Jewish World Review Feb. 11, 2005 / 2 Adar I, 5765

Robert Robb

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Consumer Reports


Federal ‘belt-tightening’: You call that an austerity budget?


http://www.jewishworldreview.com | In its budget released this week, the Bush administration purports to increase federal spending by 3.6 percent.

But that excludes likely supplementals, in particular for continuing operations in Iraq and Afghanistan. Assuming an additional $75 billion for those endeavors, less than was spent either last year or this, the administration is actually proposing an increase in spending of 6.6 percent, or twice as much as population growth and inflation.

That's what passes for austerity in Washington these days.

President Bush would prefer to focus attention on so-called non-security discretionary spending, which he proposes to modestly reduce. But such spending - which excludes defense, homeland security and entitlements - constitutes just 15 percent of the federal budget.

Moreover, the term "discretionary spending" is highly misleading. In fact, the entire federal budget is discretionary. Congress is not required to spend any particular amount on any particular thing.

Congress has chosen to put over half of the budget on automatic pilot through entitlements. But there's nothing that prevents what is spent on those programs from being changed at any time, except the lack of political will to do so.

Moreover, taxpayers are on the hook for everything the federal government spends, regardless of how politicians choose to label it. So, it's total federal spending that's the important number.

And there, Bush's record is not very good. Even if his 2006 budget is adopted, again assuming an Iraq supplemental, spending will have increased at a 7 percent annual pace on his watch. It was half that during the Clinton years.

If Republicans really wanted to, there's an opportunity to do something meaningful about federal spending and balancing the federal budget. Despite the Bush tax cuts, federal revenue growth is quite strong.

Individual income taxes are projected to increase more than 10 percent this year and over 8 percent next year. The Bush administration estimates that they will increase more than 9 percent a year for the remainder of the decade.

So, with true spending restraint, substantial progress could be made toward balancing the budget while continuing and even advancing pro-growth tax cuts and policies.

But true spending restraint requires more than simply trimming around the edges of a small part of the federal budget. It requires reconfiguring what the federal government does.

Subventions from the federal to state and local governments constitute $436 billion, or 16 percent, of the Bush budget. And, contrary to bellyaching by state and local officials, that's up 37 percent during Bush's tenure. From the standpoint of financial management and accountability, it makes little sense to be shipping money to Washington only to have it shipped right back.

There is no state too poor to pay to educate its children. And it's highly doubtful that Washington politicos have a greater interest in doing it well than state and local officials who are closer and more accountable.

The increased risk of terrorism argues for more coordination and interaction between federal and state and local law enforcement agencies. But it doesn't argue for a greater financial role for the federal government in hiring and equipping firefighters and cops. Public safety should have the first claim on the state and local fisc.

Nor is there any state too poor to pay for its own roads, public transit or community development.

There is an argument for a federal role in low-income assistance programs, which take up $368 billion, or 14 percent, of the Bush budget. Assuming the poor would migrate to states with more generous benefits, liberals worry that there would be a disincentive for local assistance without minimum federal standards.

But currently, there's a perverse incentive for an upward spiral in spending on programs such as Medicaid, where state officials make the decision to expand coverage but the federal government picks up most of the tab. In previous budgets, the Bush administration has proposed giving states more latitude about coverage in exchange for converting the program from an entitlement to a block grant.

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The Bush budget proposes modest reductions in farm subsidies, but not getting out of the commodity support business altogether. Nor does it seek to alleviate the burden on young workers to pay for the health care and retirement income of affluent seniors.

Republicans claim to be the party of smaller government and fiscal discipline. But that's a tough claim to maintain given the Bush administration's excessive pride over showing some modest spending restraint over a small portion of the federal budget, and the fretting among congressional Republicans that even that might be too much.

A budget that was truly moving toward fiscal discipline would look far different than this one.



JWR contributor Robert Robb is a columnist for The Arizona Republic. Comment by clicking here.

Up

02/07/05: Did I mean that? — Why Bush ‘encouraging’ Iran to rebel should be done with caution
02/04/05: Prez reaffirms commitment to fundamental conservative reform
02/02/05: If Bush's war turns out to have worked, was it worth the cost?
01/28/05: Would a diminishing U.S. global influence actually do us good?
01/21/05: Broadness of new Bush Doctrine diffuses focus from the true terrorist threat
01/05/05: Why is this any of the government's business?
12/15/04: Finally a maverick Nobel Prize winner for economics?
12/10/04: The challenge four more years of the Bush administration presents to conservatism's fundamental beliefs
12/02/04: Sportsmanship? What's that?
11/22/04: Tax reform limited by, uh ... tax reform
11/14/04: Empowerment agenda reality check
10/13/04: And what tax rate should Americans making over $200,000 a year pay? Some pre-debate advice for the President
09/24/04: Too many of the wrong people have too much ability to influence public opinion too quickly?
09/20/04: Kerry asks good question about security costs
09/07/04: Right city, right message
08/30/04: Bush's key task: His reinvention as a true uniter
08/20/04: Bush's burdening the Middle Class
08/13/04: For prez to win, he must change his campaigning style
08/03/04: Missing in Beantown was a sense of the art of the possible
07/26/04: Kerry inflated agenda reveals he's failed to truly make the transition from legislator to presidential candidate
07/12/04: Edwards punctuates Kerry fantasies
07/06/04: Kerry ups the ante in bid for Latino vote
06/30/04: High Court gave administration limits
06/25/04: Parallel (political) universes
06/21/04: Al-Qaida-Iraq interaction strengthens case for war
06/02/04: Gas whiners don't believe in or trust markets
05/10/04: Border reforms fail on black-market issue
05/07/04: It wasn't Bush's recession nor Bush's recovery
04/28/04: Arizona to become test market on immigration as a political issue
04/23/04: Accusations that the Bush administration has been shredding civil liberties are hyperbolic
04/16/04: Learning the limits
04/14/04: Aug. 6 memo is not even a water pistol, much less a smoking gun
04/11/04: Once 9/11 Commission's political theater ends, we must debate real security issues
04/09/04: Fact checking Kerry's federal budget plans
04/08/04: Should the transfer of sovereignty in Iraq be delayed beyond the current deadline?
04/02/04: Kerry's tax epiphany makes some cents
03/31/04: What could have prevented 9/11
03/26/04: Knock off the high-stakes blame game
03/23/04: McCain a ‘straight talker’? Who is he kidding?
03/17/04: Bin Laden makes distinctions?
03/12/04: In the dangerous neighborhoods, cause for hope, if not yet optimism
03/01/04: Greenspan view scary, but Dems in denial

02/27/04: How not to achieve a mandate


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