posted January 16, 2006 05:02 PM            

WASHINGTON — Congress this week is likely to trim federal spending and insist with a straight face that government spending is under better control.

It's not.

"The facts are not partisan, and they're not ideological," said David Walker, the nation's comptroller general. He should know. He's the nation's chief accountant and signs off on the government's balance sheet. America's fiscal future, he said, "is worse than advertised."

Even though the White House and Congress pledge to trim $35 billion to $50 billion in spending over five years, that's chicken feed. The government spends more than $2.5 trillion every year. Congress' savings would trim less than half of 1 percent of annual spending.

Walker, along with budget experts from across the political divide, believe Congress is shifting deck chairs on a sinking financial ship. Lawmakers are making symbolic spending cuts while skirting the real drains on the federal budget.

In addition, Republicans intend to make tax cuts permanent, which would drain $70 billion in revenues through 2010 — more than the spending cuts Congress is struggling to find.

And that's only the tip of the iceberg. The real problem is that the government's unfunded liabilities — items that include everything from public debt to promised Medicare and Social Security benefits — are growing at staggering rates.

Those liabilities totaled $20.4 trillion in 2000. They reached $43.3 trillion by 2004, after President Bush and Congress increased spending and cut taxes.

When the government next reports these numbers Dec. 15, the total is expected to reach $46 trillion to $50 trillion.

How much is $50 trillion? About $166,000 for each of the almost 300 million Americans.

This imbalance between what government takes in and what it spends is the federal budget deficit. It totaled $319 billion in fiscal 2005, which ended Sept. 30.

To bridge that shortfall, the government takes on additional debt, 46 percent of it now held by foreigners, especially the governments of Japan and China.

The gross national debt is now more than $8 trillion. The government owes itself much of that in accounts such as the highway trust fund. When IOUs in those accounts come due, the government just issues itself some more debt.

The net national debt — the amount that must be financed by borrowing in capital markets, which affects interest rates and the economy — is a mind-boggling $4.6 trillion.

"Unless the situation is reversed, at some point, these budget trends will cause serious economic disruptions," Federal Reserve Chairman Alan Greenspan told Congress' Joint Economic Committee on Thursday.

Think of America's financial future this way: A large family goes to a restaurant and stuffs itself on a full-course meal with drinks and dessert. The waitress then hands the bill to the babbling infant in a high chair. Budget deficits make today more enjoyable, but future generations of Americans will have to pay the bills.

Most economists, including Greenspan, believe American taxpayers won't be able to pay for the retirement and health-care promises that the government has made to the baby-boom generation — those born between 1946 and 1964 — which begins retiring in 2008.

"We owe it to those who will retire over the next couple of decades to promise only what the government can deliver," Greenspan said Thursday.

Undisciplined government spending has done the unthinkable: It's united experts from two rival think tanks with great influence in Washington — the left-leaning Brookings Institution and the conservative Heritage Foundation. Both accuse Congress and the White House of a "leadership deficit," punting when it should be tackling issues affecting the nation's financial future.

"It's very obvious that something has to give. It's as simple as that," said Stuart Butler, vice president of economic policy for the Heritage Foundation.

Congress is struggling over modest proposals — such as whether to nick all spending by 2 percent across the board, trim Medicaid, pinch food stamps and farm subsidies — but ignoring big-ticket spending on tax cuts, defense, homeland security, Medicare and Social Security.

Douglas Holtz-Eakin, director of the nonpartisan Congressional Budget Office (CBO), said current congressional efforts to trim spending won't make much difference.

"It doesn't change our outlook substantially at all over the long haul," said Holtz-Eakin, who formerly worked for Bush.

"The most important thing about the number this year is not the number, but doing it."

Congress shows no interest in halting a Medicare drug benefit scheduled to take effect next year. It will cost $700 billion over 10 years, and more after. It's one reason why spending on Medicare, the health-care program for the elderly and disabled, is projected to explode.

Medicare benefits promised to 40 million seniors will cost $2.7 trillion more over the next 10 years than what it costs now, according to Heritage Foundation economists.

Left unchanged, Medicare promises will cost $30 trillion over 75 years. That would consume all federal revenues, leaving nothing for national defense — or anything else.

"It's like falling off a 30-story building. For the first 20, it doesn't seem so bad," Heritage's Butler said.

Congress displays no appetite for curbing the biggest expenses in the federal budget — automatic "entitlement" spending, especially Social Security and Medicare.

In 1985, spending on such entitlements took 45 percent of the federal budget. It now takes 56 percent. A decade from now, it will take 62 percent, according to the CBO.

It gets worse from there, as the first wave of boomers reaches full retirement age in 2011.

"If there's one thing that could bankrupt the country, it's health care," Comptroller General Walker said.

But it's not just health care and retirement, not just war and homeland security. Congress is spending lavishly on everything, said Brian Riedl, Heritage's top budget analyst.

Spending has grown twice as rapidly under Bush than it had under Clinton. Remove defense and homeland security costs and spending still jumped 22 percent.

"Everything is going up well past inflation" rates, Riedl said.

Since 2001, spending on education is up more than 100 percent, international programs 94 percent and housing and commerce up 86 percent.

"We need a spending cap that helps lawmakers say no," Riedl said. He pointed to the 1990 agreement between Congress and the first President Bush called Pay-Go, which capped discretionary spending and required new spending to be offset with cuts elsewhere.

Sen. Kent Conrad, D-N.D., the ranking Democrat on the Senate Budget Committee, recently introduced an amendment to return to Pay-Go. "There is an old-fashioned idea," he said on the Senate floor.

"Pay for it."

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posted January 16, 2006 05:08 PM            

On Spending, Bush Is No Reagan
by Veronique de Rugy and Tad DeHaven

Veronique de Rugy is an adjunct scholar with the Cato Institute and Tad DeHaven is a former research assistant for the Cato Institute. This article was published in April 2003.

George W. Bush is increasingly being compared to Ronald Reagan. It's true that like Bush, Reagan came to Washington with an ambitious plan to cut taxes across-the-board and increase defense spending while containing federal spending. And Reagan, indeed, lightened the tax burden on the American people and oversaw a massive increase in defense spending. Thus, given Bush's recent push for more pro-growth tax cuts combined with increased defense spending for the war on terrorism, the analogy is tempting.

But at this stage in his presidency, Bush's dismal record on spending when measured against Reagan's nullifies that temptation. Better yet, in light of Bush's spending it looks like it would be more accurate to compare him to Jimmy Carter than to Ronald Reagan.

Let's look at the facts. Compared to the same point in Reagan's first term, not only is Bush a bigger spender than Reagan, he's a big spender in his own right. Adjusted for inflation, total spending under Bush's watch will have increased by 14 percent as opposed to 7 percent under Reagan. But more indicative of Bush's spending problem is the run-up in discretionary spending under his watch. Discretionary spending represents funds for programs that Congress has to allocate for on an annual basis and it is the type of spending that the president has the most influence over.

Now, it is true that a sizable portion of this discretionary spending goes toward national defense. Bush will have overseen a 21 percent increase for national defense -- pretty much equal to Reagan. However, the major difference between the two men is discretionary spending not related to national defense. Whereas Reagan was able to reduce non-defense discretionary outlays by 14 percent, Bush will have overseen a rise of 18 percent -- a whopping 32 percent difference between the two men.

The table at the bottom compares nondefense discretionary spending levels between Reagan and Bush. President Reagan managed to cut spending in most categories. In contrast, Bush has not only failed to match Reagan in reducing spending, spending has actually gone up across the board -- and often at exorbitant levels.

Reagan and Bush both inherited defense budgets that were inadequate for the threats facing the nation. As noted, both men sought -- and won -- substantial increases in defense spending from Congress. And, while providing for the defense of the nation is a defined responsibility of the federal government, most non-defense discretionary endeavors are not. Spending money on advanced weaponry to fight terrorism is more important than funding the National Endowment for the Arts or the Corporation for Public Broadcasting. Thus, it is Bush's failure to limit government spending on those latter constitutionally murkier activities that prevents him from matching Reagan's accomplishments.

Of course, the argument can be made that it is unfair to lay excessive blame on Bush for over-spending given that Congress controls the purse strings. A recent study shows that three out of the top five all-time federal spending sprees occurred in the last five years under Republican-controlled Congresses (the other two occurred during World War II). Thus, President Bush appears to have inherited a Congress with established spendthrift credentials.

However, that excuse is diminished by the fact that Bush has not vetoed a single spending bill during his three years in office. Instead, he has agreed to sign every piece of legislation crossing his desk, including a bloated farm bill and an intrusive education bill. In contrast, President Reagan vetoed 22 spending bills during his first three years in office.

In addition, Bush has been the beneficiary of a considerably more favorable party arrangement in Congress. Although Republicans controlled the Senate during Reagan's first term, Democrats dominated the House -- by a 100-seat margin at one point. Bush, on the other hand, has enjoyed the luxury of a GOP-controlled House and Senate (with the exception of a five-month loss of control in the Senate to the Democrats when GOP Sen. Jim Jeffords left the party). While Reagan was sufficiently successful at taming a doubting and often hostile Congress, Bush has demonstrated a lack of conviction in tempering the spending desires of a comparatively receptive Hill.

While President Bush is obviously aware of the benefits and the need to cut taxes as a way to trigger economic growth, the government continues to expand, bureaucratic programs blossom, and talk of eliminating entire government departments is a distant memory. No, Bush is no Reagan. And despite the self-proclaimed party of limited government controlling the White House and the Congress, it continues to move further and further away from the limited government envisioned by our founding fathers.

posted January 16, 2006 05:11 PM            

February 9, 2004
Modified:February 23, 2004

Summary

President Bush slipped up in his hour-long interview with NBC's Tim Russert over the weekend, claiming that the growth of discretionary federal spending has slowed markedly since he took office. But in fact, annual growth has been in double digits for the past three years, far higher than in any year of the Clinton administration.

A Bush spokesman said the President meant to refer to discretionary spending minus military spending and spending for homeland security. But what the President actually said was wrong.

Analysis

Figures recently released by the Office of Management and Budget show the Bush Administration's explosion of discretionary federal spending. Here is a chart based on historical figures from the U.S. Budget showing percentage increases in discretionary outlays:

Source: Office of Management and Budget, Budget of the United States Government: Fiscal Year 2005: Analytical Perspectives and Historical Tables table 8.7 —OUTLAYS FOR DISCRETIONARY PROGRAMS: 1962–2009

That's an average annual growth rate of 2.4% during Clinton's eight years, compared to an average of 11.8% during Bush's first three.

So in his Feb. 8 interview the President erred in this exchange:

Russert: But your base conservatives -- and listen to Rush Limbaugh, the Heritage Foundation, CATO Institute, they're all saying you are the biggest spender in American history.

President Bush: Well, they're wrong.

Russert: Mr. President

President Bush: If you look at the appropriations bills that were passed under my watch, in the last year of President Clinton, discretionary spending was up 15 percent, and ours have steadily declined.

Discretionary spending -- meaning spending that is subject to annual legislative appropriations, as opposed to spending for entitlement programs such as Social Security and Medicare -- actually grew only 5.6% in Clinton 's last budget year (fiscal year 2001, which began October 1, 2000 ).

Since then discretionary spending has not "steadily declined" as the President said, but has gone up. In fact, the growth has been much faster than under Clinton. In the first year for which President Bush signed the spending bills discretionary spending growth soared to 13.1%, and annual growth remained in double digits through the current fiscal year.

How could the President be so wrong in a nationally televised interview? White House spokesman Dan Bartlett said the President meant to refer not to discretionary spending overall, but only to the portion of it not attributable to military spending or homeland security. That would exclude well over half of all discretionary spending this year.

It is true that military and security spending have risen much faster under Bush than spending for domestic programs.

What the President meant to echo was testimony his Budget Director Joshua Bolton gave on Feb. 5 to the Senate Budget Committee:

Bolton : In the last budget year of the previous administration (2001), discretionary spending unrelated to defense or homeland security soared by 15 percent. With the adoption of President Bush’s first budget (2002), that growth rate was reduced to six percent; then five percent the following year; and four percent for the current fiscal year.

Even that is somewhat misleading: Bolton failed to mention that the growth of all discretionary spending was below 4% for six of Clinton's eight years, as shown in our first table.

The figures that Bolton referred to are in table S-2 of the administration's budget document. (Actually, the figures don't refer to "spending" as Bolton said, but to amounts appropriated and legally available to be spent. The technical term for that is "budget authority," sometimes called "funding." It includes some amounts which are not spent immediately but may be spent in future years.)

Using Bolton's own figures, FactCheck.org calculates that the discretionary sums contained in appropriations bills signed by Bush for the current fiscal year -- including the $87 billion supplemental appropriation for Iraq -- amount to nearly a 36% increase over Clinton's last year.

Most of the increase has indeed come from military spending (including wars in Iraq and Afghanistan) and activities that the administration classifies as homeland security. But that still leaves a 16% increase in funding for other discretionary programs.

Discretionary budget authority:
3-year increase

Homeland Security (non-Defense)
180.0%

Department of Defense
52.5%

Other Operations of Government
16.0%

Total, Discretionary budget authority
35.7%

Source: Office of Management and Budget, Budget of the United States Government: Fiscal Year 2005: Summary Tables Table S-2 — Discretionary Totals

As Clinton's budget surpluses have turned to deficits, Bush has come under criticism from all sides, liberals complaining about tax cuts and, lately, conservatives complaining about spending.

A Cato Institute analyst wrote Jan. 23 calling the increase "The Republican Spending Explosion,” and said discretionary spending increases signed by Bush -- once adjusted for inflation -- "are 3 of the 10 biggest annual increases in the last 40 years.”

A Heritage Foundation analyst wrote that "spending has increased twice as fast under President Bush as it did under President Clinton," and attributed the spending surge less to the terrorist attacks of September 11, 2001 than to a lack of "self-discipline required to balance fiscal priorities."

But Richard Kogan of the Center on Budget and Policy Priorities says that even with the big increase in spending overall, Bush still is “modestly shortchanging, and maybe not so modestly in some cases, some domestic programs that have worked well.”

Kogan adds, “It’s true that Bush is a small spender, but only if you ignore the increases in military spending and anti-terrorism spending.”

And only if you consider a 16% increase over 3 years to be "small."

Sources

Office of Management and Budget, Budget of the United States Government: Fiscal Year 2005: Analytical Perspectives and Historical Tables table 8.7 —OUTLAYS FOR DISCRETIONARY PROGRAMS: 1962–2009

Office of Management and Budget, Budget of the United States Government: Fiscal Year 2005: Summary Tables Table S-2 — Discretionary Totals 5 Feb. 2004 :366.

Testimony ofOMB Director Joshua B. Bolten, “President’s FY 2005 Budget Request” Committee on the Budget, United States Senate 5 Feb. 2004.

Alison Fraser, "The State of Spending" WebMemo #398, Heritage Foundation website 21 Jan. 2004 .

posted January 18, 2006 07:23 PM              

"Sen. Kent Conrad, D-N.D., the ranking Democrat on the Senate Budget Committee, recently introduced an amendment to return to Pay-Go. "There is an old-fashioned idea," he said on the Senate floor.

"Pay for it."

That is an interesting idea. Who'da thunk it?

I think ties together the American credit card spending issues and the government spending issue.

A lot of Americans are sheeple... maybe they're just following the example set before them by their government. Seems like a dumb thing to do to me, but a lot of people think in order to be good Americans you must think like the government thinks... agree with what they believe.

From the second article:

"...in light of Bush's spending it looks like it would be more accurate to compare him to Jimmy Carter than to Ronald Reagan."

LOL That's gotta hit the Republicans where it hurts.

I like that... Let's compare Bush to Carter more often!! That's sure to get the banter going!!!!

"President Bush appears to have inherited a Congress with established spendthrift credentials... However, that excuse is diminished by the fact that Bush has not vetoed a single spending bill during his three years in office."

posted January 18, 2006 07:50 PM              

Has anyone else noticed how the media almost always refers to us as consumers and very rarely as citizens?

I think that says a lot.

posted January 18, 2006 08:00 PM            

You're right. I wasn't really talking to you. Jwhop tried the other day to imply that our deficit was under control, and not as bad as it might seem.

posted January 21, 2006 04:53 AM              

I totally oppose Hillary. She's a Senator from New York correct? Was she born or raised there?

Sincerely,

posted January 21, 2006 05:34 AM            

In the second post, are you trying to suggest that the present administration is doing a good job economically?

posted January 23, 2006 12:08 PM            

I don't think that logically you can say that Reagan is to blame for the 90's, especially with your caveat that the Dems taking over both houses compromised Reagan's plan. If the Dems compromised it then it shouldn't have come out as great as it did in the 90's. Also, there was a 4 year gap between Reagan and Clinton.

The deficit is not a result of a natural economic slump. The deficit is a direct result of terrible budgeting, and lack of discipline. The tax cuts didn't help in this area either. Even without the events of 9/11 the deficit would be there. Do you remember when Clinton shut the government down to get the budget passed in a fiscally responsible manner?
http://www.cnn.com/US/9511/debt_limit/11-14/transcripts/clinton.html

Other things to keep in mind:

If economics takes time then wouldn't our current economy, which Republicans tout as good, be a result of Clinton?

The Federal Reserve Chairman Alan Greenspan has been with us through all of these presidents.

posted January 26, 2006 11:54 AM            

President George W. Bush, who has never vetoed legislation, said on Thursday he was ready to do so this year if the U.S. Congress approves too much government spending.

"I'm fully prepared to use the veto if they overspend," Bush told a news conference.

Speaking as it was announced that the U.S. budget deficit would hit $337 billion this year, Bush also said he would welcome legislation to discourage the use of "earmarks," or targeted spending that lawmakers often use for pet projects in their districts. Such measures are often added in secret to spending bills.

Bush touted a five-year bill to cut spending on social welfare and other programs by $39.7 billion. The measure was approved by the U.S. Senate but still needs final passage in the House of Representatives.

Approval by the House of that bill would show a resolve for fiscal discipline, Bush said.

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