Fiscal Chicken Hawks November 16, 2005; Page A18 To hear the rhetoric from Washington, you'd think Democrats and Republicans were engaged in some titanic clash over the future of government. The reality is that they are fighting over entitlement restraint that is so minor that it reveals this year's entire budget debate as a political charade. Let's pull back Oz's fiscal curtain.
By "entitlements," we're referring to Social Security, Medicare and Medicaid, student loans, food stamps, farm subsidies and other programs that increase automatically each year without policy changes. They now cost $1.3 trillion annually, and they'll cost $2.5 trillion in 10 years -- even before most of the 75 million baby boomers become permanent members of the burgeoning entitlement class. If we were to borrow to pay for all this spending, U.S. Treasury bills would take on junk bond status in about 20 years, according to David Wyss, the chief economist at Standard & Poor's. If we raised taxes to pay for this spending, personal income tax rates would have to double or the payroll tax would have to rise to 25% from 15%. So facing this mess, what is Congress doing this year? In one corner are the Republicans, who propose to "cut" entitlements over the next five years by $35 billion (Senate) and $59 billion (House). GOP "moderates" were so spooked by even this amount that last week they forced their leadership to pull the budget from a scheduled vote on the floor. The Republicans could not corral even a single Democratic vote for a budget they say contains savage cuts. To which we can only respond: what cuts? The reality is that over the next five years the total federal budget is expected to exceed $13.855 trillion. The Republican faux-Slimfast plan basically erases the rounding error, or the $0.055 trillion, and leaves the $13.8 trillion untouched. To put it another way, the GOP plan reduces the increase in the federal budget by a microscopic 0.25% over the next five years. The new prescription drug bill by itself adds some $300 billion to the budget over this same five years, or six times what this "deficit reduction" bill would save. [What Cuts?] In the other corner are the Democrats who supposedly learned "fiscal discipline" at the knee of Robert Rubin. Not quite. Their Congressional leaders, Nancy Pelosi and Harry Reid, have denounced even these paltry GOP savings as "shameful" and "immoral." They even brought a dozen Katrina Hurricane victims to Washington, trotted them out in front of the national media, and proceeded to lambaste Republicans for shredding the social safety net. The hypocrisy here is nearly immeasurable. Earlier this year when President Bush tried to fix Social Security with private investment accounts and slower benefit growth for high-income seniors, his critics said the health care cost "crisis" was more urgent. But now liberals are assailing even the tiniest slivers in Medicare and Medicaid as shameful and anti-poor. Here's a reality check on the state of the safety net: For the past five years federal spending on anti-poverty programs has increased by 41%. Medicaid, which provides health care for the poor, is scheduled to grow by 7.9% a year, and under the GOP plan it would grow by 7.5% a year. Either way the program expands by more than double the rate of inflation through 2011. Meanwhile, we still await those Democrats who fancy themselves as deficit hawks to propose even one remotely serious entitlement reform. In several areas, the Republicans actually expand entitlements. The Senate version would raise the cost of farm price supports by extending the subsidy program for four more years past 2007, at a cost of $60 billion -- that is, more than the savings in this bill's first five years. Credit for this little budget maneuver goes to Georgia Republican Saxby Chambliss. Midwestern Senators are also insisting on extending the milk program, which was supposed to expire this year and mainly benefits well-to-do dairy farmers. Northeasterners get $1 billion more for low-income heating assistance -- which means that Uncle Sam will be subsidizing families to use more energy, while the feds spend billions in other agencies for energy conservation. There's even $130 million to expand Medicaid for Alaska, which has become the Republican version of West Virginia as a state bathed in taxpayer subsidies. And all of this in a "spending reduction bill." There's a shred of good news in this story, which is that Senators Sam Brownback of Kansas and John McCain of Arizona have joined with five first-term Republicans to propose some genuine cost cutting. Their plan would delay the Medicare prescription drug bill, adjust Medicare benefits to seniors with incomes of more than $80,000 a year (or $160,000 for a couple), cancel highway pork projects, end dozens of obsolete spending programs, and cut all domestic discretionary spending programs by 5%. Their plan saves $120 billion over two years, which would offset the added costs of Katrina and take at least a five times larger whack out of the long-term federal debt than the current GOP leadership plan. This is the kind of spending restraint Republicans ought to bring to the House and Senate floor. At least they'd be criticized for doing something worthwhile. As it is, they have the worst of both worlds: They get assailed as mean-spirited skinflints even as they spend like Democrats. Meantime, it's slightly reassuring to know there are at least seven souls in Congress who don't want to drop a multi-trillion-dollar legacy of unpaid entitlement bills into the lap of our children. It would be educational to find out how many more -- in either party -- would join their ranks. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Discover CFTicket - The leading ColdFusion Help Desk and Trouble Ticket application http://www.houseoffusion.com/banners/view.cfm?bannerid=48 Message: http://www.houseoffusion.com/lists.cfm/link=i:5:183146 Archives: http://www.houseoffusion.com/cf_lists/threads.cfm/5 Subscription: http://www.houseoffusion.com/lists.cfm/link=s:5 Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5 Donations & Support: http://www.houseoffusion.com/tiny.cfm/54
