Forbes: "Budget To Nowhere"

Forbes.com

http://www.forbes.com/business/2008/02/04/bush-budget-congress-biz-beltway-cx_bw_0204budget_writethru.html

The Budget
Budget To Nowhere
Brian Wingfield, 02.04.08, 3:50 PM ET

Despite his pledges to curb government spending, President Bush will
exit the White House next year leaving behind an eye-popping federal
deficit that tops $400 billion. And that's just one of the shocking
revelations in the president's $3.1 trillion budget request to
Congress for fiscal year 2009, which the White House unveiled Monday.

In addition, the president has proposed to freeze or cut more than 151
discretionary programs, boost defense spending and implement drastic
reforms to entitlement programs, including a $178 billion reduction in
Medicare during the next five years.

"Good intentions alone do not justify a program that is not working,"
Bush said in his budget message, referring to the cuts in
discretionary programs.

Bush's final budget request is perhaps the unofficial start of the
"lame-duck" portion of his presidency. There will be a protracted
battle over spending issues during this election year, when lawmakers
like to ruffle as few feathers as possible.

When Fiscal Year 2008 draws to a close Sept. 30, Congress could pass a
resolution to fund the government at its current levels until after a
new president is elected--effectively cutting Bush out of the picture.

"This budget will be quickly forgotten," says Sen. Kent Conrad, D-
N.D., chairman of the Senate Budget Committee.

For that reason, the component that won't be forgotten--the deficit
increase--is immediately grabbing headlines. For 2008, the federal
deficit is expected to soar to $410 billion, up from $162 billion in
2007. The reasons: a projected $146 billion stimulus plan to
invigorate the economy, a one-year plan to keep the Alternative
Minimum Tax from drastically expanding, reduced corporate tax receipts
and increases in defense and emergency spending. The administration
projects the FY2009 deficit will be $407 billion, about 2.7% of U.S.
gross domestic product.

Still, Bush says his proposal will balance the federal budget by 2012.
The White House wants to cap non-security discretionary spending
growth at less than 1% for 2009 and hold it at that level through
2013.

Among the cuts the administration wants to implement: elimination of
the Agriculture Department's single-family-housing direct loans,
termination of the Centers for Disease Control's preventative health
services funding and reduction of the Homeland Security department's
funding for state and local programs by 46%.

The White House estimates that these and other reductions in
discretionary spending would save $18 billion in FY2009 alone.

Reform of entitlement programs is expected to save $16 billion in 2009
and $208 billion over the next five years, the White House says. As
much as $178 billion of this savings would come from Medicare
reductions. The president also wants to implement a standard health-
insurance tax deduction of $7,500 per person, a deviation from the
current tax exclusion for employer-sponsored insurance.

In an echo of a past policy failure, Bush has proposed that Social
Security be reformed to allow workers to use up to 4% of their Social
Security earnings to fund personal retirement accounts. The
contributions, which would begin in 2013, would be capped at $1,400
per worker during the first year and would be allowed to gradually
increase until 2018.

The president has also proposed to make permanent the tax cuts he
championed in 2001 and 2003.
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