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Originally Published: 2/13/2008


By The Issue Wonk


President George W. Bush has unveiled his budget for Federal Fiscal Year (FFY) 2009.  During his State of the Union address,1 he vowed to put the nation on a balanced budget by 2012.  How will he do this?  After all, his budget increases the annual deficit from $163 billion in 2007 to about $400 billion in 2009, close to his deficit of $412 billion in 2004.2  Interest costs alone are expected to be $260 billion, or nearly 10% of the total projected revenues.3  Additionally, his tax cuts, which are scheduled to expire in 2010 and which have been one of the largest contributors to the deficit, would, in his proposal, be made permanent.4  When Bush took office in 2001 there was a projected $5.6 trillion surplus over the next 10 years.5  And, at that time, the federal debt was $4 trillion.  It will be $9.7 trillion by the time he leaves.6


The budget is filled with “rosy projections” about economic growth6 – projections that probably won't come to pass given the current economic situation.  So, the projected $400 billion deficit is actually a low estimate.  It will probably be much higher.


In addition to the inflated revenue projections there are massive spending cuts to domestic programs.  Together these allow him to increase military spending dramatically.  There are some other increases.  The State Children’s Health Insurance Program (SCHIP)7 and the Food and Drug Administration (FDA)8 both are increased.  And there is a 19% increase for border security and immigration enforcement.7  However, Bush has cuts to over 100 domestic programs, primarily in the area of health care.


Health Care.  Bush’s budget includes $170 billion in cuts to Medicare over the next 5 years.2  Medicaid would be cut nearly $1.2 billion in 2008 alone and nearly $14 billion over the next 5 years.  Most of the Medicare savings would be achieved “by reducing the annual update in federal payments to hospitals, nursing homes, hospices, ambulances, and home care agencies.”9  The largest “savings” will come from cutting funding to hospitals.  Kenneth Raske, president of the Greater New York Hospital Association said, “the president’s proposals showed ‘great insensitivity to teaching hospitals’ across the country.  The proposals ‘would undermine our ability to train young doctors at a time when the nation is facing a shortage of doctors.’”9  According to William Dombi, vice president of the National Association for Home Care and Hospice, “75% to 80% of home health agencies would be doomed.”9


Rural health programs are cut 87%.7  A special health program for 9/11 rescue workers who were exposed to “unprecedented levels of risk” for lung disease, will be cut 77%.7  Programs that care for people with Alzheimer’s disease and that treat people with traumatic brain injury are eliminated.7  The Centers for Disease Control and Prevention are cut more than $430 million, including $28 million from chronic disease prevention and health promotion.7  A $301 million program that trains 4,700 pediatricians and pediatric specialists at children’s teaching hospitals is also eliminated.7


Other Domestic Programs.  Poison control centers would have a 62% cut6 and the Community Services Block Grant (which provides housing, nutrition, education, and job services to low-income people) is completely eliminated.7  Bush also reduces the Low Income Home Energy Assistance Program by 22%.10  Education programs are being heavily targeted too.  Even Start (which promotes family literacy), grants to states for classroom technology, Supplemental Education Opportunity Grants (for needy undergraduates), and a scholarship program are all hit hard.7  Hope VI, a housing program that upgrades dilapidated public housing, is eliminated.2  The Safe and Drug-Free Schools Program is cut 64% and $1.5 billion is cut from grants to states and cities for security, law enforcement, firefighters, and emergency medical teams.2  The environment did not escape the scabbard.  Bush’s budget also slashes funding for the Environmental Protection Agency with significant drops in spending on clean-water projects.  Bush is proposing the elimination of 5 programs.11


Military Spending.  This is the area, along with the tax cuts, that throws the U.S. into unprecedented debt.  The Pentagon’s 2009 budget will increase to $515.4 billion that, when adjusted for inflation, is the highest level since World War II.12  This is a $35 billion (7%) increase over last year.  Since 2001, baseline military spending has increased by 30%.12  In past years Bush hasn’t included the costs for the occupations of Iraq and Afghanistan in his budgets.  He’s been getting that funding through “supplementals.”  In this budget he used a technique called a “plug.”  This is an estimated amount for the occupations, but of course the actual amount will be determined by Congress.  His budget has a $70 billion “plug” even though the spending this year will come to $196 billion.  Therefore, the plug is at least $100 billion short, meaning the deficit will be at least another $100 billion.  In addition to the Pentagon budget, he included another $21 billion for nuclear weapons programs.13


Other Spending.  In his State of the Union address, Bush said he wanted a program that would allow U.S. troops to transfer education benefits to family members.  However, he didn’t include funding for it in his budget.14  Also, even though in his address he chastised Congress for “earmarks” and threatened to veto any legislation containing them,15 he “buried” a number of earmarks in his budget.  “He asked for money to build fish hatcheries, eradicate agricultural pests, conduct research, pave highways, dredge harbors, and perform many other specific local tasks.”16  


Thus, with over-estimating revenues and under-estimating the cost of the occupations, we have an even greater prospective deficit than Bush’s estimated $400 billion.  Even if the tax cuts are allowed to expire and we go back to pre-Bush tax levels, we’re still in trouble.  And Bush never tackled the issue of the Alternative Minimum Tax (AMT) which everyone knows needs to be fixed.  If it is fixed, revenues will decrease significantly.17  Why didn’t Bush address this problem?  Probably because it primarily effects middle-class Americans.  He’s only concerned with protecting his tax cuts for the wealthy.




1  State of the Union Address, January 28, 2008, White House (1)


2  Abramowitz, Michael & Weisman, Jonathan. President’s Spending Plan Would Rival 2004 Deficit. Washington Post, February 3, 2008 (2)


3  Gross, Daniel. Are Bush’s Tax Cuts Dead? Slate, February 5, 2008. (15)


4  Center on Budget and Policy Priorities. Tax Cuts: Myths and Realities, November 16, 2007. (3)


5  Stephenson, Richard W. Surplus Estimate Hits $5.6 Trillion. The New York Times, January 31, 2001. (4)


6  Abramowitz, Michael & Weisman, Jonathan. Bush’s Budget Projects Deficits. Washington Post, February 5, 2008. (8)


7  Pear, Robert. Bush to Seek Budget Cuts, Except in Child Health. The New York Times, February 2, 2008. (5)


8  McKinnon, John D. Bush’s 2009 Budget Will Top $3 Trillion. The Wall Street Journal, February 1, 2008. (6)


9  Pear, Robert. Bush Seeks Surplus via Medicare Cuts. The New York Times, January 31, 2008. (7)


10 Low Income Home Energy Assistance Program. Administration Slashes LIHEAP Budget, February 4, 2008. (9)


11 Kaufman, Marc. A Decrease for the EPA; a Boost for NASA. Washington Post, February 5, 2008. (16)


12 Shanker, Thom. Pentagon Seeks Record Level in 2009 Budget. The New York Times, February 3, 2008. (10)


13 Associated Press. Elements of Bush’s Budget, February 3, 2008. (11)


14 Abramowitz, Michael & Wright, Robin. No Funds in Bush Budget for Troop-Benefits Plan. Washington Post, February 9, 2008. (12)


15 Abramowitz, Michael & Eggan, Dan. Bush Touts Iraq Progress, Economic Plan. Washington Post, January 29, 2008. (13)


16 Pear, Robert. From Bush, Foe of Earmarks, Similar Items. The New York Times, February 10, 2008. (14)


17 Thomas, Kaye A. Alternative Minimum Tax 101. Fairmark.com, January 31, 2008. (17)



© The Issue Wonk, 2008



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