected regions, as well as comical proposals such as $148 million for the Solar America Initiative and $55 million for activities during the International Polar Year. And yet the White House argues that this year we will “maintain our pro-growth policies and insist on spending restraint.”
The tax rate reductions have been a success, so the first part of that claim is fine. After that, it goes downhill. President Bush’s previous budgets increased spending by a dramatic 48.7 percent in six years. Defense spending increased by 67 percent while non-defense spending increased by 49 percent. It sometimes seems as if things are getting worse with each passing year. This year, total spending is increasing by 9.6 percent and has reached 20.8 percent as a percentage of GDP, up from 18.4 percent when President Clinton left officeÃ¢â‚¬â€thatÃ¢â‚¬â„¢s a $909 billion increase in six years. The administration has been arguing that much of the increase in non-defense spending stemmed from higher homeland-security spending. However, the fact is that over half of all new spending in the past two years is from areas unrelated to defense and homeland security.
Ideally, the administration and Congress should find significant savings elsewhere in the budget if they want more security spending. That is theoretically what the FY2007 budget will accomplish. First, it will supposedly save taxpayers $14.5 billion by cutting and eliminating roughly 140 wasteful programs. But the proposed cuts represent 0.5 percent of the $2.77 trillion budget. And last year, he proposed about $16 billion in savings and barely got $6.5 billion from CongressÃ¢â‚¬â€roughly 40 percent of the amount requested. If history is any guide, heÃ¢â‚¬â„¢ll get $5.8 billion in cuts, which is about 0.2 percent of the total budget. Hardly a sign of dramatic spending restraint.
Second, the administration proposes once again to virtually freeze non-homeland non-defense spending in order to maintain national defense and cut the deficit in half by 2009. But the portion of the budget Bush wants to restrain represents a ridiculously small portionÃ¢â‚¬â€$497 billionÃ¢â‚¬â€of a $2.7 trillion pie. Unless they apply to aggregate outlays, these spending limits are meaningless.
Until the administration is ready to significantly reduce the mandatory side of the budget, its credibility will remain weak. The administration does claim to be tackling the problem of increased entitlement spending this year, but letÃ¢â‚¬â„¢s look at the fine print. The White House proposed to cut about $36 billion out of Medicare over five years. Medicare spending over the next five years will be about $2.6 trillion. So the alleged entitlement cuts represent one and a half percent of Medicare spending. Put another way, the White HouseÃ¢â‚¬â„¢s proposal is to reduce the programÃ¢â‚¬â„¢s growth from 70 percent to 66 percent over the next five yearsÃ¢â‚¬â€hardly a revolution.
Moreover, planning to cut the deficit in half from to $423 billion in FY2006 to $208 billion by 2009 is a wrong measure of fiscal responsibility. The problem is spending, not how it is financed. The White House should be focusing on reducing the size of government, not just the part financed by borrowing.
Focusing on the deficit will also make it harder to make needed policy changes. For instance, the administration only proposes to give taxpayers one year of relief from the alternative minimum tax. This means that between 15 and 20 million taxpayers will soon be hit by this wretched tax. It also guarantees that the President will have to battle hard to make his tax cuts permanent. Ironically, some Republicans have been the main opponents to President BushÃ¢â‚¬â„¢s tax reform and spending discipline agenda, establishing their reputation as the party of all big spenders.
The presidentÃ¢â‚¬â„¢s so-called fiscal responsibility relies on extraordinary spending restraint from CongressÃ¢â‚¬â€even though the White House has lost almost all credibility on that issue since the veto pen has remained sheathed for more than five years. The president has urged Congress to help him rein in federal spending by adopting a line item veto amendment and getting rid of all earmarks in the budget. He should know better. After all, this Congress is responsible for a transportation bill jammed with 6,371 pork projects, such as therapeutic horseback riding programs and funds to teen “goth” culture in Blue Springs, Missouri.
Congress is addicted to pork and to spending increases, and this is unlikely to be cured without a dramatic change in behavior by the White House. Unfortunately, the White House has dirty hands. How can the president expect Congress to cut spending when he is unwilling to give up his pet projects like science or defense? The White House proposes that funding for the Pentagon be increased by 4.8 percent to $439.3 billion and that the Department of Homeland SecurityÃ¢â‚¬â„¢s Budget increased by 5 percent. These outlays are certainly justified because of external threats, but we shouldnÃ¢â‚¬â„¢t forget that these two areas are not impervious to wasteful spending and pork-barrel earmarks
This may sound like a depressing indictment, but things may get worse before they get better. The administration has left out important items from budget calculations, such as most of a recent $120 billion supplemental for Iraq and Afghanistan and some hurricane relief.
Somebody in Washington needs to remind politicians that a dollar cannot be spent twice. Every time government spends money, it is diverting resources from productive use. This is true if government finances that spending with taxes. And it is true of government finances that spending with borrowing. Squandering $5.9 billion on math education might be a small price to pay if politicians somehow learned the preceding lesson. But donÃ¢â‚¬â„¢t hold your breath.
VÃƒÂ©ronique de Rugy is a research fellow at the American Enterprise Institute.