The Real 'Fuzzy Math'

When President Bush unveiled his nonsensical budget proposal last Monday, he once again demonstrated his complete inability to engage in responsible fiscal planning. In his $2.23 trillion budget, he called for both increased spending and increased tax cuts—a policy that is not only fiscally irresponsible, but also potentially harmful to the economy. The budget makes room for billions of dollars in income tax cuts while dramatically increasing spending for the military, domestic security and veterans services. If enacted, projected deficits will reach $1 trillion over the next five years. The proposal also abandons financial support for some of the nation’s most important social programs. Bush is taking advantage of the country’s economic slump and the war on terrorism to give tax breaks to his wealthy political patrons and to spend money we don’t have on Republican pet projects.

It seems that Bush doesn’t even try to come close to balancing the budget. The plan forecasts a deficit of $307 billion for the 2004 fiscal year, an amount that would grow to $2.1 trillion over 10 years if all of the administration’s tax cuts are enacted. We are already two weeks away from hitting the limit on the government’s borrowing authority granted by Congress; Bush’s proposed tax cuts would only make the country’s financial situation worse. And the budget included no projection of the cost of a war with Iraq, which administration officials have said could be as high as $200 billion.

If enacted, this plan could be fiscally disastrous for the country’s fragile economy. The federal deficit, representing 2.7 percent of the nation’s gross domestic product, could potentially lead to increased interest rates, endangering future economic growth. While presently low interest rates have protected middle-class homeowners from the economic downturn by allowing them to refinance mortgages, large government deficits—and spiked interest rates—would leave these families without such a safety net. Higher interest rates will also deter businesses from borrowing, leaving capital investment stagnated as well.

As usual, the president’s backward agenda favors his rich patrons at the expense of the nation’s poor. The budget proposal would reduce taxes by $674 billion over 10 years, half of which will come from an elimination of taxes on stock dividends. While predominately wealthy stock shareholders will receive a hefty tax break, the President turned his back on important social programs for the nation’s less affluent citizens. Reductions were made to Justice Department programs on juvenile delinquency, and money for public housing programs was cut. Over time, government-financed child care and children’s health insurance would be reduced. Bush also plans to alter Medicaid coverage so that many poor people, including some in nursing homes, would no longer be guaranteed benefits.

The budget also reduces education spending in areas that are crucial for student success. Professional development of teachers, and a literacy program for low-income families, would get less federal funds.

The budget allotted for children through grade 12 is $6 billion short of the amount outlined in the No Child Left Behind Act for 2004. It cuts $1.5 billion in programs covering rural education, dropout prevention and physical education, among others. Ross Wiener, an education policy analyst at the Education Trust, a non-profit organization, commented that “if money indicates priorities, the president believes No Child Left Behind is one sixty-seventh as important as cutting taxes.”

In the mean time, the administration is requesting $41 billion for domestic security and $380 billion for defense, an increase of 4.2 percent beyond what was already the biggest military buildup since the presidency of Ronald Reagan. But much of the new money would be spent for questionable initiatives like a missile defense system and “futuristic ships,” while the budget would eliminate $330 million to hire police officers nationwide. Once again Bush is putting pressure on states to raise security and then withholding necessary funds from them.

These proposals are negligent and insensible. The widening gap between revenue and spending will have detrimental effects on the economy in future years, and those who are feeling the economic downturn the most are losing key social programs. If passed, the damage of these proposals could be felt for years to come.