President Bush released his much-awaited fiscal year 2005 budget proposal, with the usual complaints that some "programs" are not adequately funded while a minority of House members claimed that there should also be cuts in defense and homeland security. Since this is a presidential election year, in which no large voting blocs are left unbribed, cutting federal spending – Porkus Federalus – is likely to be more difficult than usual.
Bush has proposed cutting various programs in a number of departments in order to reduce the projected deficit from this year's budget (fiscal year 2004 ends this September 30) from $521 billion to an estimated $237 billion in fiscal year 2009, but the chances of these cuts being made are very low.
Bush apparently wants to sucker fiscal conservatives into voting for him in November so his minions have fashioned a budget plan to try to appeal to conservatives, if only on paper. Bush has deliberately, and mendaciously, left out a request for the estimated $50 billion needed to continue the U.S. foray into Iraq and Afghanistan. As part of his budget announcement, the president's budget minions have announced that the costs of the new Medicare prescription drug benefit program have already risen by $134 billion to $534 billion. He apparently hopes that Congress will take the heat on reigning in this nightmare program.
Couple this with Bush's desire to raise defense spending and make permanent most of the recent tax cuts (the tax cuts being the only legitimate part of his proposal) and you have the recipe for a real political stinkfest, one that is unlikely to yield any significant cuts in federal outlays this year.
The Deck is Stacked Towards More Spending
Cutting spending is nearly an impossible task in Washington, made even more difficult by the way budgets are proposed and enacted. A lot of the budgetary shenanigans has its genesis in the so-called 1974 budget law, which created a lot of the current mess. The law was passed by a Democratic Congress in order to prevent Richard Nixon from "sequestering" funds, that is, from not spending funds for the purpose Congress appropriated them. An additional justification for the law is that it would bring fiscal discipline to Congress, allowing them to view the budget and its impact on the economy and thereby restraining itself when it came to spending.
In fact, the law went way beyond those goals. It also required that estimates be made (by the Congressional Budget Office, which was created by the 1974 law) of what it would take to continue government operations at the current level of "services." This lunatic requirement enables politicians of all stripes to claim that their favorite programs are being cut if they are not keeping pace with inflation and the anticipated expansion of "claimants." When a program was not getting the full current services budget, its champion(s) in Congress could get the attention of the national media and mobilize support from all those claimants who were allegedly having their budgets cut.
Then, even more important, the 1974 law grouped all executive branch spending into 13 monster appropriations bills. On the surface, it would seem easier to have Congress pass only 13 bills instead of passing a hundred, if not hundreds, of separate appropriations bills. At the time, proponents of the law claimed that Congress would be better able to exercise fiscal restraint.
Well, that just is not the case. Instead, by putting all appropriations into thirteen monster categories, Congress has made it extremely difficult to cut any program. That is because each of the thirteen bills contains at least one departmental budget that is generally not considered a total waste of money or that is considered by many as being critical to running the government (remember the big stink when Gingrich and Company closed down some parts of the federal government in late 1995?). All the rest of the spending bills in each of the thirteen categories are losers. In this way, those wanting to preserve useless programs have the leverage to put enough heat on those supporting the one program to get them to go along with increases for all.
One good example of this is the appropriations bill that deals with the Department of Veterans Affairs, Housing and Urban Development, and Independent Agencies. Independent Agencies include (but are unfortunately not limited to) such goofball operations like the National Aeronautics and Space Administration (payoffs to the Star Trek and aerospace crowd – $16.2 billion), the Environmental Protection Agency (buying off tree huggers and other earth worshipers- $7.8 billion), the National Science Foundation (welfare for academics – $5.7 billion), the Corporation for National Service (i.e., Americorps and the rest of the alphabet soup of federal "volunteer" agencies – $1 billion), and the Corporation for Public Broadcasting ($400 million for subsidizing propaganda that favors bigger government). The Department of Housing and Urban Development is a sewer for public money and is best known for subsidizing housing for those unwilling to work, thus making it more difficult for those working to obtain housing. The proposed HUD budget (subsidies to landlords) for fiscal year 2005 is $38.9 billion, which is lower than 2004’s $46.2 billion. Add up just these, and you get a total of about $70 billion, with many other independent agencies probably bumping up the total to at least the $72–75 billion range. And don't bet that George Bush is sincere in wanting to cut HUD's budget as it is one way for him to try to bribe Hispanic immigrants into voting for him. When it comes time to voting on the whole package, Ted Kennedy and other Congressional spendthrifts will probably stage a media event depicting "poor people" being thrown out of HUD-subsidized housing.
The one big appropriation that protects these dogs is the proposed $67.3 billion budget for the Department of Veterans Affairs, which includes medical care and pensions for military veterans injured or made ill by their service. Whatever you may happen to believe regarding the legitimacy of the Department of Veterans Affairs, it was a stroke of evil genius in holding that budget hostage to the other dogs. It would be a flight of fancy to expect any significant cuts to take place in the dogs mentioned above, especially in an election year.
Others of the thirteen major appropriations bills are similarly structured, with various constituencies supporting each. You get such proposed expenditures (that is, actual outlays) as $64.3 billion for the Department of Education, $59 billion for the Transportation Department, $31.1 billion for the Department of Homeland Security, $81.8 billion for the Agriculture Department, $57 billion for the Labor Department, and a whopping $479.7 billion (I have added in the $50 billion for Iraq and Afghanistan not included in the official $429.7 billion in outlays proposed by the Bush administration) for the Defense Department.
The Stinkfest
Looking at more than $2.4 trillion in spending and how it is spent, a person of average intelligence could easily find hundreds of billions of dollars in programs that could be eliminated, including whole departments and agencies, with no harm to the health and safety of citizens. That citizen's proposed cuts would wipe out the deficit within several years, permit further permanent tax cuts, and free up resources for productive use in the private sector, probably touching off a real economic boom and not the on-again, off-again recovery the U.S. has been experiencing.
But the fact that 2004 is an election year will make it virtually impossible for most members of Congress to find the backbone to cut any federal spending, regardless of how useless the program and/or wasteful the expenditure. Washington lives by plunder, and Bush's latest budget proposal only perpetuates the buying off of various electoral constituencies, all to the detriment of the average taxpayer.
Bush's political opponents will paint him as a stooge for the rich, cutting their taxes excessively and proposing cuts in federal programs, geared to "helping those in need," in order to reduce deficits. They will demand that he raise taxes to pay for all the "necessary" expenditures, when in fact the bulk of the proposed $2.4 trillion budget is pure plunder. Because it is election year, the Senate will likely delay voting on many spending bills until near or just after the election, all to paint Bush as an ogre.
For his part, Bush cannot be trusted to demand significant cuts in federal spending. If he can somehow get re-elected by suckering real conservatives into voting for him, he is just as likely to turn on his conservative base and support a tax increase in 2005 to pay for all those "necessary" federal spending programs.
The Good News
There is good news despite the grim picture I have painted, and that is more of the electorate are getting wise to the plunder that comes from Washington because of its vast scale. Whether it is disgust at the exploding welfare state or horror at how the U.S. has become a modern day version of the warfare state Roman Empire, more citizens see the federal government for what it is – nothing more than an exercise in brute force by a power mad elite that is destroying the individual freedoms it is supposed to protect.
And greater citizen anger at what is going on can lead to more heat being put on Congress to exercise it proper role, namely to defend liberty by cutting spending drastically. Such an action would have the added benefit of preventing the nation from going bankrupt.
February 6, 2004
Jim Grichar (aka Exx-Gman) [send him mail], formerly an economist with the federal government, writes to “un-spin” the federal government’s attempt to con the public. He teaches economics part-time at a community college and provides economic consulting services to the private sector.
