Another federal budget mess looms

Many conservatives and liberals agree on one Washington phenomenon: The budgets emerging from Congress under the Bush administration are a mess.

"Bush is the second-most fiscally irresponsible president ever," says Richard Kogan, a budget expert at the Center on Budget and Policy Priorities, a liberal Washington think tank. (The worst, by his measure, was Ronald Reagan.)

At the libertarian CATO Institute, budget expert Steven Slivinski refers to the "Grand Old Spending Party": "President Bush has presided over the largest overall increase in inflation-adjusted federal spending since Lyndon B. Johnson," he writes in a policy analysis.

In other words, the two, politically far apart, agree that Republicans have not walked their talk of "fiscal discipline."

The fiscal year 2006 ends Saturday. Members of Congress hope to head to the hustings Friday. In theory, by then Congress should have passed all 13 appropriations bills for fiscal 2007. But at this writing, only two – for defense and for Homeland Security – are thought to have a chance of passage.

Those not dealt with in the next several days are likely to be considered in a postelection congressional session in November. It's been speculated, though, that a stopgap continuing resolution will be passed to provide the federal government with enough money to keep going until a new Congress convenes next year.

It has become common for Congress not to pass all appropriations legislation before a fiscal year starts – relying on a continuing resolution to pay the bills. Spending disagreements and deadline bargaining cause frequent delays.

Democrats are chuckling at the situation today. Republicans, supposedly organized and parsimonious, control both houses of Congress plus the White House. But there's no budget yet.

Stan Collender, a veteran budget observer, offers this explanation: "The White House and congressional Republicans have obviously realized that 'cutting spending' won't work as a political strategy." What is different this time, he holds, is that the Republican leadership has consciously decided not to force action on the appropriations bills.

Congressional procedures, even the veto in the Senate, are not a real impediment to making budget cuts, Mr. Collender maintains. But the conservative Republican leadership knows that Democrats and a small group of moderate Republicans could combine at this pre-election stage to block some cuts in discretionary spending, say, on social programs. After the election, such cuts become more politically feasible for moderate Republicans, perhaps even if defeated. So it's expedient to put off these votes for now.

When it comes to allocating blame for the budget mess, conservatives and liberals differ.

Mr. Kogan largely blames the tax cuts endorsed by the Bush administration. Minus them, the 2006 budget would be in balance. Instead, the deficit is expected to run somewhere around $260 billion this fiscal year. It's likely to grow in coming years – unless some tax cuts die.

What bothers Kogan is that the economic burden represented by Uncle Sam's debt has seriously deteriorated by one measure. Outstanding federal debt held by the public has climbed as a ratio of the nation's gross domestic product (GDP) from 26 percent when Bush took office to 37 or 38 percent now.

As a result, interest on that federal debt is the fastest-growing major expense category in the budget. About 40 percent of federal debt rolls over each year, and rising interest rates make new and rolled-over debt more costly.

Under Reagan, who tried to shrink government by starving it of tax revenues, this debt-GDP ratio deteriorated even faster. It rose from 26 percent at the start of his eight years to almost 50 percent at the end. Reagan was "the most profligate" of the presidents, says Kogan.

Nor does the rising cost of the Iraq war give Bush an excuse, Kogan says. That war is cheap compared to the Korean War or the Vietnam War during the times of Presidents Eisenhower and Johnson. Yet during their presidencies the debt-GDP ratio hardly changed.

But while liberals want to maintain revenues for social programs, conservatives are "aghast," writes Michael Franc, vice president of the Heritage Foundation in Washington, at "the way supposedly conservative lawmakers have spent money." His comments were in Human Events, a conservative magazine.

Federal spending grew by 33 percent during Bush's first term. Outlays were $1.86 trillion in 2001 and about $2.7 trillion in the fiscal year ending this month.

Conservatives can list hundreds of programs they want trimmed or eliminated.

The budget's long-term outlook looks even worse. "Incredibly worrisome," says Adam Hughes, an economist with OMB Watch, a Washington budget observer. "The country is headed toward a fiscal crisis."

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