Budget Smoke and Mirrors

Stan Collender gives the straight poop on the Bush 2007 budget:

BUDGET BATTLES FY 2007 Budget: One Hand Clapping: President Bush’s fiscal 2007 budget is far more likely to be the fiscal equivalent of a tree falling in the woods when there is no one there to hear it.... [T]he Bush 2006 budget was submitted shortly after the president had been re-elected and a Republican majority... returned.... [T]he president thought he had more than enough political capital to tackle some very big and extremely controversial ideas, and put Social Security and the tax code on its reform agenda.... Bush tried, and failed. And because of Iraq, Afghanistan, the tsunami, and Katrina, the deficit got worse....

So the White House took a different tack with its fiscal 2007 budget... small changes are in. That’s why the Bush fiscal 2007 proposal includes about a 3 percent reduction from a very small part (less than 20 percent) of the budget—domestic appropriations. It also includes a relatively small reduction ($35 billion over 5 years) in Medicare.... Even these limited proposals are highly likely to be rejected, however. The domestic programs the president is proposing... are... ones with the most political support in Congress.... If these changes had been easy to make, they would have been made years ago....

The Medicare reductions will be even harder to get enacted. Virtually every health care group... will vigorously oppose the president.... Congress may not be able to pass a... reconciliation bill... election year.

That doesn’t leave much... except for those things that will increase the deficit. Military, homeland security, interest on the debt, and entitlements will be higher in 2007 than they were in 2006. And, even though the proposals were not included in the Bush fiscal 2007 budget, we already know that additional spending for Iraq, Afghanistan, and Katrina will continue to be needed.

Why would the White House send Congress a 2007 budget that includes so much that won’t happen?

First, and most important, President Bush has put together a political platform.... Second, unrealistic proposals allow the White House to say that it is on target to cutting the deficit in half by the end of 2009...

Let's see how the Washington daily press corps does in its coverage:

Jonathan Weisman writes the budget story for the Washington Post, and the poop is definitely not straight:

Bush's $2.8T Budget Proposal Cuts Domestic Programs : Bush's $2.8T Budget Proposal Cuts Domestic ProgramsBy Jonathan WeismanWashington Post Staff WriterMonday, February 6, 2006; 1:51 PM: President Bush today proposed a $2.8 trillion budget for fiscal 2007 that would cut billions of dollars from domestic programs ranging from Medicare and food stamps to local law enforcement and disease control, while extending most of his tax cuts beyond their 2010 expiration date. Under the plan, a budget deficit -- expected to reach $423 billion this year -- would fall to $183 billion by 2010, more than meeting his goal to cut the deficit in half by 2009. But it would rise again to $205 billion in 2011, reflecting the cost of the extensions in the president's tax cuts.

"We have set clear priorities that meet the most pressing needs of the American people while addressing the long-term challenges that lie ahead," Bush said in his budget message. "The 2007 Budget will ensure that future generations of Americans have the opportunity to live in a Nation that is more prosperous and more secure." The budget, for the fiscal year that begins Oct. 1, is a tall order for a Congress facing a difficult election year. Defense spending would rise 6.9 percent, from $411 billion to $439 billion. Homeland security spending would rise by 3.3 percent.But all other operations of government would fall by $2.2 billion, or 0.5 percent.To accommodate increased spending in the president's favored non-security programs such as diplomacy and foreign aid, veterans health care and energy, other programs would face significant cuts. Agriculture spending would fall 6.5 percent and education spending would drop 3.8 percent. The Department of Transportation would lose 9.4 percent of its discretionary budget. The Army Corps of Engineers -- a congressional favorite that was highly criticized in the wake of Hurricane Katrina -- would be cut 11.2 percent.

But the biggest savings would come from entitlement programs, in which spending rises and falls according to complex formulas that Congress would have to change to meet Bush's demands. The president proposed cutting Medicare by $36 billion over five years, and $105 billion over a decade -- mainly by reducing payments to hospitals and other providers. Federal child-support enforcement payments would fall slightly, while Medicaid and the State Children's Health Insurance Program would lose $5 billion over five years and $12 billion over 10 years.Some of the savings that Bush seeks were specifically rejected by Congress last year, such as tightening eligibility for food stamps and opening Alaska's Arctic National Wildlife Refuge to oil drilling.

And a slew of tax cuts, tax incentives and tax-cut extensions would cost the Treasury $1.7 trillion over the next decade, dwarfing the $172 billion in entitlement savings and proposed user fees in the budget. Bush also included the cost of his embattled plan to add private investment accounts to Social Security, at a cost to the Treasury of $82 billion in the first two years of the program and $172 billion over the first seven years.All totaled, his proposals for entitlement programs -- including cuts, tax hikes and Social Security partial privatization -- would actually increase spending by $551 billion. But those costs are not reflected in Bush's deficit projections, since the president did not deduct the Social Security costs from the bottom line...

Writing for the New York Times, David Sanger does considerably better at calling a spade a spade:

Bush's $2.77 Trillion Budget Plan Calls for Medicare Cuts - New York Times : WASHINGTON, Feb. 6 -- President Bush proposed a $2.77 trillion budget today that significantly increases spending on defense and domestic security while calling for cutbacks in a range of domestic programs, new efforts to address the long-term costs of an aging population and an unrelenting push to lock in permanently the tax cuts that the administration pushed through Congress in recent years.

The budget bears all the hallmarks of the Bush presidency, putting national security and tax cuts above all other considerations and gradually tightening or reducing spending on programs, including educational loans, farm subsidies and national parks. But it is unclear how much appetite Congress will have in a critical midterm election year for further spending cuts, including a new formula Mr. Bush is proposing to limit the growth in Medicare spending, at a savings of $36 billion over the next five years. The administration stood by its pledge that it could cut the budget deficit in half by 2009, compared with its projection for 2004. The projections issued today by Mr. Bush's budget director, Joshua B. Bolten, show that the huge deficits that have returned since Mr. Bush came to office were partly offset last year by what Mr. Bolten called a "remarkable" $274 billion increase in federal tax receipts. Almost all of that was the result of stronger-than-expected economic growth, which Mr. Bolten said was directly attributable to the tax cuts -- a supply-side argument many of the administration's critics reject.

Mr. Bush, in a budget message, defended his approach of seeking increases of 7 and 8 percent, respectively, in defense and domestic security, while cutting elsewhere. "My administration has focused the nation's resources on our highest priority: protecting our citizens and our homeland," Mr. Bush said in his budget message. "Working with Congress, we have given our men and women on the frontlines in the war on terror the funding they need to defeat the enemy and detect, disrupt and dismantle terrorist plots and operations." In the other areas where Mr. Bush has advocated new programs -- including research in nuclear energy and alternative fuels, and preparation for the potential outbreak of bird flu -- the amount of new federal funds proposed in the budget is relatively modest. For example, the nuclear energy program, which Mr. Bush proposed in last week's State of the Union address as a key element in weaning the United States of Mideast oil, is budgeted at $250 million, building on a program about a quarter of that size that has existed for many years. That amounts to about one-half of one percent of the estimated cost of operations in Iraq in the fiscal year of 2007, which the administration tentatively estimated at $50 billion, in addition to the defense budget of $439.3 billion.

Mr. Bush also proposes financing for another of his major State of the Union initiatives, the American Competitiveness Initiative, which would train 70,000 high school teachers and 30,000 scientists and mathematicians to teach classes in local public schools, but he cuts other popular education programs -- a delicate issue in an election year. Among those he is asking Congress to shut down include programs in vocational education and two other programs -- legacies of Lyndon Johnson's Great Society programs -- to prepare poor and minority students for college.

And Joel Havemann of the Los Angeles Times does best of all the daily papers:

Bush Budget Plan Strikes Home, Not Deficit - Los Angeles Times : President Bush today will propose a $2.7-trillion budget that would take another slice out of domestic spending next year -- but still leave a huge $355-billion deficit. In Bush's budget for fiscal year 2007, which begins Oct. 1, the departments of Defense and Homeland Security would continue to grow at a rate greater than inflation.

But most other federal departments, from Agriculture to Veterans Affairs, will be asked to get along next year with less money, and with no allowance for inflation or population growth. Altogether, Bush's budget would save $14.5 billion next year by eliminating or sharply curtailing 141 federal programs -- fulfilling his vow in last week's State of the Union address to reduce the costs of what he called "non-security discretionary spending." Broken down, those range from a relatively small nick in Medicare's enormous growth to the virtual elimination of a small program that distributes food to the elderly. The administration would continue to chip away at entitlement programs, which mandate that certain groups, such as the elderly and the poor, receive federal benefits. The savings in this category would be $65 billion over the next five years.

Bush's proposed budget, however, is only preliminary because it has not undergone congressional review and debate. It also does not include the full cost of the wars in Iraq and Afghanistan. As described by analysts who have seen them, the budget documents being made public today reflect a financial climate so tight that there is scarcely any room for innovation. They also reflect a president bent on curtailing the reach of government. Even the one major new domestic program that Bush described in his State of the Union address -- the American Competitiveness Initiative -- offers nearly $3 in tax cuts for every dollar in new spending.

Bush would reinstate the research and experimentation tax credit for business, which Congress let expire at the end of last year, at an annual cost of $4.4 billion. He would spend $1.6 billion for measures -- including the placement of 100,000 new math and science instructors in elementary and secondary schools --with the long-term goal of turning out more engineers and computer specialists. The proposed budget anticipates a deficit of $355 billion -- lower than in any of the previous three years, which hold down the top three spots in the deficit derby. In the current fiscal year, the White House says, the deficit is headed for $423 billion -- the greatest on record in dollar value, in large part because of the costs of the wars in Iraq and Afghanistan and of the rebuilding efforts along the hurricane-ravaged Gulf Coast.