February 07, 2005
2006 Bush Budget, Smoke and Mirrors are Back
The President is yet again proposing a tax payer busting budget. But his advisors’ sophistication has grown. In a snapshot of revenues and expenditures, the President may show on paper a deficit cut in half by 2009. But, as anyone who balances a checkbook and has credit cards knows, a snapshot does not give an accurate picture of financial well being. The 2006 spending budget is going up about 8% over this year’s.
And while the President proposes increasing the spending budget, he at the same time is asking for permanent tax cuts. Anyone who can add and subtract will understand when we are already spending more than we are taking in, cutting our income and raising our borrowing must increase our debt, not lower it.
There are many ins and outs of the budgetary process which can and will lead to endless point - counterpoint debate over the details and priorities. But, the overall picture of the President's fiscal policy is now in fairly sharp focus, and the frightening picture is clear. The Bush Administration's fiscal policy has two long range goals, escalate military and foreign spending, and end Social Security and Medicare.
The President's budget of 2.5 trillion dollars, will cut:
- farm subsidies
- the COPs program which makes our streets and homeland security safer
- educational spending
- environmental protections
- business development
The President refuses to be pinned down as to what his foreign policy will entail, leaving all options for further military action on the table. He refuses to be pinned down on when American involvement in Iraq and Afghanistan will end, when American casualties will cease, and when American tax dollars going to those nations can be returned home for education, health care, and homeland security. Even Congress is nervous over the President's foreign policy strengthening its oversight of CIA secret operations to prevent invasions into other countries based on wrong or false intelligence. The President is digging deeper and deeper into American tax payer's future earnings toward some goal of globalization under American supervision. While noble on its face, such behavior is akin to my charging all of my credit cards to the hilt and beyond in order to make a donation to the IRS to save us from our national debt. Noble, but, insane at the very least since, the act would make beggars of my entire family.
Though lacking in many details, the Private Saving's Accounts (PSA's) which the President is trying to sell as a Social Security Reform now has a price tag. That price tag is 4.6 Trillion dollars according to the government. Even VP Dick Cheney admits they will add trillions to the national debt. So, here is the deal. The President offers taxpayers the opportunity to save a part of their Soc. Sec. taxes in an account with their name on it. However, the plan also will add 4.6 Trillion dollars to the national debt, (currently 7.6 Trillion) thus guaranteeing that while you are trying to put money into your PSA, your federal taxes will inevitably have to increase to keep the government solvent. Estimates reflect the PSA's will cost the government 3/4 of a Trillion dollars in just the first 10 years. While you are earning interest on your PSA, you will also being paying record level interest through your taxes to pay the more than 2.5 Billion dollars a day interest on the national debt, (40% of which now goes to investors in China, S. Korea, Japan, Taiwan and similar countries).
Let's do a little arithmetic. Current national debt = 7.6 Trillion. Cost of Private Savings Accounts = 4.6 Trillion. The cost of the President's budgets for 4 years if he cuts it in half by 2009 = 1.75 Trillion. The sum of these equals $13.95 Trillion dollars national debt. Remember, the President came into office with a national debt of about 5.5 Trillion. And when he leaves office he will still be adding a quarter of a trillion dollars a year to the debt. So, the reality is while the President attempts to convince Americans he is fiscally responsible, he is in fact increasing America's national debt 250% over what it was when he first came to office. And what is America getting back for having its future taxes doubled? The answer is less of almost everything except military. Homeland security block grants will even be cut in the 2006 budget.
Even experts in the conservative think tanks agree that growing the economy will not accommodate this kind of massive increase in our national debt. It is just not in the realm of possibility. But, the sophisticated trick of the Bush administration, is to defer the PSA debt until Bush is out of office, excluding it from being accounted for in his budgets. Hence, technically, Pres. Bush can claim he will cut the budget deficit in half by 2009. Another slight of hand that this administration is using is segmenting the budget. The President submitted a 2006 budget proposal to Congress with a 427 billion dollar deficit, which did not include the costs for Afghanistan and Iraq for the 2006 fiscal year or the Alternative Minimum tax which will cost 100's of billions of dollars.
As any financial advisor will tell you, one does not put money in savings at 2% interest earnings while one is paying out 8% interest on one's credit cards. To get ahead, one must pay off the credit cards first, then begin to save. A piece of advice the Bush Administration is completely ignoring at great cost to present and future generation's of tax payers. The President's budget will actually increase spending by between 6 to 8% over last year and continue to grow the nation's already record debt.
Another slight of hand is reported by the LA Times in which it states:
Finally, the budget that the president will send to Congress will, like his past budgets, omit some major deficit-raising items.It will, as Vice President Dick Cheney said on "Fox News Sunday," be "the tightest budget that has been submitted since we got here." It will hold the growth in domestic programs whose spending levels are set in annual appropriations bills to less than inflation.
But these programs, because they exclude defense and giant benefit programs such as Social Security, account for about $1 of every $5 the government spends.
Most of the cost of the Iraq and Afghanistan wars will not be included in the budget. Instead, it will be sent to Congress as a supplemental budget request for 2006, just as the administration recently announced an $80-billion supplemental request for the current fiscal year.
So, another way in which the President intends to hoodwink the public is by claiming to cut the deficit in his formal budget proposal while removing key elements of it from his initial proposal to be added back in later in supplemental budget requests after he has claimed he cut the budget. This is the kind of smoke and mirrors that got the Democrats in trouble a decade ago when the public realized they were not being given the whole budgetary picture.
Other interesting facts should also be considered but, this article is long enough. However, it is important to note almost 1/3 Trillion dollars per year are not collected from individual and corporate taxpayers who legally owe taxes. Yet, IRS budget for collections are proposed to be cut. With all of this information regarding spending, the context is a President who cut taxes for the wealthiest Americans and he intends to make those tax cuts permanent.
Social Security, Medicare, investment in American education and research and development and American ingenuity and creativity are all on track for bankruptcy with the President's fiscal policy carried forward. Simply put, his revenue cuts will benefit the wealthy (in the short term), and his spending cuts will hurt working and poor Americans, and that is the bottom line of the Bush fiscal policy, today and for decades to come with the policies he is putting in place.
Posted by David R. Remer at February 7, 2005 08:08 PMYou forgot to add that the supplemental budget used for Iraq and Afghanistan is still not included in the calculations. Nor is the effect when the Bush Tax Cuts becomes permanent. They also forgot to mention that Bush is cutting Veterans’ Benefits. Iraq Veterans are already showing up homeless!!!
Hey!!! Look at the bright side!!! Once it gets hard enough to find a job and survive in FantasyLand, you can all find work in the Army!!!
I blame the Republicans for voting Bush the DimBulb. They may THINK themselves morally superior but they sure never read the fine print. I say we should Draft them all!!! Find all the Seniors who voted Bush and Privitize THEIR Social Security!!! I am sure the nice people at Wall Street will take care of them. HA!!!
Posted by: Aldous at February 8, 2005 01:55 AMAnd while the President proposes increasing the spending budget, he at the same time is asking for permanent tax cuts.
As Aldous just mentioned, all the administration’s budget cut rhetoric is based on the tax cuts that favor the rich phasing out (The middle class tax cuts - marriage penalty relief, child tax credit, widening the 10% bracket - were extended unanimously by Democrats and Republicans a few months ago).
When you look at President Bush’s budget cuts - COPS cuts, Navy cuts, Air Force cuts, veteran’s benefits cuts, no call for new troops to help out our over-extended military - you have to remember that’s because Bush is desparate to protect those tax cuts for the rich at all costs.
Aldous said: “You forgot to add that the supplemental budget used for Iraq and Afghanistan is still not included in the calculations. Nor is the effect when the Bush Tax Cuts becomes permanent.”
These are covered in my article, Aldous.
Posted by: David R. Remer at February 8, 2005 04:35 AMJust one comment. While I know it’s not central to your post, the fact that you lumped farm subsidies in with “programs designed to aid the poor in America” shows a bit of ignorance of the subject.
First, our farms are often subsidized such that we pay farmers more money than their total crop is worth (as we did in 2002). Also, it’s not like we’re paying the small farmer. According to Oxfam, “Not all US farmers benefit from subsidies. A large majority of farms - 67 per cent - are ineligible for government support because they do not grow a select group of subsidized commodities. Of the 33 per cent of farms that do get subsidies, the top 10 per cent receive 52 per cent of all government payments” (Source)
Secondly, even if it did support the small farmer instead of propping up giant agribusiness firms, it’s the difference between an American farmer getting another job and a village of West African farmers (the world’s would-be leading producers of cotton) starving to death. Overproduction created by subsidization causes huge dumping of surplus at rock-bottom prices, especially because it’s actually possible (as was the case in 2002) that farmers receive more money in subsidies than their entire crop is worth.
Cutting subsidies is hardly a plan that’ll hurt the poor. Sorry to have gone off on a rant about it, but farm subsidization is one of my pet peeves.
Posted by: Nick Mason at February 8, 2005 08:43 AMNick, thank you for fleshing out the farm subsidies issue. I appreciate it, and found some of the same information you provided to be quite factual.
There is only one farm subsidy I want to see in place, that is for those small family farms (net assets 5 million and below) which are certified organic. And then only when certification means something reliable to the consumers.
I also wanted to see country of origin tagged on all imported foods - but, oh well! I have grown my own vegetables before and will begin again this year.
Posted by: David R. Remer at February 8, 2005 02:10 PMDavid, great article!
This budget is nothing but the GUISE of fiscal responsibility when all they really care about is their ideological agenda.
Here are few other questions (besides the permanent tax cuts for the wealthy, the cost of privitizing Social Security, or Military expenses) that we should be asking ourselves about this budget:
How responsible is it to cut Job Training by 500 million when overseas outsourcing has left so many American workers in the manufacturing sector out of work?
Or to cut Federal aid to states for job training by $300 million - even though that funding is used to train veterans?
Speaking of veterans, how responsible is the fact that this budget more than doubles the co-payment charged to veterans for prescription drugs and makes them pay a fee of $250 a year to use government healthcare?
How responsible is it to cut the Low-Income Home Energy Assistance program that helps people pay their heating bills, by 8.4 percent when home heating oil prices are skyrocketing?
How responsible is it that funding for police and firefighters will be slashed - reducing federal grants to local police forces from $600 million to $60 million, while grants to local firefighters will be cut by $215 million dollars?
How responsible is it to make cuts on a range of CDC public health programs like disease control and prevention (to be cut 9%), and state and local agencies that respond and prepare for bioterrorism medical emergencies (to be cut 12.6%)?
Adrienne, none of those cuts would bother me quite so much if Bush was not transfering such huge amounts of our taxpayer dollars overseas. If spending increases & decreases were a measure of loyalty and care, Bush’s loyalty and care would lie far more with foreign nations’s than with working Americans.
Posted by: David R. Remer at February 8, 2005 02:26 PM“Adrienne, none of those cuts would bother me quite so much if Bush was not transfering such huge amounts of our taxpayer dollars overseas.”
David, that is exactly what I meant to point out - that those extremely important things are going to be cut because of his desire give tax breaks to the rich, as well as to transfer so much of our tax dollars overseas.
“If spending increases & decreases were a measure of loyalty and care, Bush’s loyalty and care would lie far more with foreign nations’s than with working Americans.”
Yes, and with his rich friends and campaign contributors who’ve never given a damn about Middleclass working or unemployed American’s, or working or unemployed Poor American’s.
Posted by: Adrienne at February 8, 2005 02:57 PMMan- I thought liberals supported foreign aid? Can you IMAGINE the outcry if Bush had said what he should have said about the Tsunami relief. That is:
“charity to help others is not the province of the government, but of individuals who have earned money and thus have earned the right to give to those they wish to help.”
The liberals would have had a collective anurism.
The aid to massive government aid, massive centralized government programs, and the other big government programs Bush has pushed is the victory of the left’s view of government of that if small-goverment fiscal conservatives. You asked for it brothers.
By the way, I support almost every cut that Bush has proposed in this new budget. But it just drops in the bucket. Our federal government’s spending is out of control, and there are almost no people in Washington that take the problem seriously. Definetely not the president.
Posted by: Misha Tseytlin at February 9, 2005 02:13 AMHaha! Misha, you’re right - to a point. :)
Bush is way to the left of Democrats on fiscal policy, foreign policy and defense. He’s only conservative on social issues.
The idiot emperor and his crowd are bankrupting this country to feed their corp sponsors and all ther global delusions while gutting America. America and Americans first. Impeachment may be in order if these guys are not stopped in bankrupting this country and sending all the trade and jobs overseas.
Time for all the moderates and non-partisans to heed the call and act to get done what needs to get done, to means-test, to sacrifice if living above basic levels, and to put pitch forks where necessary to save this country…
Posted by: Alex at February 9, 2005 08:47 PMYou are absolutely right, Alex. Question is will enough Americans act to stop it before it is too late? I have my doubts which is why I am being forced to seek options for my teenage daughter.
Posted by: David R. Remer at February 10, 2005 08:34 PM
