Bush Seeks to Soothe Republican Worries on Budget

Reuters ^ | Sat January 31, 2004 | Caren Bohan

[demlosers]

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.

[Sabertooth]

How very Swiss of you, those cold selfish pecuniarily driven bastards.

Nahh, no Swiss Gold here, because I'm not talking about capping legal immigration at 100,000 per year; that would be 100,000 above and beyond the current levels, to which the annual number of refugees admitted does not apply.

This would be a self-funding increase in current immigration levels.

[Torie]

Actually, the Swiss charge about $250,000 a head. But then the cost of living is higher in Switzerland. I am just trying to emphasize how truly compassionate you really are.

[Owen]

>
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.
>

It is true. Now, there is nothing wrong with your reasoning. What is wrong is your conclusion. It faces the cold reality of mathematics. No president of the past several decades has "whittled down" domestic discretionary spending from 10% to 6% and waved his arms in celebration because It Hasn't Happened And Probably Never Will.

Domestic discretionary as a % of GDP has hung between 3 and 4% for multiple decades. That's right. Decades. It is a multi decade norm. Between 3 and 4% is where it is, and where it has been, and that's where it will probably be in the future. Bush's spending is not at all out of line with norms of past presidents and it is superior to Reagan's.

So the metric I specified is in fact accurate, real, and proper. What matters is not claimed growth or reduction when the number hardly changes at all over so long a period of time. What matters is the absolute value -- which IS SUPERIOR to Ronald Reagan's in the same year of their presidencies, though, because both are between 3 and 4%, not by much.

Feel free to post that to other threads, too.

[jwalsh07]

Single payer won't happen in your lifetime so nothing to worry about there. Single payer requires the alignement of four stars, a democratic house, congress and executive and a willing part of the electorate that votes.

Not gonna happen in the near future. Tax increases on the "rich" such as the medicaid portion of your paycheck are much more likely as is extending the SS tax to all earned income.

There are ways around it but it would take a radical shift to accomplish. The single best way is to disengage employment and health care in order to put competition into the health provider market place.

At any rate, those are my feelings on the subject.

[Torie]

The single best way is to disengage employment and health care in order to put competition into the health provider market place.

What a radical and novel idea! At the very least, there needs to be an incentive for each consumer of medical care to price shop, pending the ultimate squaring of the circle. Thus the rationale for HSA's, and it is a good one. Heck, I get my drugs from Costco, because I have to pay for the bulk of my drugs.

[jwalsh07]

Do me a favor, order them online from drugstore.com, I took a flyer on that when it was worth a buck.

[Torie]

Stick to the Vanguard total stock market fund, whose symbol is VTSMX. Leaven it with the Vanguard tax managed international fund, dilute the risk with Vanguard's short term corporate bond fund (suitable for incipient old fogies), and you will be in the winner's circle, relatively speaking. Granted, my portfolio is a bit more complex than that. We all have our hobbies.

[jwalsh07]

Good advice, I should spend more time on investing and less on FR but life is short and we have to find our kicks where we can.