Archive for Sunday, February 3, 2002

Bush plans painful cuts

Record spending for military, security to exact toll from domestic programs

February 3, 2002


— President Bush this week will seek sharp cuts in highway funding, Army Corps of Engineers water projects, congressional environmental initiatives, job training and scores of other domestic programs, reflecting the darker side of a fiscal 2003 budget that calls for record spending increases for the military and for domestic security.

For weeks, Bush and members of his Cabinet have touted most of the president's biggest spending initiatives pegged to the post-Sept. 11 war on terrorism and the recovery from an economic recession, including a near doubling of spending on homeland security and a 14 percent boost in defense outlays that would dwarf the Reagan-era military buildup.

Yet the administration has been less forthcoming about how it plans to do that. With war expenditures, the economic downturn and a major tax cut eliminating the once-projected budget surplus, Bush plans to cut or freeze spending in many parts of the government and to dip into Social Security and Medicare funds that previously were off limits, according to administration officials, congressional aides and special-interest groups.

These trade-offs and the way in which the administration is choosing to reshape the federal government will become evident for the first time on Monday when Bush releases his budget plan for the coming federal spending year.

Laying a foundation

The president began promoting his agenda in his State of the Union address Tuesday night. "To achieve these great national objectives to win the war, protect the homeland and revitalize our economy our budget will run a deficit that will be small and short-term, so long as Congress restrains spending and acts in a fiscally responsible manner," he said.

Bush's budget will include a sharp $9 billion cut in highway programs, largely due to the unexpected consequences of a budget formula that was designed to guarantee that the highway trust fund would be fully spent on highways and transit.

This budget mechanism, called the Revenue Aligned Budget Authority (RABA) formula, works well in an expanding economy but results in a large cut when the economy slows. The biggest loser is California, which is likely to lose nearly a quarter of the $2.5 billion in federal aid it is receiving this year, according to the Department of Transportation.

Wide swath of cuts

For the second consecutive year, the Army Corps of Engineers will take a serious hit in the president's budget, as the administration will propose a 10 percent to 15 percent reduction, a freeze on new projects and renewed efforts to get the corps to focus on its core mission of undertaking flood control, navigation and environmental projects. Last year, Congress thwarted efforts by the White House to cut the agency's spending by 14 percent.

The U.S. Conference of Mayors wrote the White House and Labor Secretary Elaine Chao last week protesting a proposal to eviscerate spending for a youth job training program, from $225 million this year to $45 million next year. The program was passed with overwhelming bipartisan support in 1998.

Budget documents and analysts who have studied them say the administration is considering cutting an additional $620 million in grants to the states for training and education, including $350 million for youth programs other than the Job Corps, for which Bush announced he would ask for a $73 million increase.

Environmentalists on guard

Environmentalists say they also anticipate a renewed effort by the administration to cut spending for water-quality programs and to reduce the number of Environmental Protection Agency personnel assigned to enforcing federal clean-water and clean-air laws. The administration attempted to eliminate 270 federal enforcement positions last year and to shift resources to state enforcers, but that proposal was blocked by the Senate.

The president will seek an overall reduction in EPA spending from this year's $7.9 billion, but an agency official said the aim is to eliminate a number of pork-barrel projects that were added by Congress over the administration's objections.

Official unveiling

Bush will formally unveil his budget on Monday, seeking $2 trillion in overall spending in the fiscal year beginning Oct. 1 for defense, domestic programs, foreign aid and interest on the national debt. After several years of surpluses, the new budget projects that spending will exceed revenue by about $80 billion.

Administration officials have said that government spending other than for Social Security, Medicare and Medicaid is expected to grow by 9 percent next year, compared with the 4 percent growth this year. But when defense, homeland security and the economic stimulus are set aside, the spending increase drops to 3 percent, or barely more than the rate of inflation.

Dipping into Social Security

The White House last year said that its budgets would not use moneys generated by Social Security payroll taxes to fund other parts of the government, using excess revenue instead to pay down $2 trillion of the federal debt by 2010. But recent administration and congressional projections suggest that Social Security funds will be tapped for other programs through the rest of the decade, with little prospect for significant debt reduction.

"I think everybody understands our top obligation is to defend the nation," said Senate Budget Committee Chairman Kent Conrad, D-N.D. "In effect, what the administration is doing is taking Medicare and Social Security funds and using them for tax cuts and additional spending. The question for the country is whether that's a wise direction for America. I think it is unwise."

In the weeks leading up to the budget's release, the White House and federal agencies have selectively announced increases for several federal programs that Bush has decided to recommend in his spending plan. In an administration that is highly disciplined in its release of information, these budgetary announcements appear to represent a strategic effort to generate good news about areas of the budget that are important to constituencies whose support will be crucial to Republicans in the elections this fall.

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