Why budget critics are out in force

President Bush's new federal budget has received a much tougher reception than his earlier ones did. Much of the press, and many fiscal conservatives, are hammering it hard.

"Federal spending has grown twice as fast under President Bush as under President Clinton," notes Brian Riedl, an economist at the Heritage Foundation, a conservative advocacy group in Washington.

When the White House released the budget last Monday, Mr. Riedl stayed up until 3 a.m. to get out a 12-page outline of the numbers. He noted that federal spending has increased by 33 percent since 2001, from $1,863 billion to $2,472 billion. And inflation-adjusted federal spending last year neared $22,000 per household, the highest level since World War II.

The press was taking more seriously what Robert Greenstein, director of the Center on Budget and Policy Priorities (CBPP), told this reporter in 2002 about the 2003 budget: "This administration stretches and spins the truth further than either party in the past 30 years."

A New York Times editorial, for instance, calls the 2007 budget "fiction masquerading as fact." The Boston Globe, carried a column headlined, "The deficit deceit." Even The Wall Street Journal noted, "Bush's Deficit Math Sidesteps Some Big Outlays."

So either newspaper writers are now better informed about the budget, or they have revitalized critical faculties that were dulled by the September 2001 terrorist attacks and perhaps the Iraq war.

As for conservatives, they have been shaken by the failure of Mr. Bush to tame a huge budget deficit.

For example, Bruce Bartlett, a highly regarded Republican economist and alumnus of President Reagan's White House, has written a book that got him fired last October as a senior fellow at the National Center for Policy Analysis.

You can see why the conservative think tank in Dallas acted. Mr. Bartlett's book is entitled, "IMPOSTER: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy." It goes on sale Feb. 28. The jacket blurb says Bartlett has "reluctantly concluded that Bush is not a Reaganite at all but an unprincipled opportunist who will do whatever he or his advisers think is expedient to buy votes."

Bartlett has less harsh company among other conservatives. The Concord Coalition, headed by President Nixon's Commerce secretary, Peter Peterson, complains that expanded entitlement costs and proposed tax cuts will lead to "much higher deficits - a problem that is hidden from view in the administration's five-year budget window."

Republicans, "supposed to be the party of small government ... are not going to find much help in the ... budget," notes Stephen Slivinski, director of budget studies at the Cato Institute. He calls the budget's spending cuts "wishy-washy tinkering around the edges."

On the other side of the budget debate, that "tinkering" is lamented. The CBPP notes that federal grants to states and localities will be "cut deeply" and that the budget would "cut food for over 420,000 low-income seniors." The Low Income Housing Coalition complains about further cuts to low-income housing programs, potentially hurting 5.18 million low-income families. And so on.

The budget facts are complex. And they are partially irrelevant because Congress, in an election year, won't enact the budget cuts entirely as presented. Nonetheless, here's a few observations:

• The budget deficit, forecast at $318 billion in 2007, could very well get worse, especially if Congress makes the 2001 and 2003 tax cuts permanent. The tax cuts are responsible for almost half of the deficit, the CBPP reckons. If the economy picks up steam, though, the deficit could shrink as revenues pour in.

Though the deficit is huge in terms of dollars, as a proportion of the massive US gross domestic product (GDP) - 2.6 percent, it is smaller than that of many European nations. Yet in economic terms, the deficit is not immaterial. A Congressional Budget Office study says the deficit raises interest rates from what they might otherwise be. And the deficit puts the US into deeper hock with other nations buying up the new Treasury debt to stave off upgrading their currencies.

• Both left and right agree that the costs of Medicare and Medicaid are a major problem. Riedl calculates that, adding in Social Security, these three entitlement spending programs will leap from 8.4 percent of GDP in 2005 to 18.9 percent in 2050 - a long time ahead.

• Antipoverty spending under Bush has risen by 39 percent, Riedl says, to a record 16 percent of all federal spending. But he complains that a lot of this spending doesn't move poor people "out of government dependency."

Richard Kogan, an economist at CBPP, holds that the Riedl numbers are presented in a "bizarre way." He helped write a 10-page study in December finding that it is defense, homeland security, and international affairs spending that has "exploded," and that domestic discretionary spending stands "unchanged" at slightly less than 3.4 percent of GDP in both 2001 and 2005.

• Iraq war costs have soared beyond what the administration projected - costs not included in the new budget.

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