Budget Deficit

Discussion in 'Politics' started by ARogueTrader, Nov 28, 2003.

  1. Spending escalates under GOP watch

    By James G. Lakely

    Nondefense spending has skyrocketed under Republican control of Congress and the White House, and critics say the outlays will hit the stratosphere with the passage this week of a drug entitlement for seniors.
    The Congressional Budget Office reported that nondefense spending rose 7 percent in the fiscal year that ended Sept. 30, nearly double the 4 percent discretionary spending caps that President Bush insisted Congress honor.
    Since Mr. Bush took office in 2001, nondefense spending has leapt 13 percent — 21 percent if spending on the war on terrorism is included. And he is poised to become the first Republican president to sign into law a new federal entitlement: the $400 billion Medicare expansion to cover prescription drugs.
    Sean Spicer, spokesman for Rep. Jim Nussle, Iowa Republican and the conservative chairman of the House Budget Committee, said the spending increases appear worse when lumping in the annual late-year "emergency" congressional expenditures that he said are little more than thinly veiled pork projects.
    "Even without the emergencies, we're looking at [spending] numbers well above inflation, and that's definitely a concern," Mr. Spicer said.
    Chris Edwards, director of fiscal policy at the libertarian Cato Institute, said the Bush record on spending has been a major disappointment.
    "My impression of Bush is that I've never seen him give a speech in which he says government is too big and we need to cut costs," Mr. Edwards said, pointing out that President Reagan vetoed 23 bills in his first three years in office, while Mr. Bush has yet to unsheathe his veto pen.
    Accepting additional spending is the price Mr. Bush pays for getting his agenda through Congress, Mr. Edwards said.
    "When you have a president who has a bunch of his own spending initiatives like education and the Medicare drug bill, it makes it difficult for him to go out and say that Congress is being wasteful," he said.
    Prominent conservatives are beginning to chafe about the kind of spending occurring on their watch. Nine Republican senators and 25 House Republicans voted against the Medicare drug bill, citing cost as the major reason.
    The $31 billion energy bill also has stalled, largely because many in Congress object to the price tag. The president is itching to get the bill to his desk even though it is four times more expensive than what he had proposed.
    Even radio host Rush Limbaugh, an unwavering booster of the president and his policies, told listeners Tuesday that after passing the Medicare bill Republicans no longer can contend they are the party of smaller government.
    The White House did not return a call for comment.
    Brian M. Riedl, a budget analyst for the conservative Heritage Foundation, said mandatory government spending on entitlements such as Medicare will reach 11.1 percent of the nation's gross domestic product, a record high. That number will climb exponentially, he said, once seniors begin getting government-paid drugs in 2006.
    "Congress often underestimates entitlements by a lot," Mr. Riedl said. "By our calculations, it will cost $2 trillion between now and 2030."
    That's assuming that the program never is expanded, he said, an unlikely scenario.
    When Congress created the Medicare program in 1965, the projected cost in 1990 was $9 billion. The true cost, after several expansions that came with low-balled price tags, was $67 billion, 7.4 times higher.
    "The lawmakers who pushed for the Medicare drug bill never answered the question of how they would pay for it," Mr. Riedl said. "Apparently, they are leaving the $2 trillion tax hike to future congresses to figure out."
    Tom Schatz, executive director of Citizens Against Government Waste, said he hopes that conservatives can bring the president and Congress "back to earth in terms of spending" if Mr. Bush wins a second term.
    "We hope that this is not the legacy of the Bush administration," Mr. Schatz said. "We hope these will be aberrations that will be corrected in coming years."
    A senior Republican congressional aide said many conservatives on Capitol Hill are hoping that is the case. If it isn't, Mr. Bush and the party will have some explaining to do to their political base.
    "There's only so long we can be told [by the White House], 'Just keep waiting for spending restraint,' " the aide said. "Eventually you develop a credibility problem. There's a point where people say, 'We've heard that for five years and nothing's happened.' "
  2. So when is the S&P going to downgrade federal bonds?
  3. McCain: Congress spending money 'like a drunken sailor'
    Sunday, November 30, 2003 Posted: 12:03 PM EST (1703 GMT)

    WASHINGTON (Reuters) - Leading Republican Sen. John McCain Sunday berated fellow lawmakers for "spending money like a drunken sailor" and said President Bush was also to blame for pushing the nation toward higher interest rates and inflation.

    On the "Fox News Sunday" program, McCain lamented the closing actions of the Senate and House before recessing for the year, most notably passage of a massive overhaul of the Medicare insurance program for the elderly.

    He also decried a $31 billion national energy bill, still pending until at least next year, much of which would fund industry tax breaks.

    "The numbers are astonishing," said McCain, an Arizona Republican. "Congress is now spending money like a drunken sailor. And I've never known a sailor drunk or sober with the imagination that this Congress has."

    It was a rare admonition from a member of Bush's own political party, which hopes to benefit from a series of wins this year in Congress -- which in addition to the first-ever Medicare prescription drug benefit, included more tax relief, funds to rebuild Iraq and a law to restrict abortion.

    Bush is hoping the record will help him and fellow Republicans keep control of the White House and Congress in next November's election. Democrats, however, have bemoaned the rising price tags, a sentiment shared Sunday by McCain, a member of the Senate's Armed Services Committee.

    Exceeding Caps
    McCain said Bush, who has never vetoed a spending bill, was in large part responsible for this year's spending levels exceeding prescribed caps of four percent growth, at a whopping eight percent.

    "The president cannot say, as he has many times, that I am going to tell Congress to enforce some spending discipline and then not veto bills," McCain said.

    "We are laying a burden of debt on future generations of Americans. ... Any economist will tell you, you cannot have this level of debt, of increasing deficits without eventually it affecting interest rates and inflation," he added.

    McCain, who challenged Bush for the Republican presidential nomination in 2000, took particular issue with the massive energy bill, which in beginning stages cost $8 billion, a total that rocketed up with dozens of provisions inserted to benefit the districts of individual lawmakers to win their support.

    "There was no policy initiatives in the energy policy. It was just one pork barrel project larded onto another," he said. "... And the administration is still saying it is one of its highest priorities, I don't know how you rationalize that."

    Despite the bills that were passed, however, lawmakers recessed last week without passing a roughly $375 billion year-end federal spending bill.

    The failure will not shut down the government, which can operate under stopgap funding until January 31. But it was a setback for Republicans, who had vowed to get the budget process back on track this year.
  4. Published Wednesday
    November 26, 2003

    Chuck Hagel: This measure will not strengthen Medicare


    The writer, a Republican, is Nebraska's senior U.S. senator.

    I voted against the Medicare reform bill because it will not strengthen Medicare and does not responsibly address the need for prescription drug coverage. It will add trillions of dollars onto Medicare's current $13.5 trillion in unfunded liabilities for future generations.

    I voted against this for reasons different from those of many of my Democratic colleagues.

    Yes, it does contain some good things, like realistic Medicare reimbursement formulas for rural hospitals and physicians, preventive health care measures and means testing. For $400 billion over 10 years and an additional $7 trillion of unfunded liabilities, it should!

    This started as a prescription drug plan for seniors. We need to add such a plan. But it must be an honest, responsible plan that can be paid for and sustained by the next generation. This bill became a payoff to special interest groups involved in Medicare reform.

    It expressly prohibits the federal government from negotiating drug prices for Medicare beneficiaries, even though the government negotiates prices for other Medicare services. Who wins here?

    The drug benefit structure is confusing. There are premiums, deductibles and gaps in coverage. Between $2,250 and $5,044 of drug expenditures, seniors pay 100 percent of their drug expenses while continuing to pay monthly premiums. Who wins here?

    There is a fear that many employers may drop the drug coverage they offer retirees once a federal benefit is in place. In order to prevent this, the bill contains $68 billion in tax-free payments to employers so that they will continue to offer retiree prescription coverage.

    However, many employers are already contractually obligated to do this through collective bargaining agreements. These employer subsidies are being used to provide drug coverage for those already covered. Who wins here?

    Congress should have produced a bill that addressed those seniors who do not now have prescription coverage. Seventy-five percent of Medicare beneficiaries already have some such coverage. We also should have limited the bill to addressing some of the real problems with Medicare, such as rural health care reimbursement formulas and preventive health measures, and by addressing some form of means testing and the cost of prescription drugs. This could have been done.

    There is nothing in this bill to control costs. There is a phony cost containment "trigger" that would require an unspecified "congressional response" once the general revenues (revenues beyond the Medicare payroll tax) account for 45 percent of program spending. Currently, 30 percent of Medicare costs are being paid for from the general treasury. When Medicare was enacted in 1965, the government's lead actuary projected that the hospital program (Part "A") would grow to $9 billion by 1990. It ended up actually costing more than $66 billion by 1990. This is reality.

    There is a larger point to all of this. Who is looking out for the future of the country? This administration and Congress have increased federal spending over the past three years by 21 percent, resulting in budget deficits for the last two years of $559 billion, with next year's deficit estimated to be about $500 billion. We passed some of the largest and most expensive bills in the history of the Congress in the past three years - at the same time passing some of the largest tax cuts ever.

    All of this at a time when America has taken on more peacekeeping and nation- building around the world than at any time since World War II - all at huge costs. And we see a dangerous and strong protectionist movement beginning to dominate our historical commitment to free trade that will have a negative impact on our trade and institutional relations as well as our economy.

    I gave my first speech on the Senate floor in February 1997 in support of the balanced-budget amendment. Republicans used to believe in balanced budgets. Republicans used to believe in fiscal responsibility, limited international entanglements and limited government. We have lost our way.

    We have come loose from our moorings. The Medicare reform bill is a good example of our lack of direction, purpose and responsibility. If we don't get some control over this out-of-control spending and policy-for-the-moment decision-making, we will put America on a course that we may not be able to recover from.

    We need to reform Medicare. We need a responsible and affordable prescription drug plan for seniors. But this legislation does not fit that prescription. The forces of reality will require us to go back and try to undo the damage we've just done to Medicare and future generations. We then will have another opportunity to do it right.

    This time it was about 2004 politics. Next time it will be about responsible policy for the future.

    Contact the Omaha World-Herald newsroom