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April 18, 2005

The Budget Clown Show Moves to the Republican Congressional Leadership...

Could the Post be making a joke? I mean, there is no doubt--no doubt at all--about the Republican Congressional leadership's willingness to tackle the deficit. It has no willingness to tackle the deficit at all. None. Zero. It has never had any. What "doubt" about this could there possibly be?

washingtonpost.com: Congress's Willingness To Tackle Deficit in Doubt. By Jonathan Weisman: In the same week that the House voted to permanently repeal the estate tax, 44 House Republicans broke with their leaders to demand that as much as $20 billion in Medicaid savings be stricken from the budget. The twin moves raise new questions about Congress's willingness to tackle the budget deficit. And they came just as the World Bank and the International Monetary Fund are to convene their annual meetings this weekend. The Bush administration was to use the meetings to tell the world's finance ministers and central bankers that Washington is serious about its red ink....

President Bush and congressional Republicans have vowed to cut the deficit in half over the next four years, but new data indicate that little progress has been made. Halfway through fiscal 2005, the federal government recorded a deficit of $291 billion, the Congressional Budget Office reported this month. That is just $10 billion less than last year's figure when the government was on its way to a record $412 billion deficit. Tax receipts -- buoyed by economic growth -- have risen over last year's levels, but spending increases have nearly kept pace. And Congress will soon approve an emergency spending package for the wars in Iraq and Afghanistan amounting to $80 billion, which will exacerbate the problem.

Stanley E. Collender, a longtime federal budget expert at Financial Dynamics Business Communications, said the deficit this year could exceed the White House's $427 billion forecast, and may reach $450 billion. 'Clearly, the deficit is not anyone's concern,' he said. 'They're just barreling ahead.' Going forward, Congress has not given budget analysts reason for optimism. The House's vote for a full repeal of the estate tax beyond 2010 would cost the Treasury $290 billion over the next 10 years and as much as $70 billion a year once fully implemented. In the Senate, Republicans and Democrats have launched serious negotiations over a deep and permanent estate-tax cut that can pass this year, even if it falls short of a full repeal.

Republicans have long maintained that the deficit should be controlled by curbing government spending, not raising taxes. But, this week, significant numbers of Republicans appeared to give up on Bush's planned cuts on Medicaid, agriculture subsidies and student loans. Those cuts -- especially the Medicaid savings -- were supposed to be a test run for deeper cuts to come. 'The federal government has unfunded promises of $43 trillion on the books,' said Senate Budget Committee spokesman Gayle Osterberg. 'So the uproar over skimming even 1 percent off the growth of one program is disheartening.' On Wednesday, 44 House Republicans penned a letter urging House Budget Committee Chairman Jim Nussle (R-Iowa) to strip as much as $20 billion in Medicaid savings from the House budget resolution, one of the largest pieces of spending cuts under consideration. Senate budget writers had included about $14 billion in Medicaid reductions in their version of the budget, but last month, the full Senate voted to strike those cuts and instead empanel a commission to study changes in the Medicaid system that would determine how much in savings is feasible. Now, dozens of House members who initially agreed to the cuts say House negotiators should accede to the Senate's position.

'This is a program that is in significant need of reform, and we believe the policy should drive the budget, not the other way around,' said Rep. Heather A. Wilson (R-N.M.), who is leading the effort. Of the 44 Republican signatories, 43 had voted for the estate-tax repeal. Rep. Frank R. Wolf (R-Va.), one of the 43, said he sees no contradiction in his stands. 'Poor people need health care, and this is an important program,' he said of Medicaid. The estate tax 'is a tax issue,' he added. 'In my area, a lot of farms are being broken up because when the farmer dies, the family has to sell out. It's really about growth.' 'We should do everything we can to deal with [the deficit],' Wolf concluded. 'I think the Congress is very serious.'

The tough spending targets set by the House and Senate budget committees could still emerge relatively intact when a final budget deal is reached, perhaps by the end of the month....

One piece of evidence that the Post is not making a joke--is simply clueless about the budget--is its description of $20 billion in cuts in Medicaid spending over five years as "tough spending targets." Medicaid is not the first, or the second, or the tenth place I would look for savings in order to reduce the deficit. But $20 billion over five years is 0.2% of the total budget. It is tough on some Medicaid beneficiaries. It is not part of a tough overall spending target.

Posted by DeLong at April 18, 2005 02:02 PM