Tuesday, December 06, 2005

Bush discretionary spending

I do subscribe to the conspiracy theory that nearly all presidents in history should've been impeached for one thing or another. Sure, they never do, but for the Bush administration it should've not been for WMD, but spending.

Defending Spending: Bush's Bloopers
That's an average annual growth rate of 2.4% during Clinton's eight years, compared to an average of 11.8% during Bush's first three.

'Conservative' Bush Spends More than 'Liberal' Presidents Clinton, CarterL
But the real truth is that national defense is far from being responsible for all of the spending increases. According to the new numbers, defense spending will have risen by about 34 percent since Bush came into office. But, at the same time, non-defense discretionary spending will have skyrocketed by almost 28 percent. Government agencies that Republicans were calling to be abolished less than 10 years ago, such as education and labor, have enjoyed jaw-dropping spending increases under Bush of 70 percent and 65 percent respectively.


The White House spinmeisters insist that we keep the size of the deficit "in perspective." Sure it's appropriate that the budget deficit should be measured against the relative size of the economy. Today, the projected budget deficit represents 4.2 percent of the nation's GDP. Thus the folks in the Bush administration pat themselves on the back while they remind us that in the 1980s the economy handled deficits of 6 percent. So what? Apparently this administration seems to think that achieving low standards instead of the lowest is supposed to be comforting.

That the nation's budgetary situation continues to deteriorate is because the administration's fiscal policy has been decidedly more about politics than policy. Even the tax cuts, which happened to be good policy, were still political in nature considering their appeal to the Republican's conservative base. At the same time, the politicos running the Bush reelection machine have consistently tried to placate or silence the liberals and special interests by throwing money at their every whim and desire. In mathematical terms, the administration calculates that satiated conservatives plus silenced liberals equals reelection.

How else can one explain the administration publishing a glossy report criticizing farm programs and then proceeding to sign a farm bill that expands those same programs? How else can one explain the administration acknowledging that entitlements are going to bankrupt the nation if left unreformed yet pushing the largest historical expansion in Medicare one year before the election? Such blatant political maneuvering can only be described as Clintonian.

But perhaps we are being unfair to former President Clinton. After all, in inflation-adjusted terms, Clinton had overseen a total spending increase of only 3.5 percent at the same point in his administration. More importantly, after his first three years in office, non-defense discretionary spending actually went down by 0.7 percent. This is contrasted by Bush's three-year total spending increase of 15.6 percent and a 20.8 percent explosion in non-defense discretionary spending.

Bush Budget Reveals Serious Overspending Problems
The biggest spending administration in decades. With Bush's budget plan for FY2004, real non-defense discretionary outlays will rise 18.0 percent in his first three years in office (FY2002-FY2004). That growth far exceeds the first three years of any recent presidential term, including Ronald Reagan's first term (-13.5 percent), Reagan's second term (-3.2 percent), George H. Bush's term (11.6 percent), Bill Clinton's first term (-0.7 percent), and Clinton's second term (8.2 percent). When Reagan came to office and pursued a large defense build-up, he essentially froze non-defense discretionary outlays, which were $150 billion in FY1981 and just $151 billion three years later in FY1984 (in current dollars).

A spending freeze would eliminate the deficit. The FY2004 budget would increase discretionary outlays from $791 billion in FY2003 to $926 billion by FY2008. If, instead, discretionary outlays were frozen at the FY2003 level, the deficit would plunge to just $55 billion by FY2008. The budget could be balanced even more quickly with reforms to cut rapidly growing entitlement costs. If total outlays were frozen at the FY2003 level, the budget would essentially be balanced in just two years (by FY2005).

Spending increases dwarf proposed tax cuts. The administration proposes to increase total federal outlays by $89 billion in FY2004, $114 billion in FY2005, and more than $100 billion each year thereafter. As spending increases accumulate, annual outlays are expected to be $571 billion greater in FY2008 than in FY2003. By contrast, the tax cuts in the administration's growth package have a tiny effect on future budgets. By FY2008, the Bush growth package tax cuts would reduce federal revenues by just $50 billion annually in FY2008.

Only 2 of 21 major departments and agencies are cut. Only 2 of the 21 major federal departments -- Justice and Labor -- would receive an actual cut in discretionary budget authority in FY2004. While most departments receive small increases this year, many have had substantial growth in recent years. For example, the Department of Education budget has jumped from $40.1 billion in FY2001 to $53.1 billion in FY2004. During the same period, the Health and Human Services budget increased from $54.2 billion to $66.2 billion, State and International Assistance from $20.4 billion to $27.4 billion, and Veterans Affairs from $22.4 billion to $28.1 billion.

Almost $400 billion for state and local governments. State officials are demanding a federal government bailout to make up for their poor fiscal management. Yet the budget shows that total federal grants-in-aid to state and local governments increased from $285 billion in FY2000 to $384 billion in FY2003. The administration has resisted as large a bailout as states want, but grants are still expected to rise to $399 billion in FY2004.

Bush vs. Clinton for FY2004. When former President Clinton introduced his FY2000 budget, he proposed that non-defense discretionary spending for FY2004 should be $335 billion, as shown in Figure 1. President Bush is now proposing that non-defense discretionary outlays rise to $429 billion in FY2004, or almost $100 billion greater than Clinton's original plan. The sad fact is that the administration and Congress do not adhere to out-year budget plans, as they always spend far more than originally proposed. Unless the Bush administration pursues major program cuts and terminations, its 2.3 percent proposed annual average growth in non-defense discretionary outlays (FY2004-FY2008) is very optimistic.

Bush Beats Johnson: Comparing the Presidents
-As it turns out, George W. Bush is one of the biggest spenders of them all. In fact, he is an even bigger spender than Lyndon B. Johnson in terms of discretionary spending.

-The increase in discretionary spending--that is, all nonentitlement programs--in Bush's first term was 48.5 percent in nominal terms. That's more than twice as large as the increase in discretionary spending during Clinton's entire two terms (21.6 percent), and just higher than Lyndon Johnson's entire discretionary spending spree (48.3 percent).

-Bush has expanded federal nonentitlement programs in his first term almost twice as fast each year as Lyndon Johnson did during his entire presidency.

Bush Beats LBJ on Spending
...While the data show that all presidents presided over net increases in spending, George W. Bush is shown to be one of the biggest spenders of them all, even outpacing Lyndon B. Johnson in terms of discretionary spending.

An excerpt from the report: "The increase in discretionary spending - that is, all nonentitlement programs - in Bush's first term was 48.5 percent in nominal terms. That's more than twice as large as the increase in discretionary spending during Clinton's entire two terms (21.6 percent), and just higher than Lyndon Johnson's entire discretionary spending spree (48.3 percent).

2005 Budget Proposal
Chris Edwards, director of tax policy studies:

The budget proposes to cut 150 programs, but the fine print shows that these cuts will only reduce 2006 spending by 0.8 percent.

The administration is still not serious about cutting spending: 2 of the 5 pages of the budget overview tout 37 new spending initiatives.

The Bush budget underscores how out-of-control federal spending is. The budget is being billed as the tighest yet, but overall spending is projected to rise 3.6 percent in 2006 even without further money for Iraq.

Despite his promises, Bush's budget does not realistically cut the deficit in half by 2009.

Cato Institute
Total federal outlays will rise 29 percent between fiscal years 2001 and 2005 according to the president's fiscal year 2005 budget released in February. Real discretionary spending increases in fiscal years 2002, 2003, and 2004 are three of the five biggest annual increases in the last 40 years. Large spending increases have been the principal cause of the government's return to massive budget deficits."
"Nondefense discretionary outlays will increase about 36 percent during President Bush's first term in office."
"In FY2005, total outlays will be up an astounding $547 billion from FY2001, when Bush came into office.

Hit and Run
Over the past two weeks, I've written or co-written a couple of things about how George W. Bush outspent Lyndon Baines Johnson in his first four budgets. To recap: When it comes to inflation-adjusted increases in discretionary spending (comprising most defense and nonentitlement spending), Dubya beats LBJ like Sam Houston beat Santa Anna at the Battle of San Jacinto.

The gap becomes even bigger when you stretch the comparisons out to the first five years of each prez's budgets. Here are numbers for all recent presidents who oversaw at least five budgets prepared by American Enterprise Institute analyst Veronique de Rugy. All are based on Office of Management and Budget and all are adjusted for inflation. The Bush figure for fiscal year 2005 is based on OMB midsession review numbers; the figure for fiscal year 2006 is based on the OMB midsession review of the budget Bush submitted earlier this year (if anything, the final figures will be higher than his provisional budget):

First Five Years, Percentage Changes in Real Discretionary Spending

LBJ: 25.2%
Nixon: -16.5%
Reagan: 11.9%
Clinton: -8.2%
Bush: 35.2%

Read 'em and weep.

On Spending, Bush Is No Reagan

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