October 16, 2007

Bush Realizes that Spending Must Be Paid For

President Bush spoke in Rogers, Arkansas, yesterday on the battle with Congress over discretionary spending bills and the expansion of the State Children's Health Insurance Program (SCHIP). Virtually every word the President uttered during his speech was absolute nonsense. Let's go down the list.

"The worst thing we could do is run up taxes as this economy is growing."

So he says the tax cuts need to stay in place when the economy is growing. He also used to say that the tax cuts were needed when the economy was not growing, because tax breaks (which will mostly benefit the
richest 5 percent of Americans by 2010) will get the economy going again. He also said that when we had a budget surplus it was important to have tax cuts to give the money back to the people. And when his tax cuts sank us deep into deficits, he said it was important to have tax cuts because they actually increase revenues (even though economists in his own administration say that's not true). I guess you could say the man stays on message, at least.

"And yet when you listen carefully to the budget debate, that's what you're fixing to get stuck with -- a tax raise. Unless, of course, I prevent them from raising your taxes, which I fully intend to do."

He insisted that the Democrats' desire for (slightly) higher discretionary spending would lead to higher taxes. It's interesting that this President would even admit that spending money means you have to pay for it. Well, that's self-evident to most of us, but in conservative circles that has been denied since the very beginning of the Bush administration. After all, enacting deficit-financed tax breaks and fighting a deficit-financed war wouldn't be a winning policy if we had to actually, you know, pay for those things. If we have to actually pay for deficit-financed tax cuts later on, with interest, well, then they wouldn't really be tax cuts at all, would they?

But anyway, back to the question of whether the Democrats are actually calling for a tax increase. The discretionary spending that the Democrats are asking for fits within the budget resolution that they passed back in the spring, which balances the budget over five years. That budget does assume that some of the Bush tax breaks should be allowed to expire. But those tax breaks should be allowed to expire (actually they should be repealed early as far as I'm concerned) because they've made our tax code less progressive and cost around a
trillion and a half dollars.

"The other historic fact was that our deficit as a percent of GDP is at 1.2 percent."

There are many reasons why the budget situation actually really bad. For one thing, the full effect of the Bush tax cuts will be felt only in 2010, when the estate tax is fully repealed at a huge cost, and if the President and his allies have their way in making all the tax cuts permanent the deficit is
likely to grow over the next ten years. Beyond that, the cost of health care is rising, pushing up the costs programs like Medicare and Medicaid (not to mention straining families and businesses) and the administration has done nothing to address that.

And as the baby boomers retire, they will place new demands on the Social Security system, which is not in particularly grave danger itself but which would be less of a concern if we had actually saved the Social Security surpluses instead of blowing them on tax cuts and military spending during the Bush years.

"Every program sounds like a great program, but without setting priorities the temptation is to overspend. The job of the President is to make sure that we don't overspend, and at the same time keep taxes low."

You would think this President would be afraid of people focusing on priorities. This is a President who spent a trillion and a half dollars on tax cuts over six and a half years but refuses to spend an additional $35 billion over five years on health care for children. This is the same President who has spent something like
$460 billion in Iraq. As others have pointed out, the $22 in discretionary funding is awfully trivial compared to the overall budget and compared to the President's own priorities, like tax breaks for the rich and the war in Iraq.

"They want the executive branch to accept an increase in spending over the next five years to $205 billion. Put that in perspective, that's $1,300 in new spending every second of every minute of every hour of every day of every year for the next five years."

You might be wondering how the President can claim that increasing discretionary spending by $22 billion this year, which is what this whole fight is over, would cost $205 billion over five years. The Center on Budget and Policy Priorities
explains it all. Basically, there are some programs for which Bush wants to hold spending below what's needed to account for inflation and population growth over the next five years (which is a fancy way of saying Bush wants to slowly cut these programs over five years) and the Democrats disagree with him on this. So the overall difference is between where Bush and the Democrats are over this five-year period is $173 billion, and then the White House uses some other accounting malarkey to get that number up to $205 billion over five years.

And then of course there's the fact the President seems to be conceding that all the spending actually must be paid for, which is something new for him, as I've said.

"I think that would be bad for the economy."

Remember when, during the Clinton years, taxes were raised and we actually paid for all of our public services? Remember how that triggered a massive economic downturn... oh, wait, I was reading Republican talking points from 1993, sorry. I forgot that the 1990s actually saw phenomenal economic growth and prosperity.

"Not one bill has come out of United States Congress that appropriates your taxpayers' money."

Well of course Congress is pathetically slow, why should that change now? The President's own party demonstrated this with its
inability to even agree on a budget last year, not to mention its inability to get appropriations bills passed.

"The [SCHIP] bill sent to me didn't say, we're going to focus on those half-million that are eligible; the bill sent to me said, we can expand eligibility for the program up to $83,000."

Here's part of a
response from Families USA:

* Claims by the President that this bill raises the CHIP eligibility level to $83,000 (400 percent of the federal of the poverty level) in annual income are unambiguously false. There isn’t a single state in the country with such a high eligibility level. One state, New York, wanted to set the eligibility standard at that level, but its request to do so was denied by the Administration.

* The CHIP bill will make it more difficult for states to set eligibility levels above 300 percent of poverty (approximately $62,000 in annual income for a family of four). States wishing to establish higher levels would receive less money for children with incomes above 300 percent than for lower-income children.

* The vast majority of the 3.8 million children who will gain coverage under this bill—more than 75%—have incomes below twice the poverty level. That’s $41,300 for a family of four.


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