Where Are The Spending Cuts ?
President Bush presented his latest budget proposal to Congress today.
As has become typical with these proposals, the White House thinks it will lead to surpluses and economic prosperty while the Democrats think it will lead to economic ruin. The problem with both sides is that they aren’t focusing on what’s really needed, massive cuts in spending:
The budget that President Bush will submit to Congress today shows the federal deficit falling in each of the next four years and would produce a $61 billion surplus in 2012, administration officials said. But to get there, Bush is counting on strong economic growth, diminishing costs in the Iraq war and tight domestic spending to offset the cost of his tax cuts.
Democrats yesterday criticized the five-year budget plan as overly optimistic, and predicted that extending the tax cuts past their 2010 expiration date would dig the nation deeper into debt rather than produce a budget surplus. Republicans countered that the tax cuts are critical to maintaining a healthy economy and that a balanced budget is not possible without them.
“Raising taxes . . . won’t help balance the budget — it will slow the economic growth that is creating the new jobs of tomorrow and increasing revenue to the federal government,” House Minority Leader John A. Boehner (R-Ohio) wrote in an essay distributed yesterday by his office. “Keeping our economy strong and promoting fiscal responsibility will get the job done. Raising taxes won’t.”
Republicans hope to make the tax cuts a central feature of this year’s budget debate, the first in which Bush will present his request to a Democratic Congress. Both the White House and Democratic leaders have vowed to eliminate the federal deficit by 2012, but Democrats have signaled their intention to do it in part by targeting tax breaks for corporations and taxpayers earning more than $500,000 a year.
“We think it’s absolutely critical that they be extended in 2010, when they otherwise would expire. Why? Because they have contributed to this growing economy,” White House budget director Rob Portman said yesterday on CNN’s “Late Edition.”
“We think it would be a mistake and a risk to our strong economy to have these tax cuts not continue,” Portman added.
Here, for example, is one of the things that’s wrong with modern Republican approaches to fiscal policy. Tax cuts aren’t good because they keep money where it belongs; in the pockets of the people and businesses that earned it. They are good because they “help the economy.”
While I agree that tax cuts are a net positive for the economy, I think Republicans make a mistake when they justify tax cuts based solely on their impact on the economy. By doing so, they leave the entire argument in favor of reducing the tax burden open to anecdotal evidence, however contrived it might be, of a tax cut that harmed the economy in one way or another.
More importantly, though, Bush’s budget doesn’t seem to address the biggest budget problem the Federal Government has, the continued growth in spending:
Bush’s budget projects slower spending growth from 2008 to 2012, with outlays rising 11.8 percent, compared with 14.7 percent in the CBO’s estimates.
Most of this spending, of course, comes in the form of so-called entitlement programs such as Social Security or Medicare. Until someone is Washington is willing to tackle those issues, the budget process will continue to be the farce that it’s been for decades.