Bush's Budget Means Cutting Only Peanut Butter: Gene Sperling

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Mon, 14 Feb 2005 19:48:25 -0800

 

 

 

[Zepps_News] #Bush's Budget Means Cutting Only Peanut Butter:

Gene Sperling

 

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Bush's Budget Means Cutting Only Peanut Butter: Gene Sperling

 

Feb. 14 (Bloomberg) -- Imagine the following: The father of a

financially stretched family decides to live it up by leasing three

fully loaded Hummer H1s for the bargain price of $9,750 a month.

 

As the family's financial situation deteriorates, the father calls the

family together for a belt-tightening discussion. He holds up a jar of

Whole Foods chunky peanut butter and says, ``Do you realize we are

spending $4.49 on this? We could be saving $2.04 if we bought Skippy

peanut butter for only $2.45.''

 

His teenage son responds, ``Like, dad, man, why are you busting us about

two bucks on peanut butter when you're spending, like, almost $10,000 a

month on cars?'' The father sternly responds, ``Don't change the

subject. We are talking about peanut butter.''

 

On Feb. 7, President George W. Bush sought to use his 2006 budget to

emerge as a born-again fiscal belt tightener. His goal was clear: Focus

the fiscal debate on cutting programs for hardworking families and the

poor -- which are the financial equivalent of peanut butter -- while

ruling out any effort to add up, put on the table or even acknowledge

the budgetary equivalent of luxury Hummers -- his tax cuts for the

highest-income Americans.

 

The Cuts

 

Like the son in the family fable, most Americans understand the basic

law that money is always fungible -- a dollar on cars could also be a

dollar spent on peanut butter. Yet Bush's entire budgetary case rests on

the assumption that no one will notice or change the subject to mention

that his proposed spending cuts are dwarfed by the deficit-exploding tax

reductions that he is seeking for high-income Americans.

 

Consider some of the cuts Bush is claiming are necessary to get tough on

the deficit:

 

First, he would cut $500 million for job training and dislocated workers

in the midst of what is still the slowest jobs recovery since the 1930s.

 

Second, he would virtually eliminate the $500 million Community Oriented

Policing Services program when we are concerned about domestic terrorist

threats.

 

Third, Bush would impose $4.5 billion in net cuts to Medicaid for the

poor and disabled when health-care costs and the number of uninsured are

rising.

 

And fourth, he would scrap the $1 billion a year in funding for the

GEAR-UP and TRIO programs that reach out to economically disadvantaged

children early and encourage them to go to college when our economy

desperately needs a larger share of this population to obtain college

degrees.

 

The Exemptions

 

Yet while these cuts add up to only about $6.5 billion a year, no one is

supposed to mention that in the same budget Bush calls for implementing

two obscure tax provisions that increase personal exemptions and

itemized deductions that the top 2 percent of Americans can use to

reduce their tax payments to the tune of $115 billion over the next

decade.

 

That's enough to prevent all these cuts and still reduce the deficit by

$55 billion. Nor can we mention that if we pulled back on the income-tax

cut (leaving alone capital gains and dividends) for the 0.5 percent of

Americans making more than $400,000 a year, we could save $300 billion

over the next decade -- enough to buy a lot of peanut butter and still

make a big dent in the deficit.

 

Anyone who took seriously Bush's commitment to deficit reduction might

assume that his tight cap on domestic programs was motivated by the

deficit exploding because such spending had gotten out of control.

 

One-Sided Reality

 

Yet, in an analysis conducted at the Washington-based Center for

American Progress, it was found that when you exclude expenditure on

defense, homeland security and international affairs, discretionary

spending has actually decreased from 3.4 percent of gross domestic

product in 2001 to 3.3 percent in 2005.

 

On the other hand, the decision to pass and extend three tax cuts and an

expensive prescription drug benefit without any offsets is set to

increase the deficit by more than $5 trillion over the next decade,

including interest costs.

 

Even when looking at our long-term capacity to deal with the challenge

of the baby boomers' retirement, Bush is trying to construct this same

one-sided budgetary reality.

 

While the Social Security Trust Fund is solvent, the president laments

that in 2018 the government as a whole will have to ``somehow'' borrow

an additional $200 billion to meet its legal Social Security

commitments. Yet he seems oblivious to the fact that his own tax and

spending policies will increase government borrowing that year by more

than $500 billion.

 

Eat the Generic

 

Bush wants members of Congress to go home and tell their constituents

that there is simply no choice but to achieve Social Security solvency

entirely through benefit cuts with new price- indexing rules. Yet he

disallows any discussion of the fact that making permanent his tax cuts

for only the top 1 percent of earners -- as his budget calls for --

costs almost as much as is needed to keep Social Security solvent for 75

years.

 

Still, I get it, Mr. President, I'm changing the subject. This budget

isn't about finding numbers that lead to deficit reduction, it's about

using the pretext of deficits to limit government's role to help those

most in need. Perhaps you think the father was right to forbid any

discussion of luxury Hummers. Let them eat Costco generic peanut butter.

 

To contact the writer of this column:

Gene Sperling in Washington at atgsperling.

 

To contact the editor responsible for this column:

Bill Ahearn at bahearn.

 

 

 

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