Fiscal Responsibility
Following the President's speech in Detroit, some basic fact-checking regarding the proposed budget.
As an interesting aside in the wake of the recent $80 billion dollar request, the projected cost of our new Iraqi embassy complex is $1.5 billion - as much as it cost to build the Petronas Towers, or the proposed Freedom Tower in New York. Of course, most of this really goes to graft.
Ancillary commentary here, here, here, here, here, here, here, here, here, here, and here.
From the Washington Post:
To meet its claimed target of cutting the deficit in half by 2009, the new budget omits the cost of the war in Iraq; the cost of the president's proposed private accounts for Social Security; and the cost of correcting the alternative minimum tax, which is hitting growing numbers of middle-class taxpayers rather than the rich it is intended for.
And from the Center on Budget and Policy Priorities:
Despite cuts to scores of domestic programs, the Administration's budget increases rather than decreases the deficit over the next five years. As shown by its own figures, the effect of the Administration's budget is to increase total deficits over the next five years from $1.364 trillion to $1.393 trillion.
The budget includes $138 billion in reductions in mandatory programs (excluding the effects on outlays of the tax legislation proposed in the budget) over 10 years, including cuts in Medicaid, the food stamp program, and child care assistance for low-income working families. Figures in the budget show that child care assistance would be ended for 300,000 low-income children by 2009. The food stamp cut would terminate food stamp aid for 200,000 - 300,000 low income people, most of whom are members of low-income working families with children.
As an interesting aside in the wake of the recent $80 billion dollar request, the projected cost of our new Iraqi embassy complex is $1.5 billion - as much as it cost to build the Petronas Towers, or the proposed Freedom Tower in New York. Of course, most of this really goes to graft.
Ancillary commentary here, here, here, here, here, here, here, here, here, here, and here.
From the Washington Post:
To meet its claimed target of cutting the deficit in half by 2009, the new budget omits the cost of the war in Iraq; the cost of the president's proposed private accounts for Social Security; and the cost of correcting the alternative minimum tax, which is hitting growing numbers of middle-class taxpayers rather than the rich it is intended for.
And from the Center on Budget and Policy Priorities:
Despite cuts to scores of domestic programs, the Administration's budget increases rather than decreases the deficit over the next five years. As shown by its own figures, the effect of the Administration's budget is to increase total deficits over the next five years from $1.364 trillion to $1.393 trillion.
The budget includes $138 billion in reductions in mandatory programs (excluding the effects on outlays of the tax legislation proposed in the budget) over 10 years, including cuts in Medicaid, the food stamp program, and child care assistance for low-income working families. Figures in the budget show that child care assistance would be ended for 300,000 low-income children by 2009. The food stamp cut would terminate food stamp aid for 200,000 - 300,000 low income people, most of whom are members of low-income working families with children.
posted by Management at 3:51 PM
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President Discusses Economy, Budget at Detroit Economic Club
COBO Conference and Economic Center
Detroit, Michigan
Fact sheetIn Focus: Economy
12:23 P.M. EST
THE PRESIDENT: Thank you all. Please be seated. (Applause.) I've seen head tables before -- (laughter.) I've never seen one quite so long. (Laughter.) Thanks for having me. It's great to be back in Detroit. You know, we're only a few weeks into the New Year, but at the White House we've already had a lot of excitement. There was the inauguration. Then we had Iraqi elections, and then a visit from a group of very tall men -- (laughter and applause) -- the mighty Pistons of Detroit. (Applause.)
I appreciate you having me. I appreciate you giving me a chance to come and share some thoughts with you. Dieter, thank you very much for that fine introduction. Never mind about the English language thing. (Laughter.) Beth, thank you very much for organizing this event. It's good to be here with Rick Wagoner and Bill Ford, part of the mighty Big Three in the Detroit area. I want to thank Joe Knollenberg and Sandy, the Congressmen from the great state of Michigan. Cardinal Maida, it's great to see such a strong leader and one of the great faith leaders of not only this state, but the country.
I appreciate the Mayor being here. Mr. Mayor, it's good to see you. I may see your mother this afternoon, and I'll tell her you're looking just fine. (Laughter.)
Glad to be here with the Secretary of State of Michigan, Terri Lynn Land; the Attorney General Mike Cox. I appreciate all the state and local officials who have come out. I want to thank all the college students, middle school, high school and college students who are here as part of the Detroit Economic Club student program. It was my honor to have shaken a lot of hands. I hope my advice was good, which was to aim high, make right choices, and listen to your mother. (Applause.) I'm still listening to mine. (Laughter.)
Today when I landed at the airport, at the base of Air Force One was a fellow named Jim Comer. He is an active volunteer in the VIP Mentoring Program. The reason I like to bring up people like Jim is to remind people that the greatest strength of the country is the hearts and souls of the citizens of our country. That's our true might. And every chance I get I like to herald those individuals who are taking time out of their lives to make a difference in somebody else's life.
And what Jim Comer does is he mentors children who have got a parent who may be -- who is incarcerated. I can't think of a greater gift, a more noble cause than to surround a child who may hurt with love. And so, Jim, I want to thank you for being here. For those of you who may wonder how best to serve our country, find somebody who hurts and help them with your compassion and your decency. (Applause.)
Thank you, sir. I'm glad they gave you a good table. (Applause.) Thanks for doing it.
This is my second trip to the Detroit Economic Club. I was here as a presidential candidate back in 2000, right before the Michigan primary. You can't win them all. (Laughter.) That day I said no generation could afford to take its prosperity for granted -- and that the job of the President is not to think about the Dow Jones today, but to look down the road. That's exactly what I told the folks that were here. Little did I realize what that road would mean.
We've been down a challenging road -- together -- since the last time I came to address the Detroit Economic Club. After all, we had a stock market decline and recession; we've had corporate scandals; we had an attack on our homeland; and we've got the demands of an ongoing war. But this nation confronted these challenges head on. And as a result, we have rebuilt our economy and we're improving the security of our nation.
What I said in 2000 remains true today: No President should ever take America's economic growth for granted. We have an obligation to do what Americans have always done, and that is to build a better tomorrow for our children and our grandchildren. And that's what I'm here to talk about today.
We're moving forward with an ambitious agenda to ensure that our economy remains the freest, the most flexible, and the most prosperous in the world. Our strategy has three pillars. We will insist on a budget that limits and tames the spending appetite of the federal government. We will work with Congress to pass legislation that promotes economic growth and makes sure the entrepreneurial spirit is strong all throughout America. And we'll reform the institutions fundamental to American society.
I understand these are big goals. But the job of the President is to confront problems, not to pass then on to future generations, future Presidents, and future Congresses. (Applause.)
The first pillar of sound economic policy is spending restraint in Washington, D.C. Yesterday I sent a budget to the United States Congress. I would call it a disciplined budget. My budget reduces spending -- reduces spending -- on non-security discretionary programs by one percent -- the most disciplined proposal since Ronald Reagan was in office. It holds discretionary spending below the rate of inflation. It includes vital reforms in mandatory spending that will save taxpayers $137 billion over the next decade. It meets our nation's essential needs; it keeps us on track to cut the deficit in half by 2009.
Now, all budgets have got to be based on priorities, and mine are clear: The government's most solemn duty is to defend and protect the American people. In a time of war, we will always provide our military and homeland security personnel with the tools they need to do their jobs. And so our budget raises defense spending by almost 5 percent, and funds critical upgrades in homeland security, such as a new program to secure our chemical plants, ports, and public transportation systems.
Protecting America imposes costs that are large and they are necessary. That means we have a duty to show even more discipline about spending in other areas. Leaders in Congress and in the business sector have expressed their concerns about federal spending, and I've listened. And so I've delivered a budget that reflects our mutual concerns. And now Congress needs to join with me to bring real spending discipline to the federal budget. (Applause.)
Spending discipline requires difficult choices. Every government program was created with good intentions -- but not all are matching good intentions with good results. And so we looked at how programs are working. As I told my Director of the OMB, Josh Bolten, let's focus on results. My 2006 budget eliminates, or substantially reduces, more than 150 federal program that are not succeeding, that are duplicating existing efforts, or that are not fulfilling an essential priority. For example, there's a program called Even Start. It was created more than 16 years ago to build literacy in low-income families. We're all for that. I can't think of anybody in the Congress who is not for helping low-income families become literate. The problem is, is that after three separate evaluations it has become abundantly clear that the program is not succeeding. People are not becoming more literate. Families in Even Start have made no progress toward literacy -- no more progress than a similar group of families outside the program.
See, I think it makes sense for all of us involved in public policy to say to the appropriators, show us whether something works. Even Start is not working, and so I've asked that the program be eliminated and focus resources on things that do work. (Applause.)
We're also working on mandatory programs. These are programs fixed by formula, over which the Congress and appropriators have no discretion except to fix the formula. For example -- let me give you one example of where I think there needs to be change to save taxpayers' money. It's common-sense change. It is a reasonable approach to farm policy. Right now, the federal government pays individual farmers as much as $360,000 a year in subsidy. I think that no farmer should get [sic] $250,000 a year in subsidy. That makes sense. That will save the American taxpayer $1.2 billion over the next decade. These are the kind of reforms that are necessary to earn the trust of the American people. And to bring budget discipline, it is essential that those who spend the money in Washington adhere to this principle: A taxpayer dollar ought to be spent wisely, or not spent at all. (Applause.)
To reduce deficits, we must do more than just spending restraint. We've got to make sure we have pro-growth economic policies. We've got to do things to make sure this economy continues to expand, in order to create jobs, increase wages, and enhance the entrepreneurial spirit. I mean, I love the entrepreneurial spirit of America. I think it's what makes us a unique place. I can't tell you how positive it is when I hear the stories of person after person who creates his or her own job, regardless of their status in America. There's nothing better than to be a part of a society in which, if you dream the big dream, you can achieve that dream. And that's why pro-growth economic policies are vital for a positive future for America.
So the second pillar of a sound economic policy is to build on an environment that encourages initiative, lowers the cost of doing business, and constantly thinks about how to promote economic vitality and growth.
Pro-growth policies have helped to overcome a recession and helped make this country's economy the fastest growing of any major industrialized nation in the world. Over the past year, America has created more jobs than Germany, Japan, Great Britain, Canada, and France combined. (Applause.)
Parts of our country struggle, just like Michigan. I'm very aware of that. But that's all the more reason to make sure our economy is more flexible, and that we remain competitive. The goal out to be America must be the best place in the world to do business.
A pro-growth strategy must ensure that tax relief is here to stay. Most new jobs in America -- (applause) -- most new jobs in America are created by small businesses. Many of those business owners pay business taxes at the individual tax rate. In other words, they're subchapter S corporations, sole proprietorships. And when individual tax rates are high, it affects the capacity of a small business to accumulate and spend capital. The tax relief we passed lowered all tax rates on people who pay taxes. Yet in 2011, those tax rates are scheduled to go back up. If Congress fails to act, taxes on dividends and capital gains will also go up; and the child credit will be reduced; and the death tax will come back to life. (Laughter.) Allowing these scheduled tax increases to take effect, allowing taxes to go back up, would only discourage growth and cost this country jobs, and reduce paychecks. The United States Congress needs to make the tax relief permanent. (Applause.)
A pro-growth strategy must address the growing burden of junk lawsuits. (Applause.) Last month I met Bruce McFee, who runs a manufacturing company in North Lansing. A few years back, Bruce bought a company called Sullivan Palatek. In the 1940s, another company with the name "Sullivan" in it made a product with asbestos. The two companies are in no way related. But that hasn't stopped trial lawyers from filing 53 asbestos claims against Bruce's company.
Here's what he said about the lawsuits: "If they put us out of business, the replacement is going to be an overseas business -- I believe there are hundreds of companies in the same mess. And it's sucking money out of our state." And he's right. (Applause.)
Junk lawsuits have driven the cost of America's tort system to more than $240 billion a year -- greater than any major industrialized nation. Think about that. It creates a competitive disadvantage in a global economy, for the American economy to have so many lawsuits. It imposes unfair costs on job creators. It raises prices for consumers. Our legal system must serve the cause of justice, not the interests of trial lawyers. (Applause.) Congress needs to pass meaningful class action and asbestos legal reform this year. (Applause.)
A pro-growth strategy must roll back excessive federal regulation. Many of you in this room probably spend hours filling out paperwork to send to Washington, D.C. I can't promise you any of it has ever been read. (Laughter.) We've got to understand that. People writing the regulations must understand that, the people who are implementing regulations must understand that. And we're making some progress. We streamlined tax reporting requirements for small businesses, and that saved American entrepreneurs an estimated 50 hours -- 50 million hours of unproductive work. And there's more to be done. We've got to strip away unnecessary mandates. We want people figuring out how to hire people, not hiring people to fill out forms.
A pro-growth strategy must confront the cost of -- the rising cost of health care. I understand that -- whether it be the automaker or the family restaurant in Michigan. Escalating health costs are making it difficult for people to do business and to get the coverage they need for their workers. More than half of the uninsured are small business employees. To me, that makes sense to start there. To make sure the health care system works, why don't we address the reason why small businesses aren't able to afford health care? And one of the reasons why is because they're not able to get the economies of purchase that big companies are able to do. We ought to allow small businesses to pool across jurisdictional boundaries so they can get the same discounts that big companies are able to do. (Applause.)
I'm a big believer in tax-free health savings accounts. If you're a small business owner, or a sole proprietor, I urge you to look at health savings accounts. They're innovative ways for people to control their own destiny when it comes to health care, get catastrophic coverage to give them security, and be able to pass from one year to the next on a tax-free basis any money you do not spend in your health account. And to make them more widely available, we ought to -- we will, if Congress passes laws that allow us to provides incentives for small businesses and low-income workers to open up health savings accounts.
We should create a national marketplace for health insurance, so people can shop on the Internet across state lines to get high-quality coverage at lower prices. That makes sense, doesn't it? To break down barriers to create a marketplace for the consumer when it comes to health care. (Applause.) To reduce the cost of medicine for every doctor, every patient and every business, Congress needs to pass medical liability reform this year. (Applause.)
A pro-growth strategy must ensure affordable, reliable supplies of energy. It is hard to be in a growing economy if you're not sure whether or not you got energy, if you're not sure whether or not there's cost certainty when it comes to energy. As you found out here in Detroit, and others found out across our nation during the blackout that hit this city two summers ago, a disruption in energy supplies can cause, and will cause, serious problems in our economy. And so that's why I sent Congress a comprehensive energy strategy almost four years ago. And as I said in the State of the Union the other night, four years of debate is enough. We don't need debate. We need action when it comes to an energy plan. (Applause.)
And that plan must modernize the electricity grid, and it must encourage conservation, and it must encourage increases in domestic production. And we can do so in an environmentally friendly way. We're spending money -- and important money and good money -- on new technologies such as clean coal technologies, and ethanol, and hybrid and fuel cell vehicles. I believe that we ought to expand the use of safe and clean nuclear power. (Applause.) And I think we ought to allow for exploration in environmentally responsible ways in the Arctic National Wildlife Refuge. (Applause.)
For the sake of this economy, and for the sake of national security, Congress needs to pass an energy plan and get it to my desk as soon as possible, so we can become less reliant on foreign sources of energy. (Applause.)
A pro-growth strategy requires a policy of free and fair trade. America is the home to about 5 percent of the world's population. That means 95 percent of our potential customers are abroad. Millions of American jobs -- and this is important for the people of Detroit to understand -- millions of Americans jobs are supported by exports, including one in every five factory jobs. Here in America, it's the fifth largest exporting state. You know firsthand that economic isolationism would mean economic disaster.
My administration has worked hard to open up markets for U.S. products. We've completed free-trade agreements with 12 countries that will open up markets of 124 million consumers, and that's good. That's good for entrepreneurs. Listen, if you're good at something -- and we're good at a lot of things -- we ought to break down barriers so we can be selling to people. And I'm going to continue to work to open up markets. And at the same time, we will vigorously enforce trade laws that are on the books. You see, with a level playing field, our businesses, our entrepreneurs, and our workers can compete with anybody, any time in the world. (Applause.)
The third pillar of a sound economic policy is to put in place reforms that will keep America's businesses and workers competitive in the century ahead. It is time to confront great challenges. If you care about the quality of life for our children and grandchildren, now is the time -- not later, but now is the time to confront problems.
To keep America competitive, we've got to make sure that the education system works. The No Child Left Behind Act is working. We have challenged, and are challenging, the soft bigotry of low expectations. We will not stand for a school system that gives up on kids and just moves them through. So now we're asking the question, can you read and write and add and subtract. And when we find a child that needs help, we're providing help early, before it's too late. There's nothing better than setting high standards and having accountability to make sure every child learns. And it's working. There's an achievement gap in America that is growing -- is narrowing every year. And we've now got to extend those reforms to our high schools so that a high school diploma means something. (Applause.)
The fastest growing occupations in America require at least two years of college. And so we're going to reform our job training system and strengthen our community colleges to help thousands of workers get the -- gain the skills they need to fill the jobs of the 21st century. You know, one of the wonderful things about the community college system is that they're flexible, and they're available, and they're affordable. And for those youngsters who cannot afford a community college, or for those workers who cannot, we're going to increase the size of Pell grants to help them afford a community college -- and/or a college education. (Applause.)
What we want is we want the education system to actually educate people for the jobs which exist. And that's why I'm such a big believer in the community college system. Curricula can change with the times. Flexibility is important when it comes to helping our workers gain the skills necessary to fill the jobs of the 21st century.
To keep this country competitive, we've got to change our outdated immigration laws. This economy will be stronger and our nation will be more secure by having a rational system when it comes to immigration. First, I don't believe and I'm against blanket amnesty. Secondly, we need to know who's coming in and out of our country. And thirdly, I believe that we ought to allow a willing worker and a willing employee to match up so long as an American won't fill the job.
I don't like a system which encourages illegal trafficking on the borders, fake documents, smuggling in the desert in the heat of the day. We're more compassionate than that. This country ought to say, if you're a willing worker and an employer can't find an American, we ought to match them up for a period of time. This is a guest worker program that will bring sense to border policy and employment policy in the United States of America, and at the same time, treat people with dignity. (Applause.)
We got to simplify the tax code if we want to have pro-growth economy. Today, this code of ours and its accompanying regulations are almost 11 times longer than the complete works of Shakespeare. (Laughter.) And he wrote a lot. (Laughter.) To help you determine how much you owe the IRS, our government kindly offers hundreds of separate forms, instructions, worksheets, and publications. (Laughter.) A growing number of Americans also have to calculate their tax burden twice, once under the regular tax rules, and once for the alternative minimum tax. And then when you're done figuring out both totals, you get to pay the higher amount. (Laughter.) No wonder we now have more people in the business of preparing tax returns than we do in the entire United States Army.
Americans shouldn't need advanced degrees in accounting to fill out their tax returns. So I've appointed a bipartisan commission, led by former Senators John Breaux, Democrat, and Connie Mack, Republican, to examine the tax code, top to bottom. I will receive their recommendations, and I will work with the United States Congress to deliver a tax code that is pro-growth, easy to understand, and fair to everyone. (Applause.)
And to keep this America -- country of ours competitive in the 21st century, we have got to honestly and openly address the structural problems of Social Security. In the last few days, I've traveled to North Dakota and Florida, and now to Michigan, to discuss my ideas and plans. And I'm going to continue traveling. I'm going to spend a lot of time on this issue because I feel strongly that we better address it. And I'll tell you why.
I've reminded everybody I've spoke in front of that the Social Security system was one of the great moral successes of the 20th century, and I believe it was. And I assured them that today's seniors do not have a problem with Social Security. For those who have retired or nearing retirement, born before 1950, the Social Security system is fiscally sound and will not change at all. (Applause.)
And that's an important message for our seniors to hear. You're in fine shape, and nothing is changing. But I warned every audience I've spoken in front of that the government has made promises to our younger workers that it cannot pay for. Social Security will go broke when some of our youngsters get ready to retire, and that's a fact. And the whole world is watching to see whether or not we've got the courage to fix this problem. It's part of our structural deficit. Social Security means that we've got unfunded liabilities, debts that we owe to future generations that are going to be real hard to pay. And here's why.
Half a century ago, about 16 workers paid into the system for every one person drawing benefits. That's a nice, healthy contribution ratio -- 16 to one. But today, it's 3.3 three workers to one. And over the next few decades the numbers paying in for every beneficiary will be two to one -- two workers for every beneficiary. But that's only half the problem. The other problem is people like me, what they call baby boomers, are fixing to retire. And there's a lot of us. And not only are we fixing to retire, we're living longer, much longer than when the Social Security system was first designed. And not only that; the benefits that the government has promised are going up. They're increasing. So think about it. With every passing year, you've got fewer workers who will be paying ever higher benefits to an ever larger number of retirees.
And that is the math. Thirteen years from now, in 2018, the Social Security system will be paying out more than it takes in. That's called being in the red. And every year afterwards, the problem gets worse. The shortfall is bigger than the year before. So, for example, in the year 2027, the government will somehow have to come up with an extra -- above and beyond the payroll taxes being collected -- an extra $200 billion in that year alone to keep the system afloat. And in the year 2033, that shortfall will have grown to $300 billion. We got a problem. And it is plain to see. It is such a problem that in the year 2042, the system is going to be broke.
If you're a younger person, you ought to be asking members of Congress and the United States Senate and the President what you intend to do about it. If you see a train wreck coming, you ought to be saying, what are you going to do about it, Mr. Congressman, or Madam Congressman? Are you going to sit there and let the train run over workers, or are you going to act?
I'm calling upon the Congress to act. (Applause.) Because if we don't act now, imagine what life is going to be like trying to fill the hole. When you're $200 billion short, and a couple of years later you're $300 billion short, and the shortfalls grow every year, there aren't many options available to you if you don't do something now. In other words, you can raise taxes significantly. That will wreck the economy. You can dramatically slash benefits. You can borrow a lot of money. But whatever the case is, the closer you get to the day in which we start going into the red, the problem only accelerates.
And that's why I stood in front of the United States Congress and said, why don't we work together to fix this system -- not for those who've retired; you're fine -- but for a young generation of Americans coming up. And I fully understand that any long-term solution is going to require the discussion of a lot of options. And that's why I told the Congress, with the exception of running up payroll taxes or raising payroll taxes, all options are on the table.
There have been a lot of interesting suggestions from the United States Senator from New York named Daniel Patrick Moynihan, who, unfortunately, passed away, or to President Clinton. Over time people have suggested different options, different ideas as to how to permanently fix Social Security for younger workers. Nothing changes for older workers. Some have suggested limiting the benefits for wealthy retirees. Others have suggested indexing benefits to prices rather than wages. Some have been bold enough to suggest increasing the retirement age. Some have thought it's a good idea to change the benefit formulas, or include penalties for early collection of Social Security benefits. I'm going to work with Congress. To any Congressman or woman, regardless of party, bring forth your ideas.
Now, there are some who say we don't have a problem. I suspect over time the voters are going to say to those folks, you better figure out we got a problem. Just don't pass it on. Show some leadership. And then they're going to say to people like me and those of us who recognize we have a problem, come on, show me your ideas. And that's what I want to assure the people of the Detroit Economic Club -- I'll be open to anybody's ideas.
And I got an interesting idea for younger workers that I want the Congress to consider. I believe we have a chance to make a better deal for our younger workers, and that is I believe younger workers, if they so choose, ought to be allowed to set aside some of their own money in the form of payroll taxes into a personal retirement account. (Applause.)
I think the first principle involved here is that it's the younger workers' money. It's not the government's money, to begin with. It's your money. You're working hard. (Applause.)
And a personal account would allow that person to invest in a conservative mix of stocks and bonds. You know, you can't take it to the lottery. (Laughter.) You can't go across the river and roll dice with it. (Laughter.) There's guidelines about that which you can invest in. And these accounts would have low administrative fees. They would provide simple and easy to understand choices, just like the thrift savings plans used by federal employees. (Applause.) These monies would be available for retirement. In other words, you couldn't withdraw money prior to retirement. And, obviously, there would be a limit on that which you could withdraw. You can't pull it all out at one time. It's meant to supplement the Social Security check you'll be getting from the federal government.
And so why does this make sense? And by the way, we will phase these plans in -- the retirement accounts in, over time, eventually allowing a worker to set aside 4 percent of his or her gross pay in the form of a personal account. And the reason you allow them to phase in is so that they become easier to pay for the transition cost, is a fiscally sound way of approaching this issue.
Now, here's why I think they're -- I know they're a better deal for younger workers. The rate of return on a conservative mix of stocks and bonds will be greater in a personal account than that which the younger worker is earning in the Social Security trust. In other words, you get -- your money works for you better.
And that's important. Take the young person who earns an average of $35,000 a year over his or her working career. By the time he or she retired, their personal account would be nearly $250,000. Think about that. That's the power of the compounding rate of money. That's what that means. Over time, your money grows, in the most conservative of stocks and bonds.
That money would provide a nest egg for the owner of the account. It would supplement that person's Social Security retirement income. It is money that that person can pass on to whomever he or she chooses. Best of all, the accounts would be replacing the empty promises of government with the real assets of ownership. A personal account would be your account, you would own it, and the government could never take it away. (Applause.)
Now, I'm looking forward to discussing with Congress this issue. We have a fantastic opportunity to show our country that people can put aside their party and work what's best for the future. And I'm looking forward to it. And I'm looking forward to traveling the country, telling people as plainly as I can that we've got a problem and I'm willing to work with people to come up with a solution. And I'm willing to put out interesting ideas -- at least I think they're interesting -- (laughter) -- to help people understand there is a way forward, and at the same time, promote what I like to call an ownership society.
I think all public policy, or as much public policy as possible, ought to encourage people to own something. I want more people owning their own home. I can't -- I can't tell you how exciting it is to meet a first-time homeowner. I've never seen this, personally, as the President, but I can just imagine somebody opening their door of their home and say, welcome to my home; welcome to my piece of property. I like the idea of people from all walks of life starting their own business. I met entrepreneurs all across America who said, I've started my business; I'm an employer; I'm excited about the future.
We want people owning and managing their own health care accounts. That's why I believe health savings accounts are an important part of helping to control the cost of medicine. And we want people controlling and owning their own assets when it comes to their retirement. The more people own something in America, the more likely it is a -- future generations of America will have a vital stake in the future of this country. (Applause.)
No one knows the power of ownership better than American entrepreneurs. John Bailey is with us. It's an interesting story about entrepreneurship and optimism. Nine years ago, after a life in public relations, he found himself trapped in a company that offered no hope for advancement. His wife -- sounds like a pretty straightforward woman, I'm about to quote her -- kind of reminds me of Laura. She said, "What part of writing on the wall can't you understand? (Laughter.) They don't want people over 50, is what the wife was telling John. He didn't get discouraged. He responded in true American fashion: He went out and he founded his own firm. And today, John's business is one of the largest public relations firms in Michigan.
And here's what he had to say: "It's very daunting to go out there. But I learned that it can be done, that hard work and strong ethic pays." He went on to say, "It sounds corny, but good guys do finish on top."
The dream of a hopeful America is to say that if you work hard and dream big, no matter who you are, you can finish on top.
Thanks for letting me come. God bless. (Applause.)
Slashing Education
In his speech in Detroit, President Bush said, “To keep America competitive, we’ve got to make sure that the education system works.”
FACT: In his 2006 budget, President Bush is eliminating “$1.1 billion in state vocational education grants, $496 million for educational technology grants, and $437 million for safe and drug free schools.”
The First Pillar
In his speech in Detroit, President Bush said, “The first pillar of sound economic policy is spending restraint in Washington, D.C.”
FACT: The federal budget deficit will reach a record $448 billion this year, exceeding last year’s record of $412 billion. According to the nonpartisan Congressional Budget Office (CBO), “the long-term outlook for the US budget deficit has deteriorated since the end of last year.”
FACT: Bush has turned a $5.6 trillion surplus into $5.2 trillion deficit: a fiscal decline of $10.8 trillion in just three years. The turnaround represents the worst fiscal deterioration in at least the last half century. The CBO estimates President Bush’s fiscal policies, rather than external factors, “account for much of the reduction.”
Truth on the Deficit
President Bush said, “I would call it a disciplined budget…It keeps us on track to cut the deficit in half by 2009.”
FACT: The president’s budget leaves off transition costs for his proposal to change Social Security ($2 trillion), war costs for Iraq and Afghanistan (over $100 billion), changes to Alternative Minimum Tax.
FACT: “Despite cuts to scores of domestic programs, the Administration’s budget increases rather than decreases the deficit over the next five years…A main reason for this outcome is the tax-cut proposals the Administration has included in its budget.”
FACT: It is the 2004 deficit that Bush is promising to cut in half, but he’s not starting with the actual 2004 deficit of $412 billion. Instead, his benchmark is the projected $521-billion deficit that his Office of Management and Budget estimated a year ago, when the fiscal year was four months old. Using half of that figure, Bush’s goal is to reach a deficit of $260.5 billion.
Progrowth economic policies
President Bush said: “we need to focus on progrowth economic policies to create jobs and increase wates.”
At a time when overseas outsourcing has left many American workers - especially in the manufacturing sector - out of work, President Bush will propose cutting federal spending on job training by a half-billion dollars. Federal job training programs, including dislocated-worker training, will be cut by $200 million. Federal aid to states for job training, including funding to train veterans, will be cut by $300 million.
“In the budget for fiscal 2006, which begins Oct. 1, the White House will propose combining four Labor Department jobs programs and reduce spending to $3.9 billion from the $4.1 billion appropriated for the current fiscal year. The programs cover adults, youth and dislocated workers, as well as employment-service centers.
Bush Budget, By the Numbers
Times the phrase “spending restraint” was repeated by Scott McClellan at yesterday’s briefing on the budget: 13Percent of overall spending, including homeland security, national defense and entitlements, not covered by budget: 81Number of domestic programs to be “eliminated or dramatically reduced” in Bush budget: 150Percent of overall spending these cuts represent: less than 1
Projected 2005 deficit, minus war costs: $368 billionProjected 2006 deficit, minus war costs: $390 billionSurplus Bush inherited in 2001, when he took office: $236 billionThat surplus, projected over ten years: $5.6 trillionMajor costs left off the Bush budget: President’s proposal to change Social Security ($2 trillion), war costs for Iraq and Afghanistan (over $100 billion), changes to Alternative Minimum Tax.
What Bush said about his first budget, in 2001: “After paying the bills, my plan reduces the national debt, and fast. So fast, in fact, that economists worry that we’re going to run out of debt to retire. That would be a good worry to have.”
What he says about this one: “It’s a budget that is a lean budget. People on both sides of the aisle have called upon the administration to submit a budget that helps meet our obligations of – our goal of reducing the deficit in half over a five-year period, and this budget does just that.”
Bushonomics
The conservative ideological agenda on the economy has it full stride: aggressively slash taxes on the wealthy; run up huge budget deficits; then push for massive cuts in critical domestic spending under the guise of fiscal responsibility. President Bush will introduce a budget today that is so callous Vice President Cheney felt compelled yesterday to assure viewers of Fox News that “it’s not something we’ve done with a meat ax.” Just as with its push for privatizing Social Security, the White House plans “an elaborate marketing strategy to sell the cuts to voters and lawmakers.” The message: we aren’t cutting government programs for the needy, we are “centralizing government services and saving tax payer money.” America doesn’t need to be sold another product. America needs a responsible budget that allocates resources where they are most needed.
From Bad to Worse
The Congressional Budget Office just released its latest projections on the federal budget. Things aren’t looking good. The CBO projects the federal government will rack up “$855 billion in debt between 2006 and 2015,” and $365 billion this year alone. But that doesn’t even begin to describe the scope of our budget problem. Through a combination of Bush administration trickery and legal technicalities, the CBO numbers don’t include:
1. The $80 billion Bush just requested for Iraq and Afghanistan (including, as Atrios notes, an astounding $1.5 billion for a U.S. embassy in Iraq).
2. Assumes no spending on Iraq or Afghanistan over the next 10 years. This omission reduces the deficit by as much as $1.4 trillion.
3. Bush’s $2 trillion Social Security privatization scheme.
4. $2.5 trillion over ten years to make Bush’s 2001 and 2003 tax cuts permanent, a stated priority.
Here is the really scary part: even with all this chicanery, Bush still doesn’t meet his promise of cutting the actual deficit in half by 2009.
$80 Billion For War In '05
Jan. 24, 2005
; The Bush administration plans to announce Tuesday it will request about $80 billion more for this year's costs of fighting wars in Iraq and Afghanistan, congressional aides said Monday.
The request would push the total provided so far for those wars and for U.S. efforts against terrorism elsewhere in the world to more than $280 billion since the first money were provided shortly after the Sept. 11, 2001, airliner attacks on New York's World Trade Center and the Pentagon.
The package will not formally be sent to Congress until after President Bush introduces his 2006 budget on Feb. 7. But the aides, speaking on condition of anonymity, said White House budget chief Joshua Bolten or other administration officials would describe the spending request publicly Tuesday.
Until now, the White House had not been expected to reveal details of the war package until after the budget's release.
Until now, the White House had not been expected to reveal details of the war package until after the budget's release.
The decision to release details of the $80 billion war budget requestion comes comes after congressional officials argued to the administration that withholding the war costs from Bush's budget would open the budget to criticism that it was an unrealistic document. Last year, the spending plan omitted war expenditures and received just that critique.
Adding additional pressure, the Congressional Budget Office planned to release a semi-annual report on the budget Tuesday that was expected to include a projection of war costs. Last September, the nonpartisan budget office projected the 10-year costs of the wars at $1.4 trillion at current levels of operations, and $1 trillion if the wars were gradually phased down.
Aides said about three-fourths of the $80 billion was expected to be for the Army, which is bearing the brunt of the fighting in Iraq. It also was expected to include money for building a U.S. embassy in Baghdad, which has been estimated to cost $1.5 billion.
One aide said the request will also include funds to help the new Afghan government combat drug-trafficking. It might also have money to help two new leaders the U.S. hopes will be allies, Palestinian leader Mahmoud Abbas and Ukraine President Viktor Yushchenko.
The aides said the package Bush eventually submits to Congress will also include money to help Indian Ocean countries hit by the devastating December tsunami.
Audits: US missing $9 billion in Iraq
The US occupation authority that governed Iraq after the 2003 invasion did not properly safeguard $8.8 billion of Iraq's money, leaving the funds open to corruption, a US audit released on Sunday has said.
The US Special Inspector-General for Iraq Reconstruction was scathing in criticism of how the former occupation authority - known officially as the Coalition Provisional Authority (CPA) - appropriated Iraqi money until it handed over power last June to Iraq's interim government.
"The CPA provided less-than-adequate controls for approximately $8.8 billion in DFI (Development Fund for Iraq) funds provided to Iraqi ministries through the national budget process," said the report, released on the same day Iraqis voted in elections.
"We believe the CPA management of Iraq's national budget process and oversight of Iraqi funds was burdened by severe inefficiencies and poor management," it said.
Bad management
DFI is made up of proceeds from Iraqi oil sales, frozen assets from foreign governments and surplus from the UN Oil for Food Programme. Its handling has already come under fire by several UN-mandated audits.
The report said the occupation authorities failed to ensure funds were not used to pay "ghost" employees and cited one example where officials authorised payment for about 74,000 guards but only a fraction of these could later be validated.
The audit said there was no assurance that the funds were used for purposes mandated by United Nations resolutions.
UN auditors have also accused the occupation authorities of sloppily managing billions of dollars of Iraqi oil money and moving slowly to guard against corruption.
Bremer responds
Former occupation authority chief Paul Bremer, who received a Presidential Medal of Freedom last month for his work in Iraq, rejected the US audit's findings and said it did not "meet the standards that Americans have come to expect of the Inspector-General".
"The draft report assumes that Western-style budgeting and accounting procedures could be immediately and fully implemented in the midst of war," said Bremer in a written reply to auditors when he received the first draft.
Bremer said any delays in paying Iraqi public servants' salaries would have raised the security threat to Iraqis and Americans and cost more lives.
In addition, he said the Iraqi ministries had no regular payroll systems and the "system had been corrupted beyond repair by decades of cronyism and ad hoc fixes".
Responsibility
The auditors said they understood the occupation authorities were working in a dangerous environment but it had a responsibility to ensure Iraqi ministries had basic financial controls before they were entrusted with handling such large amounts of money.
"The fact that the Iraqi ministries ceased to or had never functioned, lacked basic tools and operated in a cash economy was precisely why the CPA should have provided oversight of the financial management of the funds."
A review of 10 payments made by the occupation authorities Comptrollers Office between October 2003 and June 2004 found none of them - ranging between $120 million and $900 million - included documentation such as budget spending plans.
In another example, about $1.5 billion in cash allocations was made to Iraqi banks between January and April 2004 for operating expenses, yet spending plans supported only about
$498 million in these expenses.
The US Department of Defence also rejected the findings and said the "sweeping and unqualified conclusion" was not accurate.
One of the main benefactors of Iraq funds was Texas-based firm Halliburton, which was paid about $1.7 billion dollars out of those funds to bring in fuel for Iraqi civilians.
UN auditors have asked for a full accounting of these funds.
Starvin’ The Beast
Joshua Holland (7:05PM) link
Oh, the cuts, they are a comin.' A rash of stories today are pretty good evidence that those alarmists on the left have been, as usual, correct.
First, from the Hartford Courant:
President Bush will propose a nearly 5 percent increase in defense spending for next year while calling for cuts in payments to farmers and work on a nuclear waste storage site in Nevada, according to documents and federal officials.
Bush also will propose increasing the size of Pell grants for low-income college students as he seeks to abolish a widely used college-loan program and to shrink federal subsidies for banks that lend money to students.
...
He would raise the maximum Pell Grant for students from $4,050 to $4,550 over five years; shrink subsidies the government pays banks to encourage them to make low-interest loans; and phase out Perkins loans, 673,000 of which were made to students last year.
...
Administration officials already said Bush would seek $60 billion in Medicaid savings over the coming decade. These will come largely from smaller reimbursements to pharmacies, reducing payments to other health providers and making it harder for parents to qualify for coverage if their assets have been shifted to their children.
Then there was this in the New York Times:
President Bush's budget for 2006 cuts spending for a wide range of public health programs, including several to protect the nation against bioterrorist attacks and to respond to medical emergencies, budget documents show.
Faced with constraints on spending caused by record budget deficits and the demands of the war in Iraq, administration officials said on Friday that they had increased the budget for some health programs but cut many others, including some that address urgent health care needs.
The documents show, for example, that Mr. Bush would cut spending for several programs that deal with epidemics, chronic diseases and obesity. His plan would also cut the budget of the Centers for Disease Control and Prevention by 9 percent, to $6.9 billion, the documents show.
And, of course, there's Social Security:
Under the plan President Bush outlined Wednesday night in his State of the Union Message, retirees' traditional Social Security benefits would be reduced if they had diverted some of their tax money into private investment accounts, according to a memorandum that the chief actuary of the Social Security system sent to the White House on the day of the president's address.
…
Now these details of the memorandum from the Social Security actuary, Stephen C. Goss, to Charles P. Blahous, the main White House staff expert on the program, are circulating among policy experts:
Mr. Goss said a "shadow account" would be calculated based on how much the retiree's investment account would have been worth if it had all been invested in bonds with an average yield of three percentage points above inflation.
… the guaranteed monthly payments from the government would be determined as if the tax money they had paid to the government were reduced by the amount in the hypothetical shadow account.
...
If the actual return in the personal account was only three points above inflation, then the guaranteed benefits would be reduced by 100 percent of the amount in the account; total retirement income would be exactly the same as if the worker had stayed in the traditional Social Security system and had not invested in a private account.
And if their investments earned only 1.5 points above inflation, then retirees would be worse off than if they had not put tax money into a personal account.
This is, of course, all those reckless tax cuts coming back to bite us on the ass, as they will for years to come through spiraling interest payments on the national debt.
Looks like everything's going according to plan--even if there is some rocky air around Social Security "reform."
Bush budget seeks deep cutbacks
President Bush has presented his 2006 budget, cutting domestic spending in a bid to lower a record deficit projected to peak at $427bn (£230bn) this year.
The $2.58 trillion (£1.38 trillion) budget submitted to Congress affects 150 domestic programmes from farming to the environment, education and health.
But foreign aid is due to rise by 10%, with more money to treat HIV/Aids and reward economic and political reform.
Military spending is also set to rise by 4.8%, to reach $419.3bn.
The budget does not include the cost of running military operations in Iraq and Afghanistan, for which the administration is expected to seek an extra $80bn from Congress later this year.
Congress will spend several months debating George W Bush's proposal.
Reward for reform
The state department's planned budget would rise to just under $23bn - a fraction of the defence department's request - including almost $6bn to assist US allies in the "war on terror".
However, the administration is keen to highlight its global effort to tackle HIV/Aids, the BBC's Jonathan Beale reports, and planned spending would almost double to $3bn, with much of that money going to African nations.
Mr Bush also wants to increase the amount given to poorer countries through his Millennium Challenge Corporation.
The scheme has been set up to reward developing countries that embrace what the US considers to be good governance and sound policies.
Yet Mr Bush's proposed spending of $3bn on that project is well below his initial promise of $5bn.
Oil reserves
A key spending line missing from proposals is the cost of funding the administration's proposed radical overhaul of Social Security, the pensions programme on which many Americans rely for their retirement income.
To sustain our economic expansion, we must continue pro-growth policies and enforce even greater spending restraint across federal government
President George W Bush
Some experts believe this could require borrowing of up to $4.5 trillion over a 20-year period.
Neither does the budget include any cash to purchase crude oil for the US emergency petroleum stockpile.
Concern over the level of the reserve, created in 1970s, has led to rises in oil prices over the past year.
The Bush administration will instead continue to fill the reserve by taking oil - rather than cash - from energy companies that drill under federal leases.
Spending restraint
The outline proposes reductions in budgets at 12 out of 23 government agencies including cuts of 9.6% at Agriculture and 5.6% at the Environmental Protection Agency.
The spending plan for the year beginning 1 October is banking on a healthy US economy to boost government income by 6.1% to $2.18 trillion. Spending is forecast to grow by 3.5% to $2.57 trillion.
But the budget is still the tightest yet under Mr Bush's presidency.
"In order to sustain our economic expansion, we must continue pro-growth policies and enforce even greater spending restraint across federal government," Mr Bush said in his budget message to Congress.
Mr Bush has promised to halve the US's massive budget deficit within five years.
The deficit, partly the result of massive tax cuts early in Mr Bush's presidency, has been a key factor in pushing the US dollar lower.
The independent Congressional Budget Office estimates that the shortfall could shrink to little more than $200bn by 2009, returning to the surpluses seen in the late 1990s by 2012.
But its estimates depend on the tax cuts not being made permanent, in line with the promise when they were passed that they would "sunset", or disappear, in 2010.
Most Republicans, however, want them to stay in place.
And the figures also rely on the "Social Security trust fund" - the money set aside to cover the swelling costs of retirement pensions - being offset against the main budget deficit.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/4243807.stm
Hoyer: Bush Budget Is a Fiscally Irresponsible Fraud
Administration Deliberately Excludes Social Security, War Costs; and Fails to Provide Leadership on Social Security
WASHINGTON, DC – House Democratic Whip Steny H. Hoyer (MD) released the following statement today regarding the Bush Administration’s Fiscal Year 2006 Budget:
“The Administration’s Budget for Fiscal Year 2006 is a fiscally irresponsible fraud that deliberately excludes the trillions of dollars that would be needed to implement the President’s Social Security privatization plan and the billions of dollars that are needed to fund the war effort in Iraq. The President also failed to show leadership on Social Security by not including any new details on his plan to address that program's long-term challenges.
“The Administration is just not leveling with the American people. It is posturing, pretending and prevaricating. The fact is, this is the kind of budgeting sleight of hand that makes the American people cynical.
“In four short years, this Administration has turned record budget surpluses into deficits as far as the eye can see, including a projected record deficit of $427 billion this year that is actually $162 billion larger – or $589 billion – because the Social Security surplus masks its true size. Even worse, this Administration has simply not proposed a real plan to restore fiscal discipline to the federal budget. More than 40 percent of the proposed deficit reduction in the President’s budget would be achieved not by tough choices on taxes and spending but by the growth of Social Security surpluses. And many of the spending cuts the President has proposed will be rejected outright by Members of the President’s own Party.
“What is absolutely stunning is that this President has told the nation that Social Security is nearing ‘bankruptcy,’ when the reality is that his own economic policies are bankrupting our nation, immorally forcing our children and grandchildren to pay this generation’s bills, and threatening our long-term national security.
“Democrats are committed to restoring fiscal discipline to the federal budget process by returning to the pay-as-you-go policies which produced budget surpluses in the 1990s. The President’s budget seems to be little more than a public relations gimmick that permits the Administration to masquerade for a day as fiscally responsible.”
Pelosi: 'President's Budget is Fiscally Irresponsible, Morally Irresponsible, and a Failure of Leadership'
Washington, D.C. -- House Democratic Leader Nancy Pelosi released the following statement today on the $2.5 trillion Fiscal Year 2006 Budget submitted to Congress by President Bush this morning:
"The President's budget is fiscally irresponsible, morally irresponsible, and a failure of leadership. Democrats insist upon fiscal discipline with budgets that pay as you go, and over the coming months, we will fight for a budget that reflects the values of America’s middle class: national security, prosperity, opportunity, fairness, community, and accountability.
"The two issues that dominated the President's State of the Union Address -- Iraq and Social Security -- are nowhere to be found in this budget. We know that the cost of military operations in Iraq and Afghanistan will cost billions this year, but those costs are not accounted for in this budget. Independent experts estimate the President's proposal to privatize Social Security will cost trillions in coming decades, but it is not accounted for here.
"Further, the budget should be a statement of our national values, but this budget is an assault on our values. It is an American value to guarantee our national security, but the President's budget cuts funding for first-responders and forces veterans to pay more for the health care they have earned. It is an American value to promote safe communities, but the President's budget slashes community policing initiatives. It is an American value to promote opportunity, but the President's budget eliminates 48 education initiatives and slashes funding for health care. Finally, it is an American value to promote accountability, but President Bush's budget is deeply and dangerously lacking in fiscal discipline. It does nothing to address the record deficit of $427 billion.
"The President wants to take credit for the courage to cut programs, yet he does not have the courage to admit his tax cuts for millionaires were a mistake. The cost of making his tax cuts permanent will be $2 trillion in additional debt passed on to future generations. The President's fiscal recklessness is a tax on the future."
I'm actually a little surprised Vice President Cheney said this. But if he wants to be upfront about the folly of his administration's proposal, who am I to complain?
This from Fox ...
"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.
As the Fox interviewer, Chris Wallace, made clear in the interview, the $758 billion number is itself the product of a little numerical flimflam. As Wallace says at one point in the conversation, "Isn't that misleading? Because under your plan, the accounts, the program wouldn't actually start til 2009. So, if you take the first full 10 years, when people can actually invest in the program, the cost is over $1 trillion, and for the following 10 years, it's $3.5 trillion. Isn't it a lot more expensive?"
In fact, I think it's considerably worse than Wallace says. But let's leave that aside and assume it was only what Cheney says.
As we've noted repeatedly here, the biggest threat to Social Security is our accumulated national debt -- actually, even more our accumulating national debt. If we only had the debt load we have now and weren't adding hundreds of billions of dollars every year because of the president's policies, we could probably grow our way out of it.
In any case, indebtedness is our problem. And Cheney's solution is to borrow many trillions more dollars over the next two or three decades, in addition to our existing structural budget deficits which are likely themselves unsustainable. And he and the White House now admit this will do nothing to improve the financial condition of Social Security.
Following any reasonable calculation the entire debate should end right there -- though I concede that rational calculation ain't what it used to be.
Look what we hear from the administration's own collective mouth. Their solution to the problem does nothing to solve the problem -- not me saying it, them saying it. However, it does cost trillions of dollars. In fact, it will cost -- by their own estimation -- much more over the next 20 years than it would to keep Social Security going strong for the next 75 years.
At what point does this proposed policy collapse under the weight of its own ridiculousness?
Priorities
Posted by jesselee
Monday, February 7, 2005 at 9:26 AM
High priority:
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.
Low priority:
President Bush plans to unveil a $2.5 trillion budget today eliminating dozens of politically sensitive domestic programs, including funding for education, environmental protection and business development, while proposing significant increases for the military and international spending, according to White House documents.
Josh Marshall elaborates on Cheney's remarks.
UPDATE: Ah, and what a surprise, Bush finds a bird of his feather...
A coalition of the most conservative House Republicans, the Republican Study Committee, showed its clout by luring House Majority Leader Tom DeLay (R-Tex.) to a retreat in Baltimore on Friday for luncheon remarks urging them to stick to their principles on budget and social questions. He drew a standing ovation -- at least the third he has received from House Republicans in the past two weeks, despite the possibility of future legal trouble.
You remember our pals in the Wingnut Caucus...
No HOPE in Bush Budget
Probably not a surprise, but for the third straight year, President Bush’s proposed budget would eliminate HOPE VI (Housing Opportunities for People Everywhere), a public housing program developed in 1992 for the purpose of eradicating “severely distressed public housing.” The program replaces severely distressed public housing projects, occupied exclusively by poor families, with redesigned mixed-income housing and provides housing vouchers to enable some of the original residents to rent apartments in the private market. According to the Department of Housing and Urban Development’s (HUD) own web site, HOPE VI “serves a vital role in…efforts to transform Public Housing.”
In its FY 2004 and FY 2005 budget submissions, the White House proposed eliminating HOPE VI, but in both years Congress maintained the program, with substantial funding cuts.
Knowing the program was on the chopping block, the non-partisan Urban Institute sponsored an extended study of Hope VI in 2004, examining the program’s results over its decade-long existence. President Bush likes to say his budget focuses on programs that get results - here’s what the Urban Institute had to say about the program’s results:
“Launched in 1992, the $5 billion HOPE VI program represents a dramatic turnaround in public housing policy and one of the most ambitious urban redevelopment efforts in the nation’s history….Since 1992, HUD has awarded 446 HOPE VI grants in 166 cities. To date, 63,100 severely distressed units have been demolished and another 20,300 units are slated for redevelopment (Holin et al. 2003). As of the end of 2002, 15 of 165 funded HOPE VI programs were fully complete (U.S. GAO 2003b). The billions of federal dollars allocated for HOPE VI have leveraged billions more in other public, private, and philanthropic investments.”
The Urban Institute stresses that, despite some administrative shortcomings, HOPE VI remains “the only major source of redevelopment funding” in HUD’s budget. “In our view,” the study concluded, “evidence strongly supports continuation of the HOPE VI approach as a way to improve outcomes for distressed developments, residents, and neighborhoods.”
In 2005, the program was funded at an estimated $143 million, significantly less than the U.S. is currently spending each day in Iraq. President Bush is proposing zeroing out the program. In other words, we will soon have spent $200 billion on reconstruction in the Middle East, but can spare precisely zero dollars to rebuild at home.
GEARing Down
When President Bush used his State of the Union address as a bully pulpit to declare the fiscal and social responsibility of his fiscal year 2006 budget, he announced substantial reductions or eliminations of “more than 150 government programs” that were “not getting results” or “not fulfilling essential priorities.” With his decision to cut the GEAR UP education program, one must wonder how this president defines results and what he sees as our nation’s priorities.
Since its introduction in 1998 by Congressman Chaka Fatah (D-PA), Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) “has provided 1.3 million [low-income] children the opportunity to go to college.” The program works by targeting children in middle school and sticking by their side until college, developing them academically, professionally and socially. By bringing a multitude of resources together - “parents, educators, business, labor, and community organizations” - the GEAR UP program weaves a tightly knit safety net for disadvantaged students across the nation who often slip through the cracks of our slipshod educational system. The success stories from the GEAR UP program’s website epitomize the goal of bringing hope to those whom many considered to be hopeless. It makes college a reality for those who had not previously even dared to dream of it.
By gutting the GEAR UP program in his 2006 budget, President Bush has unsurprisingly fallen short in delivering on the promise that taxpayers’ dollars would “be spent wisely or not at all.” Worse still, he has once again failed our nation’s future generations.
UPDATE: This article on a recent survey that found “public high schools are failing to prepare at least 40 percent of graduates for higher education or an entry-level job” provides even more evidence that GEAR UP is as important now as ever.
Job Training Left Behind
One of the President Bush’s low moments in the third presidential debate came when he was asked about his opposition to raising the minimum wage. Here was his answer:
“…let me talk about what’s really important for the worker you’re referring to. And that’s to make sure the education system works. It’s to make sure we raise standards. Listen, the No Child Left Behind Act is really a jobs act when you think about it.”
Bush was panned for this response and others during the debate, in which he repeatedly referred to No Child Left Behind (NCLB) as if it were a job training program. It’s not of course (especially “when you think about it"). It’s an underfunded education initiative which involves a lot of tests for kids in grade school. NCLB’s merits for grade school kids can be debated, but there is no evidence whatsoever it has helped anybody get a job. It would be one thing if Bush talked about NCLB in connection with other efforts to improve job training, but he doesn’t. He means it as a substitution for those efforts.
He won the election so he must think this is an appropriate substitution. Here Bush is at the State of the Union:
“To make our economy stronger and more dynamic, we must prepare a rising generation to fill the jobs of the 21st century. Under the No Child Left Behind Act, standards are higher, test scores are on the rise, and we’re closing the achievement gap for minority students.”
Regardless of whether NCLB actually has had these effects, these two sentences are only tangentially related. “We must prepare a rising generation to fill the jobs of the 21st century” should have been followed by, “so I’m going to improve job training by…” Today we learn why that option was closed to the president - his budget really doesn’t care about filling the jobs of the 21st century, (from a generous description of the president’s job cutting proposals in the Wall Street Journal):
“In the budget for fiscal 2006, which begins Oct. 1, the White House will propose combining four Labor Department jobs programs and reduce spending to $3.9 billion from the $4.1 billion appropriated for the current fiscal year. The programs cover adults, youth and dislocated workers, as well as employment-service centers.
The White House also will propose allowing governors to combine federal-funding streams that go to five other programs that serve many of the same groups through the Labor, Education and Agriculture departments. For these programs, Mr. Bush proposes to spend $3.6 billion in 2006, down from $3.9 billion in 2005.”
No word on how these moves will affect eighth grade reading scores.
This comment has been removed by a blog administrator.
washingtonpost.com
A Breathtaking Budget
Tuesday, February 8, 2005; Page A22
THERE ARE TWO ways to treat a president's budget proposal. The realistic, even cynical, method is to unmask the various bits of budget gimmickry involved, to assume that some aspects are dead on arrival, and to view the document as the administration's opening gambit in a long political chess match. The other is to take it seriously, as the administration's idealized vision of what government should be. Either way, the fiscal 2006 budget proposed yesterday by President Bush is breathtaking -- in the first approach as farce, in the second as tragedy.
First, the farcical aspects: To meet its claimed target of cutting the deficit in half by 2009, the new budget omits the cost of the war in Iraq; the cost of the president's proposed private accounts for Social Security; and the cost of correcting the alternative minimum tax, which is hitting growing numbers of middle-class taxpayers rather than the rich it is intended for.
To make its already unaffordable tax cuts permanent, the administration wants to change the budget-scoring rules so that the cuts show up on the score card as cost-free. In fact, making them permanent would cost $1.1 trillion over the next 10 years. To obscure the real-world consequences of its unrealistic spending caps for discretionary programs, the administration has neatly avoided the inconvenience of specifying where, in future years, the necessary cuts would be made. It eliminated the traditional tables from the budget documents showing what spending would be in those programs beyond next year.
As to the tragic: Budget austerity is wise, but cuts as draconian as the administration proposes are not necessary and would fall too heavily on those who can tolerate it least. Under the administration's discretionary spending caps, spending for defense and homeland security would be permitted to grow, as it must; for example, military spending (and this doesn't include the costs of war in Iraq) would rise from $400 billion this fiscal year to $419 billion in 2006 to $492 billion in 2010. By contrast, other discretionary spending would be trimmed, from $391 billon this year to $389 billion next year and frozen at that level through 2010. Given expected inflation, this would mean a cut, in real terms, of 14 percent by 2010 in such areas as housing, environmental protection, education and transportation.
If implemented, this would bring a dramatic restructuring of federal spending. In 2002, spending for programs other than defense and homeland security accounted for about half of discretionary spending; by 2010, that would fall to just 42 percent. Interest payments on the national debt would amount to just $75 billion less. The administration also wants to make cuts in entitlement spending -- some of them laudable, albeit politically unlikely, cuts in agricultural subsidies, others more worrisome, particularly the $45 billion over 10 years that is to be cut from Medicaid, the shared federal-state health care program for the poor and disabled. Food stamp benefits would be eliminated for 200,000 to 300,000 people, and a freeze in child-care funding would cut the number of low-income children receiving help by 300,000 in 2009.
The administration and its allies depict these cuts as the unhappy but inevitable consequence of tough budgetary times. "This is not a time when we can have guns and butter in excess. We're going to have a fair amount of butter," said Senate Budget Committee Chairman Judd Gregg (R-N.H.). "But it's just not going to be at the level that it might have been in the past if we weren't at war." This maddeningly blinkered mindset ignores the impact of the Bush tax cuts, which were at once unaffordable and tilted to the wealthiest Americans. Next year alone, the cost of the administration's already enacted tax cuts will be $192 billion, not including added interest.
"It's a budget that sets priorities," Mr. Bush told reporters yesterday. That it does. The problem is that some of those priorities are flat wrong.
Snarky McSnarkerson Examines the Bush Budget
Another bit of appalling news released on a day when no one will be reading it:
Bush has said his budget will assemble federal resources for war, domestic security and other priorities and cull inefficient or redundant programs. Administration officials have said he will hold overall nondefense spending — excepting domestic security — to less than next year's expected 2.3 percent increase in inflation, meaning the programs will lose purchasing power.
You might be wondering, as I was, what the “inefficient or redundant programs” to which Bush was referring are. It turns out, his choices finally clear up what he really means by “compassionate conservative”—basically, conserving all your compassion in favor of pork barrel spending and unjust wars. Let’s take a look:
The budget, the toughest he has written since entering the White House four years ago, seeks about half the increase for school districts in low-income communities he requested last year and a slight reduction for the National Park Service.
First of all, perhaps if he had written a reasonable budget in any of the last four years, or made any attempts to control the outrageous spending in Congress, we might not even be having this discussion. Secondly, I wonder if, per chance, giving less money to poor schools might actually end up leaving a child or two behind…?
The details obtained Saturday are the latest in a budget that will also seek savings from programs ranging from Amtrak and farmers' subsidies to Medicaid, the federal-state health program for the poor and disabled.
Well, that’s fair enough. We’ve been spending way too much money on health programs for the poor and disabled for years. We probably ought to just euthanize them. Sure, the upfront costs for the crematoriums will be kind of hefty, but once they’re built, they’ll be paying for themselves with all the money they save us in funding health programs for the poor and disabled. One, two generations max, and we’ll probably be turning a profit.
According to figures obtained by the AP, Bush would slice a $600 million grant program for local police agencies to $60 million next year. Grants to local firefighters, for which Congress provided $715 million this year, would fall to $500 million.
That’ll teach ya to make heroes of yourselves during a terrorist attack which will later be cynically used as the centerpiece of an opportunistic and exploitative presidential campaign.
He would eliminate the $300 million the government gives to states for incarcerating illegal aliens who commit crimes. It's a proposal he has made in the past and one that Congress has ignored. Also gone would be assistance for police departments to improve technology and their ability to communicate with other agencies.
Dear Red States: How you feeling about your choice of who will keep ya safer now? Love, Shakespeare’s Sister
The Environmental Protection Agency's $8.1 billion would drop by $450 million, or about 6 percent, with most of the reductions coming in water programs and projects won by lawmakers for their home districts.
Drinking water schminking water. Who needs it? Especially when the Kool-Aid is so widely available for mindless consumption.
The Bureau of Indians Affairs would be sliced by $100 million to $2.2 billion. The reduction would come almost entirely from the agency's effort to build more schools.
Who needs schools when you’ve got tribal sovereignty?
The $2.2 billion program that provides low-income people — in large part the elderly — with home-heating aid would be cut to $2 billion.
See: health programs for the poor and disabled. Also, with the polar icecaps melting, I’m sure there are plenty of little icebergs available on which we can send the elderly out to sea.
The park service's budget would drop nearly 3 percent to $2.2 billion, largely due to a reduction in its construction account.
The problem with expanding national parks is that, if you ever want to drill for oil in one, it becomes, like, this huge hassle. So better not to build them at all anymore, in case we want to rape the land for its natural resources instead.
There is, as one would expect, some good news, too:
The Coast Guard — now part of the Homeland Security Department — will get $8.1 billion, $600 million over this year. Included will be a healthy increase for its plans to buy more oceangoing vessels, a boon to the new chairman of the Senate Appropriations Committee, Sen. Thad Cochran, R-Miss., in whose state many of the ships are built.
That’s great. I’m really happy for Thad. And now when he’s puking up the gallons of cum he swallowed getting that “healthy increase,” he can just blame it on seasickness as he stands astride the decks of one of our brand spanking new oceangoing vessels.
Community health centers would grow to over $2 billion, an increase of $304 million, or almost 18 percent, over this year. Bush said he wants to every poor county to have one of the centers, which are used heavily by the poor.
Because they don’t have jobs or insurance. But hey—a community health care center is just as good for treating malnutrition or patching up a slit wrist as a fancy schmancy hospital.
Many proposals face an unclear fate in Congress, where members of both parties are sure to defend favorite initiatives. Democrats blame the cuts on the tax reductions Bush has enacted and say that other items his budget omits — a Social Security overhaul and costs for wars in Iraq and Afghanistan — will only make matters worse.
"What it will lead to is growing pressure for draconian cuts," Sen. Kent Conrad of North Dakota, the Senate Budget Committee's top Democrat, said Saturday. "It's inescapable, the course he's led us on, whether it's this year or next year, is for very, very heavy cuts."
Oh, these aren’t heavy cuts? Never mind then.
The federal budget is not just an accounting tool--it's a statement about our nation's values and priorities. This week, Bush released a budget that Representative Jan Schakowsky calls a "weapon of mass destruction."
It would drastically underfund domestic initiatives, from education to children's healthcare to homeless shelters to support for small businesses. The vast majority of Americans will be asked to sacrifice, with one exception: the millionaires who can afford to give something up. Their tax cuts--the same tax cuts that brought us unprecedented deficits--would be protected and likely even extended under Bush's proposal.
Bush's reckless policies are mortgaging our country's future. When he took office, the budget had a projected 10-year surplus of $5.6 trillion. We now have a more than $3 trillion deficit. That $9 trillion swing is the largest fiscal reversal in US history.
These are not the right priorities for our nation. It is not only fiscally irresponsible, it is morally wrong to cap spending for the most vulnerable and the weakest among us--children, seniors, veterans, the poor and the working class--while pursuing tax cuts for the wealthiest without limits or restraint.
As a new project of the invaluable Center for Community Change points out, Bush once promised that as a country, "When we see that wounded traveler on the road to Jericho, we will not pass to the other side." But his budgets have never matched that rhetoric, as a new TV ad produced by the Center makes clear.
This week, the Center is launching an ad campaign to engage voters in the "red" states of Missouri and Tennessee; the spot will also run in Washington, DC so the nation's decision makers will see it. The ad, titled "Jericho," focuses on the biblical language that Bush has used repeatedly to depict himself as a compassionate conservative and questions whether Bush's budget reflects the moral values of a compassionate man.
It's time to hold Bush accountable for those "wounded travelers." As Deepak Bhargava, executive director of the Center writes, "We cannot allow this nation to cross to the other side." (Click here for more info about the CCC and click here to help support its ad campaign.)
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