Monday, February 13, 2006

Budget crunching (not that bad...)

From this week's Washington Week. Pay attention to the amount of money to be spent on improving Math and Science teaching, it's 1/270th of the supplemental spending for our wars:
MS. IFILL: Okay. Well, thanks, Martha.

Earlier this week, the president delivered his 2006 budget blueprint. In one of the great annual Washington rituals, the president laid out his priorities - more for defense, less for many domestic programs - but as is always the case in D.C., the fine print tells the story, and this election year is no exception. John Harwood has had his reading glasses on -

MR. HARWOOD: I have had them on.

MS. IFILL: - looking at that fine print. What have you noticed?

MR. HARWOOD: Well, you know, Gwen, when you look at a budget, it's not just the numbers, it's also a statement of your values, your priorities; in other words, what your politics are. And in the case of this president, it's a statement about how much capital he has both in dollars and in clout, and the answer is a little bit less than he's had in the last few years. Look at what he's done in this budget. First of all, he's protected his top priority, and that is the war on terror - national defense. The Pentagon budget is up 7 percent. It's up nearly 50 percent since 2001. That's the core mission of his second term is to prosecute the war in Iraq and complete the war in Afghanistan, so he's protected that. He's in a strong position politically. He'll get the increase that he wants.

Secondly, after a very, very rough 2005, he's got to convince the American people he's focused on problems that they care about, so he's got an elaborately named American Competitiveness Initiative. But he doesn't have much money, so look at what the competitive initiative really is: $136 billion dollars over ten years. It sounds like a lot. The vast bulk of that money is the extension of a tax break for research and development that has existed for 25 years. It's not new at all. It's simply an extension. And when you look at what is new, the extra money for math and science teachers - something a lot of Americans can relate to with school-age kids, like I do - it's a third of $1 billion - $380 million, so it's not very much there. And you're seeing things like investment in scientific research by the federal government up, but health research is not up, so there are a lot of tradeoffs there and he's moving money around.

The third priority is trying to convince conservatives, who have been unhappy with him over spending issues, that he's tackling the toughest part of the federal budget in the long term. That's the entitlement programs. Social Security expenses have doubled since 1990. Medicare up four times since 1990. So the president has proposed about $40 billion in Medicare cuts, principally trying to squeeze hospitals, home health providers, nursing homes, and to charge a little bit extra for Medicare beneficiaries who make more money.

MR. DUFFY: Will he get most of what he wants, John?

MR. HARWOOD: He'll get a good bit of what he wants. You know, one of the things that we've seen is the individual accounts get moved around, but the president - the Congress, controlled by his party after all, has been fairly responsive in terms of the basic contours of the functions of the federal budget. The real heavy lift is going be these Medicare cuts. What most people who look at the federal budget think needs to be done is major overhaul both of Social Security and Medicare, but he crashed and burned on Social Security last year and a large scale Medicare overhaul is just not feasible right now. They've got their hands full trying to engineer the Medicare prescription drug benefit, which was thrown into reverse.

MS. RADDATZ: And the Medicare, is it cuts or slowing the growth, and the difference to what towards the deficit?

MR. HARWOOD: It is a slight slowing of the growth. It goes from 8.1 percent growth -

MS. RADDATZ: So it's not really a cut.

MR. HARWOOD: Well, it depends on how you define it. It's a cut if you're a hospital that's going to get less money than you've been planning on or if you're a home health provider, but it's not a cut in actual outlays. It's going to slow the growth of the Medicare program to 7.7 percent annually from 8.1, so -

MS. RADDATZ: So my inarticulate question was, what does that mean to the deficit?

MR. HARWOOD: Well, we still have a huge long-term fiscal imbalance in the government as all of us baby-boomers get older and retire, so when we look in the next decade - in the 2020s - we're talking about major adjustments are going to have to be made in the level of benefits, the level of taxation.

MS. ZACHARIA: And where is he going to find the most resistance on the Hill do you think, even among conservatives?

MR. HARWOOD: Well, you get resistance both that is of an ideological nature of people who don't agree with some of the cuts and that's parochial. He proposed, very famously in the State of the Union, that he was going to cut 140 different programs. I'll take out those reading glasses again: $9 million for the exchanges with historic whaling and trading partners. Who do you think likes that program? I think Ted Stevens of Alaska likes that program so I think things like that, important to specific members, are going to be very hard to do.

MS. IFILL: Well, and it should also be mentioned that in this budget is not additional spending for the war, not additional spending for Katrina. All of this gets negotiated down the road, so this is not by any means the final spending plan.

MR. HARWOOD: Well, and we've got a supplemental spending bill of more than $90 billion for the war that is coming to the Hill right now, and members are not eager to debate that.


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