WASHINGTON – Critics of President Bush's proposed $2.4 trillion budget proposal were in wide supply, complaining that the numbers don't add up and suggesting the president's plan for deficit reduction will have an "exploding cigar effect" after its five-year window ends.
The criticism came shortly after the president's budget plan for fiscal year 2005 arrived on Capitol Hill on Monday. In it, Bush calls for limiting the non-defense, non-entitlement spending to 0.5 percent growth for the year, cutting the budgets of seven out of 15 Cabinet-level agencies, eliminating 65 programs and reducing the size of 63 others.
"In some cases, we say 'mission accomplished,' that this was intended to be a short-term program. It's done its job. In other cases, we say this is a program that is duplicative of other programs that we have in place, especially when we have new and better programs to deal with the same subject matter. And in some cases, it's because the program is not showing the results it should be showing," Office of Management and Budget (search) Director Josh Bolten said, explaining how the cuts were made.
The cost of the eliminated programs adds up to a yearly savings of $4.9 billion, a fraction of the overall budget.
With a 7 percent increase in defense spending and a 10 percent rise in homeland security spending, critics say whatever austerity the president proposed for some agencies will have little impact on controlling runaway spending.
"Domestic discretionary spending is a very small part of overall federal spending. It's only seventeen percent of federal spending. That's not where the problem is. The great growth in spending has been, as you know, on defense and homeland security, areas that we all supported to better protect this nation," said Senate Budget Committee ranking member Kent Conrad (search), D-N.D.
Though the deficit will be among the highest dollar figures ever, at $364 billion, Bolten said it reflects only 4.5 percent of the gross domestic product.
The deficit "is not historically out of range. Deficits have been this large or larger in six of the last twenty-five years, including a peak of six percent in 1983," he said.
But Democrats call the president's budget estimates overly optimistic and question his credibility considering that he has not included in his budget estimates for ongoing troop deployments in Afghanistan and Iraq.
"There's not a dime in this budget for the deployment in Iraq. There's not a dime in this budget for the deployment in Afghanistan. This budget is notable not only for what it includes but for what it excludes," said Rep. John Spratt (search), D-S.C., ranking member on the House Budget Committee.
"I think it's helpful to look back and see what the president has told us in the past, to check his credibility on these issues. Remember, in 2001 he told us we could have massive tax cuts and even if there was an economic slowdown, there would be no budget deficits (search). He was wrong, and we have massive budget deficits," said Conrad.
Robert L. Bixby, executive director of the Concord Coalition (search), an organization devoted to deficit reduction, said the president's plan acknowledges that it also does not calculate beyond a five-year window for planning its budget, when certain presumptions will either expire or no longer be avoidable. Bixby's group also said the president has combined optimistic assumptions with omitted costs to get to his budget.
"This fiscally irresponsible combination produces an exploding cigar effect timed to go off just when the baby boomers begin to receive Social Security (search) and Medicare (search) at the end of the decade," Bixby said.
The Budget Breakdown
As it stands now, the Pentagon budget's 7 percent increase is likely to skyrocket before the fiscal year is out. The White House has said that it will likely make a request of up to $50 billion for additional funding for security forces after November of this year.
Among the chief expenses is a 7.3 percent boost to the Treasury Department's budget to $396.50 billion. Of that sum, $350 billion goes for interest payments to finance the national debt (search), which now stands at around $7 trillion.
The Department of Homeland Security's (search) 8.9 percent boost to $31.4 billion is the result of grants to first responders and funds to enhance aviation and transportation security to improve baggage screening equipment and efficiency. Overall, homeland security functions, including programs across agencies outside DHS, will increase to 14.4 percent, or $47.4 billion in homeland security funding.
The State Department and budgeting for international assistance would endure the biggest cut of 34.8 percent to $30.4 billion. Foreign assistance would drop from this year's $36 billion to $19 billion next year. The bulk of that drop comes from reductions in reconstruction spending in Iraq and Afghanistan. Included in the figure for next year is about $5.7 billion in military and economic aid to frontline allies in the war on terrorism and $1.2 billion for rebuilding Afghanistan.
The Department of Justice would receive $21.8 billion, a decrease of 12.7 percent, though anti-terror programs would receive a funding boost. The department's 12.7 percent decrease in overall spending results primarily from a reduction of $931 million in spending from the crime victims fund, which has had savings of more than $1 billion in each of the last two years.
The Social Security Administration (search) is one of the winners, with an increase of 10.7 percent for a total budget of $53.7 billion. Social Security payments, which are estimated to total $519 billion next year, are not considered part of the federal budget.
"No funds have been set aside for a Social Security reform proposal; however, the administration has expressed interest in making such a proposal. These costs would also come mostly beyond the next five years," read a statement released by the Concord Coalition.
The Health and Human Services' budget of $571.6 billion also includes a 2.7 percent boost. More than 85 percent of the HHS budget is for mandatory payments for Medicare and Medicaid (search), the government health insurance programs for seniors and the poor, respectively.
Among the new initiatives proposed by the Bush administration is the promotion of marriage among low-income Americans, at a cost of $120 million, to be matched by participating states.
The National Aeronautics and Space Administration's (search) $16.2 billion budget would go up by 5.6 percent. NASA's additional $900 million reflects President Bush's plan to refocus the agency on returning to the moon and then exploring Mars and beyond in coming decades. In addition to the increase, NASA is planning to reallocate $11 billion over the next five years for the effort.
The Department of Agriculture's $83.3 billion budget includes a boost of 6.2 percent, and a decrease in discretionary spending of 8.1 percent. Natural resources and environmental programs took big hits in the proposed budget. The Forest Service (search) budget fell 7.6 percent to $4.2 billion.
Funds associated with mad cow disease (search) include $33 million to speed development of a national animal identification system (search) and $17 million to test for mad cow disease at farms and rendering plants. Agriculture Secretary Ann Veneman announced the mad cow proposals last week, along with $178 million to complete renovation of the National Centers for Animal Health in Ames, Iowa.
The Permanence of Tax Cuts
While Congress has habitually had trouble keeping down the percentage to match the president's proposed increases, Monday's criticism fell not on the plans for restraining spending now, but on the ability to cut the deficit in five years, when several programs will need to be addressed.
"The budget purports to show the deficit being cut in half by 2009, but meets this goal by omitting about $160 billion in costs in 2009 that the administration itself intends to propose in future budgets," said Robert Greenstein, executive director of the Center on Budget and Policy Priorities (search).
"The bulk of the cost of making the 2001 and 2003 tax cuts permanent would occur after 2010, when most of these tax cuts are scheduled to expire. The bulk of the costs from the beginning of the baby boomers' retirement also occur after 2009," Greenstein said.
"Cutting the budget deficit in half over the next five years is a tall tale, derived in large part by omitting very likely or inevitable costs for items such as proposals for programs that the administration strongly supports, including: more than $50 billion for operations in Iraq, true alternative minimum tax (search) relief instead of a one-year patch and extension of the existing tax breaks," said Steve Ellis, vice president for programs at Taxpayers for Common Sense (search).
"The budget assumes that non-defense discretionary spending will remain frozen over the next five years although such spending has averaged more than five percent annual growth over the past ten years. This assumption produces 'savings' that may well prove to be illusory," said the Concord Coalition.
Supporters of the president said that while Bush's plan is unlikely to pass Congress as is — it is just a proposal — none of the president's critics has offered a viable solution for eliminating the deficit.
"My guess is that the Democrats will continue to beat their chests about the deficit but will not put forward a plan, will not put forth bills to eliminate the tax cuts that the president has proposed," said House Budget Committee Chairman Jim Nussle of Iowa.
Democrats are "not calling for responsible spending — they're calling for a tax hike," said House Majority Leader Tom DeLay of Texas.