Posted on 09/01/2003 6:34:09 AM PDT by sarcasm
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RISING FEDERAL SPENDING | |
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By DAVID WESTPHAL, News & Observer Washington Bureau
WASHINGTON -- In the Washington blame game over who is responsible for ever-worsening federal deficit projections, Republicans and Democrats offer predictably different explanations. Republicans say a lousy economy is largely at fault; Democrats point the finger at President Bush's tax cuts.
Neither side talks much about a third factor that is just as important as the other two: Federal spending once again is going through the roof.
After a decade in which penny-pinching by both parties limited spending increases to about 3 percent a year, federal outlays are again heading upward quickly.
In the past four years, annual spending increases have shot up an average 6 percent, double the rate of inflation. Last year, the federal budget grew by 7.9 percent, highest in a dozen years, and the Bush administration is projecting even higher increases this year, with spending nearing $2.2 trillion.
"The political consensus for restraining spending is just gone," said Robert Bixby, executive director of the budget watchdog Concord Coalition.
Pressure for a federal binge
The surge in federal spending is tied largely to the ramped-up military and homeland security fight against terrorism. But that is hardly the only factor. In the past two years, for example, Medicaid spending has shot up 26 percent, while Medicare costs have risen 17 percent.
In some respects, the spending story is worse than it appears because lower interest rates have counterbalanced some of the growth. Last year, for example, government costs would have grown nearly 10 percent but for a $35 billion drop in interest payments.
The upshot is that Bush and Congress have set an aggressive spending course that is significantly deepening the government's swing toward annual deficits. The Congressional Budget Office last month projected a record $401 billion deficit this year, and warned that the red ink could reach $480 billion in 2004.
Less than three years ago, the budget office had projected a decadelong era of surpluses that, cumulatively, would exceed $5 trillion.
Many budget-watchers say that even the newly stark projections are too rosy.
A report by the Center on Budget and Policy Priorities said that if Congress approves a prescription drug benefit for seniors and extends current tax policies, as most observers expect, annual deficits could reach $650 billion by 2013.
"Running deficits of this magnitude after the economy recovers," said Robert Greenstein, the group's executive director, "is a prescription for severe fiscal distress in the decades ahead."
Rep. John Spratt of South Carolina, top Democrat on the House Budget Committee, said the unfavorable budget trends are occurring at precisely the wrong time. "At a time when the nation should be saving for the retirement of the baby boomers," he said, "budget policies are saddling us with long-term debt."
In some respects, the federal government's core growth has been masked for a full decade. Throughout most of the 1990s, military spending was on a steady decline, reflecting the peace dividend that came with the end of the Cold War. Then, with the unexpected arrival of annual surpluses, interest expenses began to fall. With lower rates accelerating the trend, interest costs this year are down nearly $100 billion from the peak year of 1998.
Budget forecasters say neither trend is likely to continue over the next 10 years.
The federal government's new spending binge runs counter to the painful experience of the 50 states, nearly all of which have slashed budgets drastically in the past three years in the face of sharp revenue declines. What is different about the states' situations is that they are bound by constitutions to operate with balanced budgets. Congress and the president have no such limitation.
Bixby of the Concord Coalition says only political will can prevent federal deficits from ballooning. And that quality, he says, is sorely lacking in Washington right now.
Bush is betting on a boom
"There really is no plan by anyone to deal with this," he said. "This is quite clearly a gamble. The White House is gambling that something will happen -- some boom that will take care of this problem."
According to the Congressional Budget Office's new report, federal spending is expected to moderate. But the analysis doesn't fully deal with the costs of reconstructing Iraq and Afghanistan.
With weekly costs of $1 billion just to finance military operations in Iraq, the Bush administration is expected to ask Congress this fall for a huge supplemental funding bill, and may seek separate emergency aid to deal with an immediate shortfall.
Beyond that, Congress returns Tuesday from its summer vacation to consider a Medicare prescription drug benefit that, according to the budget office, could add $400 billion to the deficit over 10 years.
All of that could set the stage for a politically painful reckoning that federal spending needs to be reined in.
Veronique de Rugy and Ted DeHaven of the Cato Institute, a libertarian think tank, analyzed spending policies in the first three budget years of the Bush administration, and concluded that the president is most responsible for the sudden growth.
"It is true that Congress shares the blame," they wrote in their analysis. "However, Bush has not vetoed a single spending bill during his tenure in office. ... Real spending in nearly every department has increased substantially, sometimes exorbitantly, under Bush."
So you like higher taxes and gutted defense budgets? Defense is the only "discretionary" contributor to the spending increases. The others are all "non-discretionary" like Medicare and Medicade. Only Congress can cut those, and it must do so by cutting the benefits. Gridlock wouldn't help, except to cut defense spending, since the others are automatic, and would only require Congressional intervention to cut them.
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