When the Bush administration released its $2.4 trillion budget plan for 2005 Monday, it admitted that the ballooning federal deficit for this year would be even larger than previously feared: a record $521 billion. That means the government would have to borrow 22 cents of every dollar it spends.
In spite of the flood of red ink, the administration's plan for tackling the problem is breathtakingly underwhelming. Though it promises to cut the deficit in half in five years, the administration avoids credible proposals for spending cuts or revenue increases to achieve that goal.
No mystery surrounds how to actually put the budget back on track. The last two presidents, Bill Clinton and George H.W. Bush, embraced tough spending curbs and tax increases that eliminated deficits. Those actions led to the first surpluses in more than a generation and contributed to a decade-long economic boom in the 1990s.
Yet, while identifying a successful formula for shrinking deficits is easy, implementing it is hard. Today's leaders well recall the price their predecessors paid for showing fiscal leadership: The Democrats lost Congress in 1994, and Bush lost re-election in 1992.
Avoiding strategies proven to restore fiscal health doesn't relieve the pain. Instead, it leaves it for future generations to suffer in the form of a crushing national debt.
The administration's plan to reduce the deficit falls short on three counts:
Unrealistic cuts. It exempts most of the budget from spending restraint, including defense, homeland security, interest on the debt and benefits programs such as Social Security. That leaves just 18% of the budget — from agriculture to transportation — subject to a virtual spending freeze. But Congress ignored less-severe spending curbs proposed by the administration in the past three years, and Bush refused to veto any bloated spending bills.
Underestimated costs. The budget omits several costly items for 2005: up to $50 billion needed for operations in Iraq and Afghanistan and $20 billion in promised aid to states. Another $8 billion sought for NASA over five years is not nearly enough to finance Bush's plan to send a man to Mars.
Delayed expenses. The budget shows the deficit cut in half in 2009 by pushing spending increases and tax cuts beyond that year. For example, two-thirds of a $534 billion Medicare prescription-drug benefit is projected to kick in after 2009. And the Center on Budget and Policy Priorities, which advocates more spending on the needy, says 75% of the $2 trillion in tax cuts Bush wants to make permanent take effect after 2009.
The administration says the tax cuts are needed to sustain a strong economy — and the added revenue it produces will curb the deficit. To slow government growth, Bush is calling for a new spending-limit law; program increases that exceed the limit would have to be offset by cuts elsewhere.
Yet, the administration's budget avoids that very remedy. While increases sought for the Pentagon, Homeland Security and the FBI can be justified by the war on terrorism, the administration is not offering to pay for them with offsetting domestic cuts. Nor has it shown a willingness to cancel or postpone any of its income-tax cuts to pay for the burgeoning prescription-drug benefit.
The fiscal recipe for what works is well known. But as long as the administration remains unwilling to follow it, the hard answers will be left to future generations.