More Red Ink: Congress Gives Bush Another 10 Percent
This is the ninth "emergency" supplemental budget Congress has approved since 9-11. Sen. Arlen Specter (R-PA) voted against the bill because it did not include monies for education. Sen. John McCain (R-AZ), a probable candidate for president in 2008, voted for the bill while complaining about the process: "We are blowing the budget process. We are carving gigantic holes in the system."
The system is broken. According to the Congressional Budget Office, from fiscal 1995 through fiscal year 2000, all supplemental budgets (net of rescissions) totaled $21 billion. Contrast that with supplemental spending since the start of fiscal 2001, President Bush's first budget: $577 billion. An average of $96 billion a year under six years of Bush versus an average of $3.3 billion under six years of Clinton.
These numbers suggest that the problem is spending: that deduction would be in error. The problem is off-budget defense expenditures coupled with reduced revenue.
Iraq Is Not An Emergency
To his credit, McCain pushed through a proviso that any future war funding be included in the regular, annual budget. But guys, you've been doing this supplemental-budget-for-war-effort since 9-11. I'm not holding my breath that the fiscal 2007 budget, due 1 October, will truly factor in these costs.
Last month, conservative columnist George Will lamented: "The noun 'emergency' once had meaning: a severe, sudden, unexpected and temporary crisis."
Why are we funding Iraq, one of the longest wars in American history -- by Nov. 25, 2006, it will be 1,347 days old, the number of days between Pearl Harbor and VJ Day -- with "emergency" bills? To hide, or at least obscure, the costs. Funding the war in dribs and drabs -- as if the fact that the war costs money is a recurring surprise—spares Congress from confronting the huge cost and having to make room for it in the budget by shedding lower-priority spending. (tip)
On some level, this month-to-month "emegency" spending could have been predicted. After all, the Administration thought we'd be in-and-out in the blink of an eye. From February 2003 (emphasis added):
Mr. Wolfowitz, the deputy defense secretary, opened a two-front war of words on Capitol Hill, calling the recent estimate by Gen. Eric K. Shinseki of the Army that several hundred thousand troops would be needed in postwar Iraq, "wildly off the mark." Pentagon officials have put the figure closer to 100,000 troops...
Mr. Wolfowitz ticked off several reasons why he believed a much smaller coalition peacekeeping force than General Shinseki envisioned would be sufficient to police and rebuild postwar Iraq. He said there was no history of ethnic strife in Iraq, as there was in Bosnia or Kosovo. He said Iraqi civilians would welcome an American-led liberation force that "stayed as long as necessary but left as soon as possible," but would oppose a long-term occupation force...
Mr. Wolfowitz spent much of the hearing knocking down published estimates of the costs of war and rebuilding, saying the upper range of $95 billion was too high, and that the estimates were almost meaningless because of the variables. Moreover, he said such estimates, and speculation that postwar reconstruction costs could climb even higher, ignored the fact that Iraq is a wealthy country, with annual oil exports worth $15 billion to $20 billion. "To assume we're going to pay for it all is just wrong," he said.
Wolfowitz was rewarded for his performance in the Bush Administration by being appointed to head the World Bank.
Historic Revenue Shortfall
The second half of the problem is reduced revenue, a factor directly tied to the Bush tax cuts. Spending as a percent of GDP is down.
Congressional Budget Office numbers pegged 2004 federal spending at 20.0 percent of GDP -- but the average from 1980-2003 was 21.1 percent, despite record defense budgets under President Reagan.
Revenue, on the other hand, was only 15.8 percent of GDP in 2004, compared with 18.5 percent from 1980-2003. In fiscal 2003 and 2004, Congress spent about $1.42 for every $1 of its own income tax revenue.
What's more problematic is that the scale of the Bush tax cuts eclipses prior Congressional actions. A report by the non-partisan Center on Policy and Budget Priorities shows that at the start of 2001, the cost in 2011 of extending all temporary tax-cut measures was only $22 billion. If temporary tax-cut provisions in place in 2004 were to be extended (many were recently made permanent), the long-term lost revenue in 2014 would be $431 billion.
This is a fundamentally deep hole that Congress has dug, with egging on from the President. That lost revenue is equivalent to almost half of the current discretionary spending budget. It's not unlike having your job change from full time to half time -- with no corollary change in your power bill, phone bill, grocery bill, gas bill and so forth. Just use your credit card(s) and home equity line of credit to make up the difference. Oh, I almost forgot: your fixed cost payments (non-discretionary things like mortgage, car loan) are growing larger, not shrinking, and there's no "payoff date" in sight.
Spending Details
Most of the money goes to the Pentagon for foreign adventures in the Middle East: $320 billion for Iraq and $90 million for Afghanistan. This brings the total to $320 billion in Iraq and $89 billion in Afghanistan. A reminder: the 9-11 attacks were hatched in Afghanistan.
Domestically, $3.7 billion is headed to Louisiana for flood-control projects; $5.2 billion goes to Gulf states for the repair or redevelopment of homes damaged or destroyed by Hurricanes Katrina and Rita. Another $2.3 billion targets avian flu and almost $2 billion is pledged to improve security along the US-Mexico border.
According to American Progress, this is the largest single supplemental budget in our history. However, reportedly Senate Majority Leader Bill Frist characterized the conference report as proof that "Congress is cracking down on excessive Washington spending... We've made considerable progress toward limiting unnecessary and wasteful spending."
Reactions
The Decatur (AL) Daily notes that this budget process helps clearly deliniate the cost of the Middle East war. "While 320 billion is a lot of dollars to spend, one could argue that the number [2,500] of lost brave young American lives is even more expensive.
See also: Bush Budget Analysis (8 February 2005) ; Greenspan on Budget Deficits (3 March 2005) ; Senate Passes Budget, Opens Alaska Refuge (4 November 2005) ; Sobering Budget News: "Spending Our Way to Financial Ruin" (7 November 2005) ; Bush Proposes Record Defense Budget, Cuts in Domestic Programs (7 February 2006)
Technorati Profile
Technorati tags:
Budget,
Bush,
Iraq,
Politics
gada.be tags:
2007 Budget,
Bush,
Iraq,
Politics,
Category: Budget