I Cogitate

By Christopher Lee
Washington PostStaff Writer
Monday, February 7, 2005; Page A02

Vice President Cheney acknowledged yesterday that the federal government would need to borrow trillions of dollars over the next few decades to cover the cost of the personal retirement accounts at the heart of President Bush's plan to restructure Social Security.

Appearing on "Fox News Sunday," Cheney said the government would have to borrow $754 billion over the next 10 years, and conceded that
the price tag would involve borrowing trillions of dollars more in subsequent decades.

"That's right. Trillions more after that," Cheney said in response to a question...

Sunday, February 06, 2005
Fox News

WASHINGTON ­ Vice President Dick Cheney warned Sunday that if a fix doesn't come soon to the Social Security program, the system won't be able to sustain itself over the long run.

"The real cost over time is doing nothing. Because if we do nothing, then the system's going to go belly up. It's going to go broke. It won't be
there for today's younger generation," Cheney told "FOX News Sunday."

Social Security reform is one of the most contentious issues between Democrats and Republicans in Washington, D.C., right now. President Bush has proposed allowing younger workers to put part of their payroll taxes into personal investment accounts.

Democrats say the plan, which requires money to be diverted out of the system over the short haul to pay for the reforms, will aggravate, not solve the problem.

But Cheney said that the sooner reforms are undertaken, the cheaper the cost of change will be in the long run.

"We're going to borrow $758 [b]illion over the next 10 years to set up the personal retirement accounts. We think that's a manageable amount ... Trillions more after that," Cheney said, acknowledging that the personal accounts will help younger workers but will not solve all the problems of solvency.

Posted 2/6/2005 8:06 PM

Bush vows to take bite out of budget, but delivers a nibble

Listening to President Bush's State of the Union address last week, you might have come away with the impression that the budget his administration is releasing would strike a blow for fiscal responsibility.

Bush promised, for instance, to cut or eliminate more than 150 government programs. He also vowed to hold growth in spending, except for money to pay benefits, below the rate of inflation.

If these cuts sounded significant, there was a reason: They were meant to sound significant.

In reality, most of the cuts contained in his budget appear to be little more than window dressing designed to divert attention from Bush's fiscal policies, which leave the tough choices to future leaders and the bills to future generations.

Federal spending during Bush's first term increased 29% to $2.4 trillion, the biggest surge since the 1960s. At the same time, Bush promoted, and Congress approved, tax cuts expected to reduce government revenues by $2 trillion during the next decade.

That irresponsible mix of higher spending and reduced revenue has wiped out the federal budget surplus Bush inherited and produced record deficits.

What the president offers as fiscal conservatism at the outset of his second term is so nominal it might be worth a chuckle ­ if it weren't so troubling:

• Minimalist cuts. Bush's list of 150 proposed program cuts and eliminations is well worth considering. But it wouldn't have much impact. Last year, he promised to eliminate 65 programs and cut another 65. Those reductions, ranging from arts-in-education grants to subsidies for vocational education, would have reduced the budget by $11.7 billion. That may sound like a lot, but it was only 3% of the deficit and less than 1% of the budget. Only a handful of the cuts won congressional approval.
• Wrong targets. By focusing much of his attention on programs unrelated to benefits, national defense or homeland security, Bush ignores more than 80% of federal spending. What's more, the portion he has targeted is the least of the government's problems. In fact, even if these domestic departments, such as transportation and education, were eliminated altogether, the budget would still have a deficit.
• Gimmicks. The president's oft-heard mantra of halving the deficit by 2009 rings hollow. Even if he is able to stick to that timetable, which looks doubtful, he does so by pushing off the impact of many of his programs ­ the Medicare drug benefit, tax cuts and Social Security privatization ­ beyond that year.

To his credit, Bush has at least expressed a willingness to tackle Social Security. That's more than you can say for many Democrats in Congress, who vow that any effort to trim entitlement programs will be met with a partisan frontal attack.

But in all nearly all other areas, the administration appears willfully ignorant of the fiscal damage it is causing. Record deficits put the U.S. economy at the mercy of its foreign creditors, raise the chances of significant increases in interest rates and will make it harder for the government to borrow money to fix Social Security when baby boomers retire.

A meaningful effort to restore fiscal discipline would involve addressing the parts of the budget that are causing the biggest problems. It would have to start with the runaway costs of health care and other benefits that now make up 55% of the budget and are growing rapidly. It would
mean asking the public to pay now for the war in Iraq, rather than putting the costs on a credit card. It would also mean repealing or rolling back some of the tax cuts slanted toward the wealthy that were enacted without a way to pay for them.

Bush and Congress appear unwilling to make these choices. For a president who has offered bold, even politically risky proposals in other areas, his unwillingness to address fiscal reality is reckless.

By Dan Robinson - voa.com
Washington
07 February 2005
   
The budget President Bush presented to Congress follows up on his pledges to do more to control government spending. The president is proposing cuts in a range of government programs, with some increases in the amount the United States spends on bilateral assistance to foreign countries.

During most of his first term in office, President Bush was criticized by opposition Democrats and many conservative Republicans for not doing more to control government spending and for allowing the federal deficit to expand.

Now he is trying to do something about it, submitting the strictest budget of his presidency to Congress and proposing elimination or reduction
of about 150 government programs.

The president spoke to reporters during a meeting with his cabinet. "I look forward to explaining to the American people why we made some of the requests that we made in our budget," he said. "I fully understand sometimes it is hard to eliminate a program that sounds good, but by getting people to focus on results, I'm saying to members of Congress, show us the results as to whether or not this program is working I think
we will get a pretty good response."

President Bush has pledged to hold down non-defense discretionary spending, which is set by Congress in annual appropriation bills, but is optional in contrast to major mandatory programs.

The budget covering the 2006 fiscal year beginning next October 1, totals $2.5 trillion and proposes cuts in subsidies to American farmers.

That alone should stimulate a wave of negative reaction from organizations advocating for farmers.

But the budget also includes a proposal to cut about $32 billion from the government-funded food stamp program which benefits poor Americans.

It takes aim at politically-popular public health programs, for example saving billions by proposing cuts in Medicaid, a program that helps the poor.

Facing a $427 billion budget shortfall, President Bush has vowed to cut deficits in half by the year 2009. Democrats say that is unlikely to happen, but the president has decided to respond to critics with greater fiscal discipline.

On homeland security, another point of contention with opposition Democrats, Mr. Bush proposes an increase of about $2 billion, which is less of a boost than last year.

He continues to face criticism that the budget still does not reflect the realities the government faces, because it does not include figures for ongoing conflicts in Iraq and Afghanistan. Money for that is contained in a separate supplementary request from the White House.

The Defense Department is in for some belt tightening, receiving about five-percent more than last year, but less than the administration had previously planned, causing a reduction in some weapons programs.

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