Politics & Policy

What Cuts?

The newest Bush budget doesn't curb spending nearly enough.

In the recent Hollywood disaster film, The Day After Tomorrow, the earth’s climate goes wild as a result of global warming, leading to terrible global storms and a sudden ice-age. Radical environmentalists hope this film will boost support for proposals such as the Kyoto protocol, a scheme that would require draconian reductions in energy consumption and dramatically reduce U.S. living standards.

Washington, D.C.’s idea of such an apocalypse is President Bush’s FY2006 budget, which will be introduced early next year if the president is reelected, and which may include modest spending cuts for domestic agencies. This is causing shrieks of pain throughout the bureaucracy and the media. Judging from the complaining alone, one might think widows will be thrown into snowbanks and children will starve in the streets. In reality, however, like the movie, these notions are nothing more than propaganda designed to influence policy.

Complaints from special-interest groups are supposed to make us think that the administration has gone crazy and is cutting the budget in half. But how big really are the cuts we’re talking about? Very small, especially compared to the giant spending increases we have endured in recent years. President Bush’s previous budgets increased spending dramatically–by $455 billion in three years. The administration argued that much of the increase came from defense and homeland-security spending. But no serious trade-offs were made and domestic spending rose almost as fast.

The budget for FY2005 was supposed to fix that. In theory, the goal was to set priorities by granting significant spending increases to some targeted programs such as defense and homeland security while calling for limits on the growth of non-defense, non-homeland-security spending.

This was a nice first step, but the administration sought to control only a ridiculously small portion–$386 billion–of the $2.4 trillion budget. Clearly these spending limits are inadequate. Similarly, the cuts in the FY 2006 budget (which are more honestly characterized as reductions in planned increases) would amount to a grand total of $2.3 billion, a tiny slice–0.6 percent–of the $412.7 billion requested for non-defense programs.

Let’s put some of the cuts in perspective. The Department of Energy is one of the largest sources of business subsidies in the government. It’s budget grew by 37.7 percent during Bush’s first term. Cutting $23 million of the funding to develop more efficient vehicle technologies is good. But Bush also proposed a $427 million increase on a pork-barrel spending program for coal companies to research cleaner ways of burning coal, along with $287 million to build the world’s first emissions-free power plant using coal. Overall, Department of Energy spending will still grow 1.2 percent. It would be far better to leave all energy-subsidy programs to the private-sector and abolish the department completely.

The U.S. Department of Agriculture is another good example of the federal government’s corruption. Farm programs damage the economy and unfairly redistribute wealth from taxpayers and consumers to agri-businesses. This department too should be abolished, but instead its budget has grown by 20.3 percent under Bush. Yes, the new budget proposes some discretionary-spending cuts for the department. But it also includes new money for new programs, including $33 million for an animal-identification system.

With the exception of the Bureau of Census, there is almost nothing to salvage in the Department of Commerce. It is the home of numerous “corporate-welfare” and pork-barrel spending programs. Sadly, it survived abolition plans in the 1990s and its budget has grown by 82 percent since 1995. It’s a good thing the department’s discretionary-spending authority is scheduled to decline by almost 1 percent. But why stop at 1 percent of a $6.2 billion budget when the entire department could be abolished?

If the president is serious about fiscal responsibility, he needs to take a much stronger stance against wasteful spending. To reverse the massive 29 percent growth–$534 billion–in the government since he was elected, he needs to propose large budget cuts rather than simply trimming by $2.3 billion. Last year, the Cato Institute demonstrated for the president how to cut $300 billion from the budget. It proposed significant cuts across every department, including the Department of Defense, and serious cuts in entitlement spending followed by much-needed reforms of Social Security and Medicare.

Congress is addicted to pork, and this is unlikely to be cured without a dramatic change in behavior by the White House–a change that is necessary, because continued high spending will jeopardize the president’s tax cuts. It is ironic that the Democrats are getting so much Republican help in their efforts to end the president’s tax cuts and keep the pork barrel flowing.

Republicans should be bold. It does not matter how big proposed spending cuts really are–$2 billion or $300 billion–because the media and the Democrats will go into a contrived panic no matter what. Republicans may as well get some real government in for the criticism. We know the media isn’t serious, but we can’t take the administration seriously either if they choose $2 billion worth of “cuts” rather than $300 billion.

Veronique de Rugy is a visiting scholar at the American Enterprise Institute.


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