Bush Seeks to Soothe Republican Worries on Budget

PHILADELPHIA (Reuters) - President Bush vowed on Saturday to hold the line on spending as he sought to reassure members of his own party who are upset at record budget deficits.

The president told a gathering of congressional Republicans that the task of restraining spending would be a tough one in an election year when politicians are loath to cut popular programs.

"This is going to be a challenging year for making sure we spend the people's money wisely," he said.

But Bush said he wanted to send a "clear signal" to the public and to financial markets that the administration was committed to belt-tightening.

The strategy session of Republicans came just two days before Bush was set to unveil his fiscal 2005 budget. It is expected to project a record $521 billion deficit.

The budget will call for holding spending growth outside of defense and homeland security to 0.5 percent.

But some conservative Republicans worry that safeguarding security-related expenditures from the budget cap will give the White House wide latitude to propose new spending since security issues might be defined broadly within the budget.

New costs such as a White House proposal for manned expeditions to the moon and Mars have set fiscal conservatives on edge.

Further stoking concerns was an acknowledgment this week by the White House that Bush's Medicare prescription drug program would cost tens of billions more than expected.

Bush's budget will show a $530 billion cost over 10 years for the addition of a prescription drug benefit for the Medicare health program for senior citizens. That is 33 percent more than was anticipated when the Medicare overhaul was approved less than two months ago.

Bush seemed to win some goodwill with the members of his party by lingering for an hour in a private session to take questions -- longer than he has in previous years. The president was asked about both Medicare and the budget deficits.

On Medicare, Bush replied he had no regrets about pushing for the prescription drug benefit despite its price tag and said he still thought he could accomplish his goal of cutting the budget deficit in half in five years, according to a U.S. official who was there.

Another participant said that on that matter of the budget deficit, "there's a sense that we need to act."

"Some of the frustration (over the deficit) is directed at the president and some it is directed at ourselves," said the participant, who is a Republican congressional aide.

Despite griping that has been going on behind the scenes about budgetary issues, Republicans girded for the election battle with solidarity chants of "Four more years" after Bush finished his speech.

Bush has come under repeated attacks over the deficit from Democrats trying to unseat him. They blame his tax cuts for the red ink. The president faces a re-election vote in November.

Democrats said on Saturday that Bush, in his efforts to rein in deficits, was targeting programs that help the most vulnerable U.S. citizens.

"Tax cuts that pile on to the largest deficit in our history will not help those folks find jobs," Rep. Brad Miller of North Carolina said in the Democratic response to the president's Saturday radio address. "Deficits drag the economy down, increase interest rates, and leave a staggering debt for our children to pay."

Bush in his own radio address earlier urged Congress to bring back now-expired rules that forbid increases in spending unless they are paid for elsewhere within the budget.

How's this for an option: 1) consolidate your bills, pay down your debt, and live within your means, or 2) build an addition onto your house, continue to spend everything you earn, watch the real estate market slow as a result of rising interest rates, and be forced to work a couple extra years than you had planned.

A big ole capital gain? Do you even know what a capital gain is? How does any of this make sense with respect to gov't spending?

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However, Cato's fiscal analyst Veronique de Rugy notes: "The current president easily eclipses his father on federal spending growth." De Rugy and Cato researcher Tad DeHaven calculate that in real, or inflation-adjusted terms, non-defense discretionary outlays will rise about 20.8 percent in George W. Bush's first three years in office (through FY2004).
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You see? The wrong yardstick again. Growth. There are corporations right now announcing spectacular earnings growth. Why? Not because the current number is huge. Because the previous number was low.

Clinton gutted the military. Quietly. Defense as a % of GDP was a number you can look up at the CBO and see that it was gutted. The big GDP numbers of the dotcom years kept the % of GDP low for domestic discretionary too. Inflation adjustments continued for salaries in all categories, maintaining that growth rate and then GDP growth collapsed just as Bush was taking office, so his numbers as a % of GDP increased vs Clinton's.

But This Is The Wrong Yardstick. What matters is the absolute number as a % of GDP. Not how they adjust vs Clinton's gutted military numbers and in a poor economy. Bush's numbers in this regard are SUPERIOR to Ronald Reagan's in the same year of their presidency. Think about that. They are SUPERIOR.

3.4% of GDP, by my reading. Who cares, not me. I'd rather have a small deficit than a large surplus. Surplus means we are getting charged too much.

The surplus provided much of the impetus for Bush's tax cuts. How do you propose we advocate additional tax cuts now that we're running a $500 billion deficit?

Incidentally, if you're worried bout getting charged too much, you should be looking at the actual dollars you're paying the government - the surplus/deficit could be the reflection of lower revenues OR higher costs. And in fact it's a combination of the two.

Agreed. He is not spending like a drunken sailor, imo.

Discretionary spending (after Homeland Security is pulled out) is increasing at a rate of 6-7% per year. Can you give me an idea of what level would constitute "spending like a drunken sailor" if not this one?

What matters is the absolute number as a % of GDP.

I ran through this on another thread, allow me to post it again here. Absolute number as a % of GDP is an incomplete metric. A president who inherited discretionary spending as [say] 10% of GDP and whittled it down to 6%, has a superior record to one who inherited [say] 3% and allowed it to climb to 5%.

Bush's numbers in this regard are SUPERIOR to Ronald Reagan's in the same year of their presidency. Think about that. They are SUPERIOR.

Simply not true.

He is not spending like a drunken sailor, imo.

This is an insult to drunken sailors who spend their own money. The Farm bill, the Drug bill and the No Children Left Behind bill have nothing to do with national security. And don't get me started on $20 million more for NEA "art".

Still... I'm gonna vote for Bush.

What do you think will square the fiscal circle on this? I think I know the answer. What is it?

Showdowns on privatization and increased immigration, plus Amnesty.
Anything not privatized would be financed by newcomers, as would be anything privatized. That's the theory, anyway.
The price tag of Bush Prescription Drug entitlement will likely break $1 trillion over the first ten years, and many trillions more after that. The appetite for the new freebie will not abate, and the ability to pay for it through immigration growth will fall short of expectations.

Well, I was thinking a bit longer term. We are going to a single payer system (maybe with intermediaries as a fig leaf to keep the insurance companies happy, maybe not). We are going to a single payer system because that is the only politically aesthetic way to ration health care. That way, the US can get down the percentage of its GDP it spends on health care closer to the figure in socialized Europe.

And there you have it.

PS, as for taxing the "rich" the AMT is no slouch. It is beginning to eat me alive. I am learning all about "private activity" bonds. Alas, there is no escape in a high income tax state like California. It must be hell in New York City.

I hear ya. How many wealthy and middle class illegal aliens can we absorb? If we could find them, it wouldn't be so controversial. But you and I know there's no chance any of those arriving will be making enough to pay for that entitlement bill due in a decade's time. By then President Bush will be long gone and it'll be another President's headache to deal with.

The trick is to get cheap workers abroad in China and India etc. to make stuff for us old sick geezers, and we will pay for it, albeit at cheaper prices, by gradually liquidating our collective assets, which the Chinese and the Indians will buy. At the time of the final exit of the final baby boomer, they will a very large chunk of the US stock market, hold most of the US debt, and own much of the most desirable real estate. That is the grand unified theory that squares the circle. After that, things will gradually equilibriate, and ownership will gradually become more balanced again.

The trick after that is to get the Muslims/ Africans in high birth rate places to become economically productive. If they don't, then the planet has a problem, because the world's supply of productive cheap younger workers to support the aging geezers now in large supply just about everywhere, given rapidly declining fertility, will be very thin on the ground, and that standard of living of the geezers will collectively go down the toilet. The good news is that I will be long gone when that happens. I'm all right Jack.

I think a great deal of political blood will be spilt in pursuit of that aesthetic.

That way, the US can get down the percentage of its GDP it spends on health care closer to the figure in socialized Europe.

If that was the stated Big Solution from the outset, we'd be better off outlawing all forms of medical insurance and government assistance. Medical spending as a percentage of GDP would plummet at a rate far faster than the value of the care and services provided.
Not that I'd go that route, but I don't see it as any less oppressive than a single-payer plan.
More government meddling isn't the solution to problems created by government meddling. As long as we have the income tax, 100% deductible MSAs that allow for spending on health insurance are the way to go. User or private charity pays, that we may get the government out of the business at which it is singularly and wastefully inept: compassion.

I didn't say you would like it. I said it will happen. It is almost inevitable. Of course, the rationing will not be heavily publicized. It will be done by a thousand cuts, one long waiting room wait after another. Folks will get used to it, just like a frog gets used to water which gradually heats. And it will be "fair," because we will collectively all "enjoy" mediocre health care. We will be in it together, with no rich man an island of special privileges as it were. The ideal of the "village" will then be a bit closer on the horizon.

As I said, I know you don't like it. One cannot always get what one wants.

I hear ya. How many wealthy and middle class illegal aliens can we absorb?

Let's sell up to 100,000 legal immigration slots a year for $25,000 a pop.
That's a cool $2.5 billion that can be used to fund anti-Illegal Alien measures, and any immigrant who can afford $25k and pass the appropriate health and background checks is going to be an economic asset to the US of A.

I am an American. I am a veteran. I am a Texan. I have always voted for the most Conservative candidates electable!

I lived in New York for Twenty years, and registered as a Republican so I could pull the lever for Conservatives in the primaries. Then vote the Conservative line in the general election. Having said all that.....

The last time out. I voted for GWB for President in both the primary and general election. I am not sure what the primary ballot in Texas will look like this year. I will again vote for the most Conservative candidates available. I imagine, like elsewhere GWB will be running unopposed. I will not vote for him in the primary.

As for the general election This time I will vote against any Democrat.

How about the yardstick measured in dollar amounts:

http://www.opinionjournal.com/editorial/feature.html?id=110004579

The much delayed omnibus appropriations bill for 2004, scheduled for a vote in the Senate this afternoon, looks set to cap the first term of the most profligate Administration since the 1960s.

The bottom line is truly shocking. Passage of the omnibus bill would raise total discretionary spending to more than $900 billion in 2004. By contrast, the eight Clinton-era budgets produced discretionary spending growth from $541 billion 1994 to $649 billion in 2001. Nor can recent increases be blamed on the war. At 18.6%, the increase in non-defense discretionary spending under the 107th Congress (2002-2003) is far and away the biggest in decades.

And, don't forget, Reagan was dealing with Democratic congress and budget requests contained less spending than Congress in seven of his eight years in office.

It wasn't Reagan that brought us the Medicare prescription drug bill, which is one of the single biggest expansions of government since the Great Society programs.

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