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CJ Cregg
Commodore
Joined: 05 Oct 2002
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 Mon Feb 14, 2005 10:19 am Bush could leave budgetary landmine |
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| Quote: | For President Bush, the budget sent to Congress last week outlines a painful path to meeting his promise to bring down the federal budget deficit by the time he leaves office in 2009. But for the senators and governors already jockeying to succeed him, the numbers released in recent days add up to a budgetary landmine that could blow up just as the next president moves into the Oval Office.
Congress and the White House have become adept at passing legislation with hidden long-term price tags, but those huge costs began coming into view in Bush's latest spending plan. Even if Bush succeeds in slashing the deficit in half in four years, as he has pledged, his major policy prescriptions would leave his successor with massive financial commitments that begin rising dramatically the year he relinquishes the White House, according to an analysis of new budget figures.
Bush's extensive tax cuts, the new Medicare prescription drug benefit and, if it passes, his plan to redesign Social Security all balloon in cost several years from now. His plan to partially privatize Social Security, for instance, would cost a total of $79.5 billion in the last two budgets that Bush will propose as president and an additional $675 billion in the five years that follow. New Medicare figures likewise show the cost almost twice as high as originally estimated, largely because it mushrooms long after the Bush presidency.
"It's almost like you've got a budget, and you've got a shadow budget coming in behind that's a whole lot more expensive," said Philip G. Joyce, professor of public policy at George Washington University.
By the time the next president comes along, some analysts said, not only will there be little if any flexibility for any new initiatives, but the entire four-year term could be spent figuring out how to accommodate the long-range cost of Bush's policies.
"That president would have to face a very fundamental decision as to whether he would want to do what was right and be a one-term president or continue to play the same game and push it onto his successor," said Leon E. Panetta, who served as budget director and later White House chief of staff under President Bill Clinton. "That's really the choice that's going to face the next president."
The knowledge of what's ahead is hardly lost on some of those eyeing Bush's job. Sen. John McCain (R-Ariz.) has been among those raising concerns about the long-term costs of current financial policies.
'Expensive chickens'
"Hopefully some very difficult decisions will be addressed between now and the time we have a new White House resident so that occupant isn't faced with some very expensive chickens coming home to roost," said John Weaver, a McCain adviser. "There are some things that we can do, but unfortunately in the political world kicking down the road is often seen as leadership."
Bush advisers argue that he is tackling problems long ducked by other presidents and that his solutions will pay off in the long run. Joshua B. Bolten, director of the White House Office of Management and Budget, predicted last week that making the Bush tax cuts permanent could have positive economic consequences that would mitigate their costs. And he expressed hope that the Medicare prescription drug law may still result in health care savings not captured in the current cost estimates.
As for Social Security, Bush aides said that the president's plan would wipe out a long-term structural deficit facing the nation in coming decades and that the transition costs in the next decade or so will ultimately be overshadowed by the benefits. "People in the future are going to benefit from that decision," said budget office spokesman Chad Kolton.
If Congress were to pass Bush's Social Security plan and permanently extend his tax cuts, the budget deficit would bottom out at $251 billion in 2008, then climb steadily to $335 billion by 2015, according to an analysis by The Washington Post and the House Budget Committee's Democratic staff. Those figures assume, however, that Bush will secure all of his proposed spending cuts, that he will need no more emergency war spending and that there will be no changes to the alternative minimum tax, which Bush and other politicians want to rewrite to keep it from affecting more middle-class families in coming years. The AMT originally was designed to make sure wealthy people couldn't avoid paying some taxes.
With a fix to the AMT, deficits in a decade would likely reach $650 billion to $700 billion, said Sen. Lindsey O. Graham (R-S.C.). "The days of being everything to everybody are quickly coming to a close," he said, adding that a permanent extension of the Bush tax cuts would make it politically impossible to borrow the full cost of a Social Security fix. "We have to look at the deficit in a holistic way."
'Just can't last'
The White House's own 10-year costs of the Medicare drug benefit, the president's tax cuts and the plan for personal Social Security accounts are beginning to jar Republicans into rethinking the budget's trajectory, Graham said.
June O'Neill, a Republican former director of the Congressional Budget Office, agreed that the current trajectory is no longer sustainable. "I don't think that people should waste too much time on probing the details of current policy, which just can't last," she said.
"I think some adjustments need to be made," said Don Nickles, the recently retired Republican chairman of the Senate Budget Committee. Nickles said the drug law will need to be reopened to address problems of skyrocketing costs. He also said that Congress will have to be selective in extending the tax cuts, dropping some of the cuts and perhaps modifying the estate tax repeal to keep some of the revenue.
The looming problems were easily foreseeable, said Joyce, the public policy professor. The White House and Congress vowed last year to keep the 10-year cost of a prescription drug bill to $400 billion. But to do it, the 2004 law did not come fully into effect until 2006. Hence, legislation once priced below $400 billion over 10 years now will cost at least $724 billion over a decade, simply because the law would then be fully in effect.
Tax cuts approved in 2001 and 2003 were held to $1.7 trillion through an array of slow phase-ins, phase-outs and a Dec. 31, 2010, end date when all of the tax cuts would vanish. Now, Bush wants them made permanent, but according to White House numbers, a five-year extension beyond 2010 would cost nearly $1.1 trillion.
Likewise, Bush is proposing a Social Security restructuring that would cost $754 billion through 2015, including added interest costs for the government. But like the tax cuts and drug benefit, the proposal would begin slowly, with initial borrowing in 2009. The plan would be fully effective in 2011. Rep. John M. Spratt Jr. (S.C.), the ranking Democrat on the House Budget Committee, told Treasury Secretary John W. Snow on Wednesday that the first full 10 years of the program would cost $1.4 trillion, rising to $3.5 trillion in the second decade.
One tax proposal alone underscores the problem. A Bush plan to establish broad new tax-free savings accounts would actually raise $17 billion in the first five years, as savers cash out other tax-free accounts, pay taxes on their withdrawals and roll the money into the new accounts. But in the second five years, the proposal would cost $15 billion, according to Treasury figures. And the cost would rise sharply from there, as the accounts began shielding virtually all American savers from capital-gains, dividend and interest taxation.
"That's a time bomb," said James Horney, a budget analyst at the Center on Budget and Policy Priorities.
Congress has long gamed the budget system to make its legislation look less expensive in the short run, Joyce said. But the scale of the drug benefit, the tax cuts, the new tax proposals and the Social Security plan are unprecedented.
Their coming convergence would be a "budgetary perfect storm," Joyce said. "You can't hide from it forever." |
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Republican_Man
STV's Premier Conservative
Joined: 26 Mar 2004
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| Mon Feb 14, 2005 5:46 pm |
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Source please.
And I'm glad that he's cut down the budget, but he should cut less. But for Liberals who are complaining about the President cutting too much of certain programs which have problems...I say bah! You want him to spend less, or what?
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CJ Cregg
Commodore
Joined: 05 Oct 2002
Posts: 1254
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| Mon Feb 14, 2005 9:23 pm |
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Source is MSNBC
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Zeke Zabertini
Captain
Joined: 13 Sep 2002
Posts: 4832
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| Mon Feb 14, 2005 9:33 pm |
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If you want more programs you must raise taxes or find alternative income. Deficit spending is a mistake.
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Republican_Man
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| Mon Feb 14, 2005 9:52 pm |
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| Zeke Zabertini wrote: | | If you want more programs you must raise taxes or find alternative income. Deficit spending is a mistake. |
Well, you kind-of can't not spend any money  
However, Bush should cut more programs. If he would cut back on more of the small, pointless stuff, we could have 50 billion more cut out.
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"Rights are only as good as the willingness of some to exercise responsibility for those rights- Fmr. Colorado Senate Pres. John Andrews
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Zeke Zabertini
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| Mon Feb 14, 2005 9:54 pm |
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Duh. But, of course, "small, pointless stuff" is a matter of opinion.
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Republican_Man
STV's Premier Conservative
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| Mon Feb 14, 2005 9:56 pm |
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| Zeke Zabertini wrote: | | Duh. But, of course, "small, pointless stuff" is a matter of opinion. |
Oh, trust me. There truly is pointless stuff. I'll get you a list.
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"Rights are only as good as the willingness of some to exercise responsibility for those rights- Fmr. Colorado Senate Pres. John Andrews
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Zeke Zabertini
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| Mon Feb 14, 2005 9:58 pm |
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Okay, but I reserve the right to not read it, or read it with a note of cynicism; and to not debate it. I have enough on my plate without debating the congressional budget.
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