Semi-Daily Journal

The Budget Picture According to Stan Collender

The estimable Stan Collender writes about the budget:

Budget Battles (11/18/2003): An analysis (ftp://ftp.cbo.gov/47xx/doc4713/RevisedBlueDog.pdf) conducted by the Congressional Budget Office earlier this month in response to a request by Rep. Charles Stenholm, D-Texas, has emerged a major topic of discussion around federal budget water coolers since its release. Using the same baseline but a different set of assumptions about what will happen, many of which are considered far more realistic, the analysis indicates that, contrary to White House claims, the federal deficit will not be cut in half by the end of fiscal year 2008. Rather, it will remain close to $350 billion every year through the end of the decade.

House Budget Committee staff was said to be so displeased with what the analysis showed hat it leaked a plan to limit access to CBO to only those people who were requesting something that would support the Republican position on the budget. The plan supposedly included the possibility of Budget Committee Chairman Jim Nussle, R-Iowa, having to personally approve all future CBO requests from House members.

The CBO analysis may already be out of date in any case. One of the key assumptions on which the analysis was based was that a Medicare prescription drug plan costing $400 billion over the next 10 years would be enacted. But there were some indications that the Medicare drug plan agreement reached by Republican leaders over the weekend could cost considerably more than this amount.

In addition, it is now clear that appropriations have been growing much faster than the 4 percent annual limit repeatedly called for by President Bush. (The CBO analysis assumed 4 percent growth at Stenholm's request.) The actual numbers show that total discretionary spending grew by more than 12 percent from fiscal year 2002 to fiscal year 2003. Military and homeland security grew by about 17 percent, while all other programs grew by about 8 percent. This makes the higher CBO deficit projections too low.

If appropriations grew so much faster than 4 percent from 2002 to 2003, why does everyone think agency and department budgets are so tight?

The White House has attempted to retain its image as a fiscal tightwad when it comes to discretionary programs, so the president has been talking all year as if he has been successful in keeping spending growth down. Even if growth has not slowed anywhere close to what Bush has been saying, this is what people have been thinking and, until recently, the media has been reporting.

The tightwad image is particularly important for the conservative base of the Republican Party, which expressed its unhappiness over the faster-than-it-desired spending growth in the 1990s by not voting during the 1996 congressional elections and costing the GOP several seats.

The administration's basic and most repeated budget policy statement over the past year has been that one of the keys to cutting deficits in half by the end of fiscal year 2008 is to limit growth in discretionary spending to 4 percent. Bush administration officials could not say that and at the same time admit spending was growing faster than this so-called absolute limit.

Also, the narrow Republican majorities in the House and Senate have often required the leadership and the White House to agree to increases in spending or not to decrease some programs so that otherwise recalcitrant members would continue voting with them.

In addition, this is an administration that has wanted to stoke the economy. Spending cuts, however desirable for political reasons, would not help GDP and job growth. This is also one of the key reasons the president has not vetoed any appropriations since he took office even though many have included spending above levels he has deemed acceptable...

I haven't had the time or the inclination to read the National Journal for a couple of years now. I do keep getting--and deleting--messages on my answering machine asking me to resubscribe. Their coverage of politics and of the lobbying world of influence peddling is second to none. But their economic coverage is lousy: their default assumption that Bush administration and other Republican claims about economics are meant seriously is quite irritating.

Stan Collender being an exception, willing to call it as he sees it, of course.