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Are Bush's Cuts Enough?

This column from the National Review Online was written by Veronique de Rugy.
As Ronald Reagan said in his 1986 State of the Union speech, "Keeping America strong is as vital to the national security as controlling federal spending is to our economic security." And that's what President George W. Bush says he would like to do with his Fisdal Year 2006 budget.

In his budget message he explains: "My Administration is pressing for reforms so that every program will achieve its intended results. And where circumstances warrant, the 2006 Budget recommends significant spending reductions or outright elimination of programs that are falling short."

The good news is that this new budget contains proposed cuts and spending restraints — reforms that would save about $20 billion in fiscal 2006. The bad news is that the budget proposes to spend more than $2.5 trillion, and the White House never seems willing to stop Congress from adding even more money.

President Bush's previous budgets increased spending by a dramatic 33 percent in four years, defense spending increased by 44.7 percent while non-defense spending increased by 41.9 percent. The administration has been arguing that much of the increase in non-defense spending stemmed from higher homeland-security spending. However, the fact is that over half of all new spending in the past two years is from areas unrelated to defense and homeland security.

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Ideally, the administration and Congress should find significant savings elsewhere in the budget if they want more security spending. Indeed, that's what the FY2006 budget will accomplish, mostly by virtually freezing of non-homeland non-defense spending in order to maintain national defense and cut the deficit in half by 2009.

But so much more could be achieved. The portion of the budget Bush wants to restrain, domestic discretionary, represents a ridiculously small portion — $389 billion — of the $2.5-trillion budget. In other words, the spending limits in the budget are rather meaningless. Until the administration is ready to significantly slash the mandatory side of the budget, its credibility will remain weak.

Moreover, planning to cut the deficit in half from to $427 billion in FY2005 to $223 billion by 2009 is a wrong measure of fiscal responsibility. For one thing, Congress and the White House should be focusing on reducing the size of government, not just the part financed by borrowing. Besides, once again this year, the administration has left out important items from its calculation, such as an additional supplemental for Iraq and Afghanistan, which could hit $80 billion. More importantly, the administration's numbers do not include any of the potential transition costs for restructuring Social Security.

Moreover, focusing on the deficit will make it harder to make needed policy changes. For instance, omitted from the budget once again this year is a fix for the alternative minimum tax. It also guaranties that the president will have to battle hard to makehis tax cuts permanent and to reform social security. Ironically, some Republicans have been the main opponents to President Bush tax-reform and spending-discipline agenda destroying their reputation as a tough-on-spending party.

Members of his own party make president's promises less credible. President Bush's fiscal responsibility relies on extraordinary spending restraint from Congress. This year again, the president assumes that Congress would resist adding spending on top of his budget plan. But the past four years tell us that this is unlikely. After all, this Congress is responsible for a FY2005 omnibus bill jammed with earmarked pork projects, such as $175,000 for Love Social Services in Fairbanks, Alaska, and $250,000 for a traffic-calming program in Windermere, Florida. It is also responsible for adding billions of dollars in spending to the President's proposed budget each single year — up to $67 billion in FY2004. Finally, despite promises to control the growth in federal spending and to fix the budget process, the House Republican Conference rejected sensible measures to curb spending and reform the budget process earlier this year.

Congress is addicted to pork and to spending increases, and this is unlikely to be cured without a dramatic change in behavior by the White House. Even though it would be hard, it certainly could be done. In the 1980s, President Reagan signaled that things were about to change in Washington by asserting that "I am going to do a lot of vetoing. Any time there is an attempt to bust the budget, I will veto." And in November 1981 he fulfilled his promise with action and vetoed the congressional budget legislation for adding too much spending to his proposed budget.

Likewise, President Bush should veto any bill that spends too much money, something he has not done since taking office. The fact that the president failed to veto this year and last year's omnibus bills does not help his credibility as a fiscally responsible leader. And, of course, that makes it less plausible that he will fight for his proposed 150 program cuts, most of which are targeted at programs that are popular with Congress.

What also makes the president's 150 cuts less credible is a look at last year's proposed cuts. Recall that a year ago the White house targeted 65 programs — such as Alcohol Abuse Reduction and Literacy Programs for Prisoners — to save roughly $5 billion. But in the end, Congress terminated only five of them saving a total of $292 million. Yet President Bush did not even threaten to reach for the veto pen. To his credit though, he was not discouraged by his failure and this year even escalated by proposing up to $20 billion cuts in various areas of the budget — including health, education, veterans' services, environmental protection, community development and even Amtrak subsidies. Sadly, House and Senate leaders have already told the White House that no more than two dozens of the 150 cuts are likely to be accepted.

Finally, the White House proposes that funding for the Pentagon be increased by 4.8 percent and homeland security spending by about 3 percent. These outlays are certainly justified because of external threats. However, we should not forget that these two areas are not impervious to wasteful spending. To the administration's credit, it plans to cut major defense programs along with some costly weapons programs. But shouldn't the administration also use that external threat to cut waste in the Pentagon more aggressively?

The good news is that in spite of all these criticisms, if the administration backs up this budget promises by firm actions, including vetoes, it could be the turning point toward much needed fiscal responsibility.

Veronique de Rugy is a research fellow at the American Enterprise Institute and an adjunct scholar at the Cato Institute.

By Veronique de Rugy
Reprinted with permission from National Review Online

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