THIS WEEK, Congress and the American people got their first look at a much-anticipated document: President Bush's proposed federal budget for the fiscal year 2007. The plan for next year resembles budgets of years past: a swelling commitment to entitlement programs like Social Security and Medicare, cuts in discretionary spending and a massive deficit projected at $423 billion.
The size of the deficit isn't altogether problematic, given that the deficit as a portion of GNP isn't that much greater than last year. And as a matter of fact, the Bush plan also promises to cut the deficit in half by 2009, just as he leaves office. Unfortunately, this promise is not as reliable as it needs to be; Bush's budget forecasts are based on a number of unrealistic assumptions. At this point in his relatively embattled second term, the president needs to speak with some honesty in his forecasting and own up to the costs of his administration.
For instance, the budget does not account for any of the costs of the wars in Iraq or Afghanistan after 2007. Omitting the costs of the war on terrorism has become customary practice under the president's administration. Given the unpopularity of the war with many people, it's not surprising that the new budget tries to avoid the issue. However, the costs of the war, especially in Iraq, are very real and too great to ignore; estimates of the exact financial cost of the conflict hover between $150 million and $200 million per day.
Similarly omitted are the costs of any cleanup and relief efforts related to Hurricane Katrina after 2006. This is money that certainly will be spent, and it also must be accounted for. Between the omission of the Iraq and Katrina costs, it's estimated that $500 billion in spending over the next five years has not been accounted for. It's irresponsible for the president to make promises about the deficit without factoring in that money.
The president also needs to reconsider his insistence that Congress make permanent the tax cuts that he enacted in his first term. It is not possible for the government to continue to spend at its current rate while slashing revenue as drastically as the president wants. The budget has made some attempts to offset the cuts in the form of cuts to Medicare benefits and cuts to various discretionary programs.
However, the small cuts proposed don't nearly make up for the huge hit in revenue the tax breaks would create, and scores of worthwhile federal programs stand to be eliminated or be seriously reduced in scope. The idea of institutionalizing these tax cuts needs to get the axe.
The final and largest elephant in the room is Social Security. At 21 percent of total outlays in the new budget, it's become the biggest category of federal spending. The problem will only become even more pronounced as more and more baby boomers retire and start receiving benefits from the system, a process that has just begun. In his State of the Union address last year, the president proposed a radical change to Social Security, involving the creation of private accounts. This proposal failed for a number of reasons, not the least among them being the fact that the president never made it clear how this massive overhaul would be financed.
In this year's speech, the president addressed the issue again, calling this time for the creation of a panel to explore the issue. This proposal certainly won't draw as much fire as the previous one, but it's not the kind of plan for change that the Social Security crisis requires. It's true that the system isn't going to go bankrupt any time soon, but the sooner a viable plan is created the easier the problem will be to correct. In lieu of an immediate plan, the commission needs to be made a top priority, because Social Security, as one glance at the pie chart reveals, is casting a shadow over the rest of the budget.
In the coming weeks, the president will have to answer to many people for this budget, including conservatives in his own party and members of Congress. He also needs to answer to the American people, who are wondering when forward thinking and simple honesty will become part of the federal budgeting process.
Matt Waring's column usually appears Fridays in The Cavalier Daily. He can be reached at mwaring@cavalierdaily.com.
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