Expanding Bush Budgets Irk Conservatives
With Next Blueprint Looming, a Look
At How Defense, Entitlements Fuel Increases
By JACKIE CALMES
Staff Reporter of THE WALL STREET JOURNAL
January 24, 2006; Page A4
WASHINGTON -- When President Bush reveals his budget request in two weeks, he likely will repeat a boast from recent speeches: "We've now cut the rate of growth in nonsecurity discretionary spending each year since I've been in office."
But such spending -- for everything from air-traffic control to education and prisons -- amounts to one-sixth of a $2.5 trillion budget. And it is the only piece that isn't ballooning.
What are mounting are the political untouchables: defense and the so-called mandatory entitlement programs of Medicare, Medicaid and Social Security. The bottom line? Total spending this year and for fiscal 2007, which starts Oct. 1, is heading in the same direction it has since the start of the Bush administration: up.
Conservatives are fuming because this is occurring when Republicans control both the White House and Congress. "The White House always says it's [due to] defense and homeland security...but even without defense and homeland security it's record spending," says Brian Riedl, budget analyst at the conservative Heritage Foundation. "The brakes are off everywhere."
Here is a guide to spending during Mr. Bush's watch:
The big picture: The budget request for fiscal 2007 is expected to total about $2.7 trillion -- up from nearly $1.8 trillion when he took office. According to the Congressional Budget Office, or CBO, total spending rose from 2001 through 2005 by an average 7% annually, double the pace of the previous five years -- and nearly triple the average inflation rate.
The increase in fiscal 2005, which ended in September, was 8%. The year's deficit came in lower for the first time under Mr. Bush because tax revenue was up nearly twice as much as spending, due to an improved economy. The gap was $319 billion, or 2.6% of gross domestic product, the measure of the total economy -- down from 2004's high of $413 billion, or 3.6% of GDP. The administration has projected that this year's deficit will swing back above $400 billion.
What's growing, what's not: Mandatory spending for entitlement programs with benefits set by law accounts for more than half the total budget. Last year, Medicare, Medicaid and Social Security cost more than $1 trillion; additional programs benefit farms, veterans, civil servants and others.
An analysis by the Center on Budget and Policy Priorities, a liberal think tank, shows that mandatory spending grew to 10.8% of GDP this year, from 10% at the start of the Bush administration. Medicare has been growing twice as fast as Social Security amid rising health costs -- and that is before the tab for Mr. Bush's new prescription-drug benefit. Entitlement spending is projected to explode as baby boomers retire. "We're going to have to do something about" such spending, Mr. Bush said at an economic forum last week in Virginia. But he added, reflecting the failure of his push to overhaul Social Security, "a lot of folks in Washington don't want to do anything about it -- it's too hard politically."
Discretionary spending for defense and domestic programs is what the president and Congress haggle over in yearly appropriations bills, and the type of spending many Americans associate with the budget. But at $894 billion in spending authority for 2006, it is less than a third of the entire pie. The center found that funding for discretionary programs has grown to 7.7% of GDP, counting expected war funding, from 6.8% in 2001 and "all of this growth came in defense and related security areas."
Defense and homeland-security funding since the Sept. 11, 2001, terrorist attacks has grown to 4.2% of GDP in 2006 -- or 4.6%, counting expected additional war funding -- from 3.4% in 2001. This spending can't be cut, Mr. Bush says. "Listen, we're at war," he told the Economic Club of Chicago earlier this month. "That means we've got to show extra discipline in other areas."
Also off-limits is interest on U.S. debt. After declining from 1998 through 2003, payments to creditors here and abroad jumped a near-record 14.2% in 2005, CBO reported. They are now 8% of all spending -- roughly half the size of all domestic discretionary spending, or more than the entire budgets of the departments of Agriculture, Education, Energy, Homeland Security, Health and Human Services, Interior, Justice and Labor combined.
With debt payments, defense, homeland security and entitlements off the chopping block, Mr. Bush and Congress are left whittling at the one-sixth of the budget that goes to domestic discretionary spending. Only this funding has fallen as a share of the economy -- to less than 3.1% in the current year -- from 3.4% before Mr. Bush arrived, the center found.
Domestic cuts and emergency adds: In dollar terms, discretionary domestic spending has risen slightly after inflation, so it remains a target of criticism and cuts despite shrinking relative to the economy. And it is an easy target, given a tenfold increase in Congress's appropriations "earmarks" for special projects -- numbering more than 14,000 last year -- since Republicans took over Congress in 1995, according to the conservative group, Citizens Against Government Waste.
But relative to the total budget, such "pork" spending is the size of a rounding error. "Earmarks aren't the problem," says G. William Hoagland, budget adviser to Senate Majority Leader Bill Frist of Tennessee, "and the more we talk about them, the more we divert our attention from the real spending problems" -- chiefly entitlements.
As for Mr. Bush's claim that the rate of growth in "nonsecurity discretionary spending" has been cut annually, both liberals and conservatives dispute him. "The way they define this category of spending is almost meaningless" in terms of overall spending, says Mr. Riedl. The administration excludes entitlements and national-security spending, as well as the emergency funds that typically add at least $100 billion to each year's budget in supplemental costs for Iraq and natural disasters, he notes.
For fiscal 2007, Mr. Bush is expected to again omit Iraq funds from his budget request. The additional $50 billion he is expected to seek for 2006 would bring this year's total to $100 billion in emergency funds. Separately, he is expected to seek about $20 billion more in emergency funds for post-Hurricane Katrina relief.
Including emergency spending other than for the recent hurricanes, nonsecurity domestic spending increased through Mr. Bush's first term. As the president notes, he inherited a large year-to-year increase in 2001; former President Clinton and a Republican-led Congress had used that year's projected surplus to pump up domestic spending, after a decade of relative restraint.
The Center on Budget and Policy Priorities calculates that nonsecurity domestic spending authority rose 6.8% in 2001, 6.1% in 2002, 2.8% in 2003 and 1.2% in 2004, in inflation-adjusted terms. In 2005, this domestic funding declined by 1.1% and in 2006, another 4%, again after inflation. Even if inflation isn't accounted for, as conservatives like Mr. Riedl prefer, funding drops in 2006 by 1.4%. |
