Fake your way through a budget discussion

Among the articles I read this morning on the White House's proposed budget, some interesting items:

It's not a good time to be a veteran:

President Bush's budget would more than double the co-payment charged to many veterans for prescription drugs and would require some to pay a new fee of $250 a year for the privilege of using government health care, administration officials said Sunday. [...] The president would increase the co-payment for a month's supply of a prescription drug to $15, from the current $7. The administration says the co-payment and the $250 "user fee" would apply mainly to veterans in lower-priority categories, who have higher incomes and do not have service-related disabilities. (NYT)

And

In all, the president proposed savings of $137 billion over 10 years in mandatory programs with much of that occurring in reductions in Medicaid, the big federal-state program that provides health care for the poor, and in payments the Veterans Administration makes for health care. (WSJ)

It's not a good time to be a farmer:

One of the most politically sensitive targets on Mr. Bush's hit list is the government support program for farmers, which he wants to trim by $5.7 billion over the next decade, which would represent cuts to farmers growing a wide range of products from cotton and rice to corn, soybeans and wheat. (WSJ)

And

Farmers receive about $15 billion annually in federal farm program payments to help produce major commodities, including corn, cotton, rice and wheat.

California farmers could end up bearing a disproportionate share of the burden if the cuts in crop subsidies were enacted, said economist Daniel Sumner.

[...]

The administration will propose a 5% across-the-board cut in price supports for crops and a reduction from $360,000 to $250,000 in the annual cap on subsidies that farmers can receive. (LAT)

It's not a good time to be a student:

About one-third of the programs being targeted for elimination are in the Education Department, including federal grant programs for local schools in such areas as vocational education, antidrug efforts and Even Start, a $225 million literacy program. (WSJ)

And

[The budget] would cut 48 education programs totaling $4.3 billion, including $2.2 billion for high school programs, mostly state grants for vocational education.

The budget would cut $440 million in Safe and Drug-Free School grants, $500 million in education technology state grants, $225 million for the Even Start literacy program, $280 million for Upward Bound programs for inner-city youths and a $150 million talent research program, according to the documents. (WaPo)

It's not a good time to be in R&D:

The Pentagon budget provides $10.5 billion for science and technology in 2006, a reduction of $2.5 billion from this year's level, he said.

"We are concerned about that change because it means the Defense Department will be providing less support for university research," Mr. Smith said. "Engineering and computer science will be particularly hard hit." (NYT)

It's not a good time to be the outdoors:

Several Energy Department programs would be eliminated, as would $100 million in grants for land and water conservation. The budget proposal would cut $94 million in grants for the Healthy Communities Access Program and phase out rural health grants, the documents said. Bush touted his commitment to such programs during his reelection campaign. [emphasis mine] (WaPo)

And

Other programs set for cuts include the Army Corps of Engineers, whose dam and other waterway projects are extremely popular in Congress; the Energy Department; several health programs under the Health and Human Services Department and federal subsidies for the Amtrak passenger railroad. (WSJ)

It's not a good time to be poor:

Overall, the administration projected saving $8.2 billion in agriculture programs over the next decade including trimming food stamp payments to the poor by $1.1 billion. (WSJ)

And

The food stamp cut, expected to be about $1 billion in a $32-billion program,received less notice.

States must provide food stamps to people on cash welfare. But this is a much smaller population since Congress overhauled welfare in 1976.

A larger number of people now receive federal job-related aid, such as child care for working women with small children. The budget, sources said, gives states less flexibility to provide food stamps to these working poor people.

The nation's governors can be expected to lead the opposition to this proposal, just as they fought a 2003 proposal to cut their federal Medicaid support in return for greater flexibility in administering the program. (LAT)

and

The president would terminate the Community Food and Nutrition Program, and cut a migrant and seasonal farm worker training program. He would renew his effort to cut a $143 million program for the removal of severely distressed housing. (WaPo)

Sources: "Bush Budget Raises Drug Prices for Many Veterans," NYT, Feb 7, 05; "Bush to Propose Billions in Cuts," LAT; Feb 7, 05; "$2.5 Tril Budget Plan Cuts Many Programs," WaPo, Feb 7, 05; "Bush Budget Plan Includes Steep Cuts in Many Programs," WSJ, Feb 7, 05.

And the best "No ... really?" quote comes from the LAT:

The lower-income Americans who benefit from food stamps and Medicaid do not typically provide the Republican Party with many votes or campaign contributions.

And in the unintentional confirmation category, from the WSJ:

"It's a budget that sets priorities," Mr. Bush said after a meeting with his cabinet.

What those priorities are will no doubt be outlined by commentators over the next few weeks. In a bit: who to write and who to throw your weight behind if you're concerned about the future of any of the programs being targeted.

Comments

[Roger]

Let's not forget cutting funding to the EPA and funding for local police departments. (CNN.com)

In short, it's a good time to be rich, or an Iraqi.

It's amazing to see these heroic efforts by the administration to balance an out of control budget - a budget created by this same administration to replace one that was running a surplus. And yet, the cost of the war and the cost of reworking Social Security are still not counted in the new budget, as they are not in the current one. I guess we're supposed to think the $300B spent on this war is just a minor "hidden" cost.

To be fair, even the surplus-producing Clinton budget did not account for the future cost of Social Security entitlements. Neither have any of these budgets accounted for the future cost of Medicare, which is expected to become far more expensive - and thus a larger problem - than Social Security.

Recommended reading: Peter G. Peterson Running On Empty (also B&N)

[Lisa]

Yeah, I figured this budget thing was so BIG that it should take up a few separate posts. The Social Security thing and the war spending are ... dude, I'm still wrapping my head around those. That book = to be checked out.

The thing that turns me into a hysterical, pearl-clutching liberal is the systematic slashing of the vo-tech programs, the early literacy programs, and the Upward Bound programs. AND the slashing of local police programs. So let me get this straight ... you're going to create conditions that are prime for creating a permanent underclass and a corresponding rise in crime ... but give us fewer public resources for dealing with THAT problem?

It's just so shortsighted. I mean, even putting aside the apparently nonobvious premise that education is the number one way of ensuring that people transcend poverty and deleterious upbringing to become positively-contributing members of society who produce more for the U.S. than they directly consume ... even putting that aside, it makes no sense to exacerbate the conditions that lead to crime, and then hobble the programs that fight it.

[Roger]

Agreed. I neglected to include some of my commentary previously. It would appear, on quick review of the proposal, that Bush intends to cut funding on just about any program that benefits the common citizen. How this is supposed to help the country I don't know. The proposal seeks to close tax loopholes used by farmers, but what about the huge, profitable corporations who use loopholes of their own to avoid paying any taxes, while receiving subsidies from the federal and local governments? Apparently those loopholes will remain open.

The idea of cutting Medicare funding is particularly frightening, especially since the program already cannot meet its future cost expectations. This very same administration expanded the prescription drug benefits available under Medicare last term, adding significantly to its cost, and now they seek to cut funding further?

I find the education cuts ironic, given the "No Child Left Behind" program put in place last term. That (underfunded) program was in my opinion guaranteed to gut the quality of US education already. Add in these new budget cuts and we might as well begin outsourcing our education along with all the other jobs we send overseas. This one alone will be tragic if it goes through.

[Becky]

The proposal seeks to close tax loopholes used by farmers, but what about the huge, profitable corporations who use loopholes of their own to avoid paying any taxes, while receiving subsidies from the federal and local governments? Apparently those loopholes will remain open.

Ah, yes, but it's not worth raising taxes on corporations or closing loopholes, because they have sneaky accountants who get them out of paying anything!

Seriously, Bush was saying that all last fall on the campaign trail when asked about taxes. It's astounding. Meanwhile, I'll have to double-check, but I think the federal taxes went up on my poor grad student earning-less-than-a-living-wage ass.

[Roger]

That may be true. Those tax cuts heavily favored the rich, but really didn't cut federal income all that much. That means the balance had to come from somewhere else - the wage earners. Even if your taxes aren't really higher, many of your incidentals are - for instance, skyrocketing insurance rates - so what you get to keep out of that paycheck is far less these days anyway.

I don't have the numbers in front of me (I'm particularly bad about references) but over the past few years corporate income has grown considerably, executive compensation has grown considerably, the GDP has risen, and the cost of living has risen, but employee salaries have stayed essentially flat or fallen. In my industry salaries are expected to rise 0.5% this year, while the cost of living is expected to go up 3.3%. Best projections put the salary increase at 2.5%, still well under the increase in CPI. This isn't progress. In America, corporate execs now make on average 500 times the income of their workers. (The number is quoted at somewhere between 300-500x, depending on the source.) The corporations are making money, but it's not flowing through to employees. Something is seriously out of balance here.

All of this of course means on average we have less real income, and therefore pay less taxes to the federal government. Which means less money to support the ailing Social Security and Medicare systems. Add in Bush's new budget proposals which seemingly slash social programs, and your cost of living rises even further. Your ability to save suffers, which means in your later life you'll be leaning on the ailing government entitlements more. It's a pretty bleak picture. Peter Peterson actually covers a lot of this in his book, though he spends the most time on Social Security and Medicare. To my surprise, in the last chapter of the book he offers suggestions on how we (as a nation) can get out of this mess. It seems we're going to need a change of administration to pull it off though.

This budget proposal is a step in the wrong direction. That should be obvious when domestic social programs are being cut, but the sacred cows of Homeland Security and the Iraq occupation are off-limits to cuts. Not to mention that the Iraq funds are still being considered emergency appropriations and are not listed as budget items.

Forgive me if I drone on; perhaps it's obvious that this is one of my big hot buttons these days.

[Roger]

Here's yet another related meaty article from the WaPo, Tues Feb 8, 2005, "Bush Urges Congress to Cut Failing Programs".

Let the fallacy fly! Here are several points I found interesting in this article:

Bush said his proposed budget "includes vital reforms in mandatory spending that will save taxpayers $137 billion over the next decade" and help achieve his goal of cutting the budget deficit in half by 2009.

Let's ignore for the moment the numerous reports from various agencies and experts - including the government's own CBO - who say this administration will not achieve the goal of cutting the deficit in half. Let's also ignore the fact that there was a budget surplus, not deficit, before this administration took office. Instead, let's look at the gaping fallacy in this statement. Bush seeks to cut several "failing" programs, which as we know from other articles, includes many social spending programs. These are unerringly aimed to benefit lower-income families. So what happens when we cut those program? Why, our citizens have to make up for the lost benefits out of their own pockets. For the rich, that's no problem at all. For the low-income earners, that's nearly double taxation. You lose the benefit, and you have to make up the difference out of your paycheck, thus lowering your discretionary income. You gain back the tax that pays for the program, sure, but the low-income families who receive the benefit of these programs generally pay little to nothing into them. That's the whole point of the system. Before I believe this "$137 billion" saved, I want to see how much the loss of these programs will cost those beneficiaries out-of-pocket. Therein lies the fallacy.

Let's move on to the next quote:

Bush also noted that the federal government now pays individual farmers as much as $360,000 a year in subsidies and said "there needs to be change" in such programs to save taxpayers money.

Hey, that's a great salary for a farmer! $360,000 a year? Tell me where to sign up, I want some of that action! Oh, that's right, fallacy again. You see, this time, Bush is confusing - perhaps deliberately - subsidy with salary. Part of that $360,000 goes to support the farmers and their families I'm sure, but the majority of it goes to simply operating the farms. And that has a direct bearing on how much food costs in our supermarkets. So, we eliminate farm subsidies, farmers are unable to afford to operate their farms, food prices rise, everybody pays. This is a benefit? Fallacy again. Independent farmers are already struggling to survive faced with increasing competition from the corporate conglomerates; they need all the help we can give. (The farming conglomerates, like any large corporation, are after only one thing - profit. If you're interested, do a little research on one of my favorites, Monsanto. It's a hoot!)

Finally, we have a quote that isn't a fallacy, but scares the daylights out of me anyway:

To help promote Bush's goals, senior adviser Karl Rove will take on a broader role in the White House, becoming deputy chief of staff, press secretary Scott McClellan announced today.

All I can say to that is, yikes!