Deeper Budget Cuts on the Horizon

From The Washington Post, headline is linked

Deeper Budget Cuts on the Horizon

By Terry M. Neal
washingtonpost.com Staff Writer
Monday, February 14, 2005; 7:01 AM

To get a scope on the extent of the federal budget problem, consider this:
The one-year budget deficit will be so large in the next fiscal year that if the government stopped funding everything except defense, homeland security and entitlement programs such as Social Security, Medicare and Medicaid, the nation would still be $75 billion in the red.
Put another way, if the government decided this year to eliminate every education, school lunch, public health, housing assistance, space exploration, medical research, environmental protection, highways, national parks and veterans program, it would still run a deficit in 2005.
That's because domestic discretionary programs that aren't associated with defense or homeland security make up only about 20 percent of the federal budget. President Bush proposes spending about $352 billion for those domestic programs this year. The estimated budget deficit is $427 billion. The difference: $75 billion.
For all of the White House crowing about holding down spending, it is clear the government is not going to be able to cut its way out of this deficit -- not without making drastic cuts that would completely redefine the role of the federal government.
The vast majority of government spending is for mandatory programs -- most notably Social Security and Medicare -- that have set spending formulas. Of the discretionary programs, defense spending has far outpaced spending on the social programs that the president is now trying to trim.
The president wants to eliminate or drastically reduce 150 programs. These cuts measure into the billions. The budget shortfall over the next decade is projected to run into the trillions. Bush's proposed cuts in fiscal 2006 only hint at the sort of cutting that may be necessary in the future.
William G. Gale and Peter R. Orzag of the progressive Brookings Institution wrote in a recently published (linked) article that Congress has three options to balance the budget by 2010: increase individual and corporate income tax revenue by 22 percent, or reduce all discretionary spending -- including defense spending -- by 72 percent, or eliminate 72 percent of all discretionary spending that isn't spent on homeland security or defense.
Making the Bush tax cuts permanent would exacerbate the problem, according to Gale and Orzag. By 2015, the options for balancing the budget -- based on current deficit projections -- would be to cut basically every government program other than entitlement programs by 96 percent, or keep the discretionary spending, cut Medicare by 60 percent and eliminate Medicaid.
Lefties aren't the only ones alarmed by the prospect of long-term deficits. But there are big differences in how Democrats and Republicans want to solve the problem. Many on the left say that it's going to take some combination of tax increases and spending cuts. Those on the right argue that the tax cuts must stay in place to ensure future economic growth.
Brian Riedl, the federal budget analyst for the conservative Heritage Foundation, said in an (linked) interview for my Yahoo Political Players series that making serious cuts to entitlement programs is the only realistic way out of this mess.
"In part because of retiring baby boomers, Social Security and Medicare are rising fast enough in a few decades, you would need the equivalent of a $10,000-per-household tax increase, in current dollars, just to pay for Social Security and Medicare."

... more at linked article

This article makes for an interesting follow-up to the one referenced in this blog entry: After Bush Leaves Office, His Budget's Costs Balloon.

These are important issues, and are ones that everyone should educate themselves on. Reading only one side of the story is not advisable. (Actually just as unadvisable as reading and blindly following some certain JoeUser.com or PoliticalMachine.com postings by some specific individuals).

I'd encourage everyone to follow these issues and be aware of what is happening with OUR money, and what obligations our representatives are creating for us via the Federal budget.

The one thing I would most certainly say though is that we -- the public -- simply must stop expecting the government to be all things to all people, or even to be all things just for us as individuals. The more we rely on the government, the more obligations we are creating for us and our offspring. We must get back to a time and place where government handles issues of national importance, or state and locality importance. And we need to be realistic about what those items are.

Making the government do everything just doesn't work. It creates financial obligations that we'll never be able to meet, and sooner or later results in cuts that hit US.

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Your article is most informative and emphasizes the point so I've been making that there is no way to balance the budget and begin paying down the debt without increasing revenues. There are only two ways to increase revenues one is to grow the economy more rapidly by more effective fiscal policy and to increase taxes.

We've allowed the interest on the federal debt to skyrocket and it will continue as interest rates increase and as the deficit gets even larger. If you look at the OMB web site you will see President Bush is projecting $10 trillion doller national that of the time he leaves office. That is because he never addresses the issue of balancing the budget and paying down the debt. The only practical way that could ever happen is by increasing revenues significantly. No level of budget cuts ,that would be acceptable to the majority of Americans, is going to solve the fiscal problems in this country.

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