Bush's $2.2 Trillion Budget Proposes Record Deficits

NYTimes ^ | 2/4/03 | ELISABETH BUMILLER

[RJCogburn]

President Bush sent Congress a $2.23 trillion budget today — with record deficits — that would speed up billions of dollars in income tax cuts, provide huge increases for the Pentagon and offer a modest jump in spending for NASA.

Mr. Bush's budget forecasts a deficit of $304 billion in the current fiscal year, and projects a deficit of $307 billion for the 2004 fiscal year, which begins Oct. 1. Over the next five years the total projected deficit would be more than $1 trillion, a potentially problematic number for Mr. Bush, who as a presidential candidate vowed that he could both cut taxes and eliminate the national debt.

In his budget message to Congress, the president said his budget reflected his most urgent national priorities: "Winning the war against terrorism, securing the homeland and generating long-term economic growth."

The budget included no projection of the cost of any war with Iraq, which administration officials have said could be as low as $50 billion and as high as $200 billion. If there is a conflict, officials said, Mr. Bush would ask Congress for the money as an emergency supplement.

The budget calls for cuts in a wide range of domestic spending, including trims in Justice Department programs on juvenile delinquency and tribal courts and a halt in financing for the hiring of police officers. Money for a public housing program and aid to rural schools also would be cut. Over time, government-financed child care and children's health insurance would be reduced.

Democrats immediately attacked the White House for the deficits and what they called the most fiscally irresponsible budget in decades.

"The president's budget is worse than a bad movie that no one wants to see twice," Senator Tom Daschle of South Dakota, the Senate Democratic leader, said in a statement distributed by his office. "It's a budget-busting epic disaster."

Administration officials just as quickly dismissed such concerns.

"A balanced budget is a high priority for this administration," said Mitchell E. Daniels Jr., the White House budget director, in a briefing for reporters today. "It is not the top or the only priority."

The president's top priority, Mr. Daniels said, was protecting the country from terrorist attack. As a reflection of that, he said, the administration was requesting $41 billion for domestic security and $380 billion for defense, an increase of 4.2 percent beyond what was already the biggest military buildup since the administration of Ronald Reagan.

Mr. Bush, in his budget message to Congress, attributed the deficits to the costs of the campaign against terrorism, calling it "a war we did not choose" and a recession that started in early 2001. "My administration firmly believes in controlling the deficit and reducing it as the economy strengthens and our national security interests are met," he said.

Mr. Daniels asserted that the $300 billion deficit, representing 2.7 percent of the nation's gross domestic product, was not large enough in percentage terms to cause trouble or to raise interest rates — an assertion that Democrats and some budget analysts called outrageous.

"Mitch Daniels has proved once again that he is first and foremost a political operative and not a budget director," said Robert Greenstein, the executive director of the Center on Budget and Policy Priorities, a liberal research group. "I can think of few budget directors in recent history who would have made such astounding statements."

Mr. Greenstein said that the current deficits, while relatively small, were a threat to the near future, when a tidal wave of retiring baby boomers will tax the ailing Medicare and Social Security systems.

Mr. Bush's budget, a five-inch stack of five paperback volumes weighing more than 13 pounds, also details his proposals for increases in education and AIDS programs. It is filled with cheerful pictures of children lining up for school lunches and of a new kindergarten in Afghanistan supported by the Agency for International Development, prompting Representative Charles B. Rangel of New York, the ranking Democrat on the Ways and Means Committee, to brand it a press release.

"What Congress received today is pure P.R. with color pictures of little children and brave soldiers designed to distract the American public from the truth," Mr. Rangel said.

The truth, Mr. Rangel said, was that the president's proposed $670 billion economic package, which proposes the elimination of the tax individuals pay on stock dividends as well as the acceleration of planned income tax cuts, was running up the debt for a future generation to pay.

Mr. Bush's budget sets aside $400 billion over the next 10 years to overhaul Medicare, and offers a photograph of the president framed by a large backdrop of a "Strengthening Medicare" sign from a recent event. But the budget offers no significant new details on how Mr. Bush will change the program.

It also does not answer the fundamental question, which administration officials have so far declined to answer, of whether the elderly will have to leave their fee-for-service Medicare plans for health maintenance organizations to get insurance coverage for prescription drugs.

The NASA budget, normally little noticed by people outside of aeronautics, drew intense attention today. The president proposed that NASA financing should grow by nearly $500 million to $15.5 billion, an increase that White House officials said was in place before the space shuttle Columbia ripped apart on Saturday. Financing for the space shuttle program, which included four orbiters until the loss of Columbia, would increase to $3.9 billion from $3.2 billion.

Ari Fleischer, the White House press secretary, said it was too soon to say whether Mr. Bush would ask Congress for more money to build another shuttle. But Mr. Daniels said that Mr. Bush's budget made it clear that the president was committed to moving forward in space.

"If there is a lesson in the last couple of days, I suppose it is another sad example that more money alone can't always avoid very sad setbacks," Mr. Daniels said.

NASA did come under fiscal scrutiny in the budget for the cost of the International Space Station now orbiting Earth. In a volume of the budget titled "Performance and Management Assessments," NASA was taken to task for billions of dollars in cost overruns for the station and given a rating of "Results Not Demonstrated" for the program.

"This assessment indicates that the space station program has improved cost controls but also indicates that it is still too early to tell whether management reforms will continue to be successful," the report said.

The performance assessment volume is new this year, and is part of a Bush management initiative that tries to make government more cost-effective. The book rates major government programs, giving them grades like "effective," "moderately effective" and "adequate," with "ineffective" as the worst.

Eleven programs received "ineffective" ratings, among them Even Start, a literacy program that provides federal grants to states for adult and early childhood education for low-income families.

"National evaluations show the program to have no impact on the children and parents served by Even Start," the report said. None of three studies have found, the report said, "that either children or parents who received services made greater school readiness gains or educational gains than those who did not receive Even Start services."

The budget recommended continued financing for children and parents already in the program, and proposed cutting its budget from $250 million in 2002 to $175 million in 2004.

[RJCogburn]

Where's that balanced budget amendment when we need it?

We were all in favor of it when the dems were in charge, weren't we?

[cksharks]

Maybe if we would not have given that 20b to NY after 911 it might not be so bad.O and by the way what spending would you do away with that is not considerd an entitlement?

[tort_feasor]

An important point is that with the stock market troubles there is a huge appetite by investors for government debt. Witness the historic lows on the ten year treasury.The deficits will increase supply and allow yields to gradually increase and prices to gradually decline, versus the bubble that is building in this market.

[marajade]

where would you cut? Most of the budget is mandated by law...

[biblewonk]

What happened to his challenge to congress for fiscal responsibility?

[Dasaji]

A lot of this is Spin...this deficit is only 2.7% and is lower than in 1992 and in 1983.

[biblewonk]

A lot of this is Spin...this deficit is only 2.7% and is lower than in 1992 and in 1983.

I should have known. They couldn't resist the cheap show when saying 2.2 trillion dollars. Most media wonks don't even know how many zeros that has. Sorry W.

[upchuck]

A lot of this is Spin...this deficit is only 2.7% and is lower than in 1992 and in 1983.

Pardon me for disagreeing with a fellow FReeper, but this is not spin, this is total BULLSH!T

Here's a table from Neal Bortz^. Interesting, eh?

Year	Amount of Deficit	Percentage of Total Federal Budget
2004	$307 Billion	2.7%
1992	$290 Billion	4.7%
1983	$207 Billion	6.0%

Here are some of Neal's thoughts on this:

To hear the Democrats describe it, the projected deficit under the Bush Budget is the biggest, most devastating deficit in the history of this country. This morning’s Atlanta Journal-Constitution is referring to the Bush deficit as a “record.” The truth is, it just ain’t so.

Consider your own family budget. Let’s say that your monthly bills exceed your monthly income by $200. You’re running a $200 per month deficit. That amounts to $2,400 a year. Now that’s pretty serious, isn’t it?

The truth is you can’t judge the seriousness of the situation until you have more figures. The best way to judge the seriousness of this deficit is to find out just how big it is in terms of a percentage of your total monthly or annual spending. If your entire budget is $1,000 a month or $12,000 a year, then you have a bit of a problem. Your deficit is $2,400 a year, or 20% of your budget. Not good. But what if your monthly budget is, say, $7,400, or $88,800 a year. Now your $200 deficit would amount, in percentage terms, to a deficit of 2.7% of your monthly or annual. That doesn’t sound quite as bad, does it? That, my friends, in terms of percentage, is the very deficit that is projected in the Bush budget.

Now --- is this deficit a bank buster? Is this an all-time high? Hardly.

We need to be shouting this from the housetops.

[Soren]

Wouldn't a better denominator be GDP? Expressing the deficit as a percent of budget makes the percentage look better as the budget increases.

[RJCogburn]

by the way what spending would you do away with

I would do away with whatever would have been eliminated had the Republicans been successful when they promoted a balanced budget amendment.

The principle should be the same regardless of who proposed it and who is in power. The Republicans were serious, weren't they?

[RJCogburn]

where would you cut? Most of the budget is mandated by law...

The Republicans, when they promoted the balanced budget amendment, were all set to cut. Wherever they wanted to cut is fine by me.

They were serious, I thought.

[RJCogburn]

A lot of this is Spin...this deficit is only 2.7% and is lower than in 1992 and in 1983.

Whoa there, Pilgrim. Talk about spin!!!

The Republicans were all for, and made good arguments in support of, the BBA.

This notion that $300 million is not important because of the % of the budget, or of the total GDP is what the dems used to say.

[RJCogburn]

Maybe its the biggest, maybe not. One can play all sorts of number games.

The problem with your example is that when I run a deficit, I have to pay it off eventually.

Now, if I run a deficit but intend for my children, grandchildren, greatgrandchildren to deal with it, rather than dealing with it myself, well, then, if I make $10,000 and run a deficit of $500, or if I make $50,000 and run a deficit of $1000 I've left my future family in worse shape with the $1000 deficit, your number juggled notwithstanding.