http://www.msnbc.com/news/870062.asp?cp1=1
What Is He Thinking? Is the Bush budget all about slashing Social
Security and Medicare?
Feb. 7 -- Sticker shock. That's the reaction on Capitol Hill to
President George W. Bush's budget. The deficit numbers are staggering,
even to Bush loyalists: $307 billion next year, more than a trillion
dollars in five years. And that's not counting the looming war with Iraq
and the cost of a prolonged occupation. Bush talks plenty about war, but
he doesn't tell the country how he plans to pay for it.
HIS BORROW-AND-SPEND budget even shortchanges some of his
alleged priorities. Money for medical research is flat-lined, barely
keeping up with inflation. Funding for his "No child left behind"
education bill is scaled back. Other assistance programs in Africa are
raided to pay for Bush's pledge to fight AIDS in Africa. Add to this the
states that are looking to Congress for help, and it's a very sobering
time for Democrats and Republicans alike. "You don't have to be a deficit
hawk to be worried," says a Senate Republican aide.
The first casualty will be Bush's dividend-tax-relief plan, which will be
reduced drastically if not killed altogether. Bush reportedly has been
warned by Federal Reserve Board Chairman Alan Greenspan to put the brake
on tax cuts before gigantic deficits drag down the economy.
President Ronald Reagan, who ran up the government charge account, took a
what-me-worry attitude, declaring jovially, "The deficit is big enough to
take care of itself." Reagan wasn't hurt politically, but the sea of red
ink his administration created caught up with his successor, the first
President Bush. Now, the younger Bush has overtaken his father, who
previously held the record in deficit spending.
Deficit doves point out that today's deficits represent a smaller
percentage of the gross national product than during Reagan's heyday, but
that is no consolation to Kent Conrad, ranking Democrat on the Senate
Budget Committee. Poring over Bush's budget documents in his Capitol Hill
townhouse one evening this week, Conrad couldn't believe what he was
seeing: mushrooming deficits that peak just when the baby-boom generation
begins to retire. That means government spending on Social Security and
Medicare will increase when government debt is at its highest.
"It is nuts, stone-cold nuts," Conrad said in an interview with NEWSWEEK.
"And they're not nuts, and they're not stupid. They're smart people, and
they know what we know, that the deficit will explode when federal
expenditures peak. And that's when I had this revelation: the only
rationale for what they're doing is that they plan to fundamentally gut
Social Security and Medicare."
Republicans are used to Democrats accusing them of heartlessness, of
wanting to throw old people out in the snow and deny hungry children a
meal. Democrats don't have any new ideas of their own, Republicans say,
so they resort to the old, tired charges. But Conrad represents one of
the red states that Bush won by a large margin, and he's never been a
typical liberal. He was North Dakota's tax commissioner before he was
elected to the Senate, and he knows his numbers. His idea of fun is to
watch a baseball game and calculate in his head how each player's turn at
bat changes his batting average.
Conrad is convinced that the debt Bush is piling up will threaten the
country's long-term economic security, and that Social Security and
Medicare will not survive. Privately, Republicans say Conrad is right,
but with a caveat. Social Security and Medicare cannot survive in their
current form. Under the guise of reform, both programs will have to adapt
to the budget realities.
Conrad's prediction: That it will be reforming by cutting
benefits. He has charts to illustrate the choices government will face if
Bush's tax cuts proceed as planned. They range from bad to worse. Record
deficit spending means government borrowing crowds out entrepreneurial
investment and hurts economic growth. To sustain benefits and keep the
social contract as is would require an unprecedented tax increase to 30
percent of GDP (it's now 20 percent). "Or we'll have to eliminate the
rest of government as we know it," says Conrad. "This is breathtaking;
this is radical, radical stuff."
Unlike the senior Bush, who put his political career on the line to raise
taxes and begin the long climb out of the deficit hole, this President
Bush has shown no inclination to back down. Just as his foreign policy
can be summed up in two words--Get Saddam--his domestic policy is all
about tax cuts. First, the administration said tax cuts were needed to
spend down the surplus. When the surplus disappeared, tax cuts were
needed to get the economy out of recession. Now, tax cuts are billed as
the way to balance the budget by growing the economy, an idea the elder
Bush once called "voodoo economics."
A decade after Texas billionaire Ross Perot made the deficit a campaign
issue against Bush the father, Bush the son has plunged the country back
into the red. He's poised to spend billions toppling Saddam while
launching a crackdown on eligibility for poor children for federally
subsidized meals in school. The Reagan administration tried to classify
ketchup as a vegetable and caught hell. But Bush doesn't have to explain
or defend his priorities. He has a one-size-fits-all answer that so far
has provided him Teflon coating thicker than Reagan's. "The war," says
Conrad, "overwhelms everything."
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