A Rosey Scenario With Plenty of Thorns

Imagine a fellow comes to your front door, introduces himself as a candidate for city council chairman, and tells you he has a kick-ass economic plan. The town treasury has accrued a modest surplus, and he's proposing to give it back to the taxpayers of the town. "It's your money," he says. What about using that money, you ask, to build a town library, or renovate the local hospital, or fund an after-school program for disadvantaged youths, or rebuild the decades-old bridge on the far side of town. "It's your money," he says.

You have to admit, he has a point. If the town had collected more revenues than anticipated, why not send it back? You might wonder if this rebate will return a disproportionate amount to the well-to-do--who are well-connected in city hall--than the average working mugs. But the principle has a logic to it. "Besides," he says, "leave it with the members of city council, and they'll just find ways to spend it."

Perhaps you're sympathetic with his proposition. Then he adds, "And I got another idea." He explains he wants to boost the budget of the police department by over 10 percent. "Hold on," you reasonably say, "how are we going to pay for that, right after you eliminated the town's surplus." He replies, "Nothing is too good for our men and women in blue." That doesn't strike you as a responsive answer; you try again: "Will you cut other programs to finance this increase? Or are you planning to dip into the city pension fund for this? Or will we engage in deficit spending and have to borrow money?" He smiles and answers, "Our police force must be second to none." Your frustration mounts, you grab him by the collar and say, "You realize that you're proposing a major addition to the town budget without saying how you will pay for it and that you want to give back the very dollars that could fund this initiative?"

"It's your money," he says. What else is there to do but slam the door on him and send George W. Bush on his way?

While Bush was vacationing--or vacating?--in Texas, pretending to be a plain ol' guy (who owns a spread of several hundred acres and who gets four weeks of time-off after being in a job only six months), new economic numbers made him look as phony as our hypothetical candidate. It turns out that the latest White House budget projections (calculated using questionable accounting tricks and over-optimistic assumptions regarding economic growth) show that the government this year will post a $1 billion surplus, rather than the $124 billion surplus forecasted four months back. Why the change? Bush's tax cut and the economic slowdown. And the picture's the same for next year: another measly $1 billion surplus. A $2 billion surplus is foreseen for 2003, and the new budget forecast shows the ten-year surplus--not counting Social Security and Medicare--has fallen from a whopping $2.5 trillion to a next-to-nothing $38 billion.

Those among us who are not stricken by Alzheimer's should recall that when Bush was promoting his trillion-dollar-plus tax cut--about a third of which will go to the top one-percent of earners--he claimed that it would not gobble up the entire surplus, that there would still be money for new spending, and that there would be no need to dip into the separate Social Security surplus, now estimated at $157 billion. (Both parties have loudly pledged to keep the Social Security surplus in the infamous "lockbox" and not to use it to fund other government programs.) Bush's assertions have all crapped out. The non-Social Security surplus has gone poof, the tax cut has swallowed funds available for new initiatives (such as a fully-funded Medicare prescription drug benefit), and on Capitol Hill there is a growing assumption that legislators might have to tap into--or as they say in Washington, "raid"--the Social Security surplus (after already spending most of Medicare's $28 billion surplus) to cover the cost of the government in the coming year.

Now if Bush were an honest politician--please, no jokes or groans--he could say, "Mission accomplished. I wanted to get rid of the surplus in order to put handcuffs on those spenders in Congress. Maybe even create some deficits to force cuts in social spending programs, like my hero Ronald Reagan did. For if we're going to have new programs, we're simply going to have cut old programs to keep the numbers in line." He could sincerely argue, "It's your money.... and the federal government will have to get by without it, even if that means slashing existing programs." But he didn't say that on the campaign trail, he didn't say that while lobbying for his tax cut, and he's not saying it now. Instead, he and his minions are claiming that the tax cut will "eventually" stimulate the economy and boost the surplus numbers again. But they don't define "eventually." Here's an idea: if Bush truly believes in this eventuality, he should declare, "If 'eventually' does not occur by the start of 2004 and if the budget numbers have not improved, that will mean that I was wrong and, consequently, I will not run for reelection."

Bush and Company insist that the tax cut ain't the problem, it's the spending. As White House mouthpiece Ari Fleischer cracked, "Whatever the surplus, there are people in Washington who are going to try to spend it down to zero. When you look at what's left on the operating side of the budget, it's about $1 billion. That will prevent the politicians from busting the budget and spending more pork and more wasteful spending." There's one problem with this analysis: Bush's own spending. He is asking for an extra $33 billion in Pentagon spending in the 2002 budget. That's a 10-percent raise for the Pentagon--awarded even before Defense Secretary Donald Rumsfeld completes his tip-to-toe strategic review of the US military. (For comparison, this $33 billion hike is greater than the military budget of every country in the world, except for England, Russia, China and Japan.) The White House claims that this request, as part of ten-year $209 billion military build-up, is covered in its latest budget estimates. But the White House projections do note this $209 billion is merely a "first installment," meaning Bush wants to spend more, and this additional amount is not part of the current budget calculations. Moreover, this so-called first installment does not include the tab for his national missile defense pipe-dream, which could run between $100 billion and $200 billion, if not more.

So with the surplus essentially gone, Bush is aiming to spend a lot of money we don't have on the Pentagon and missile-defense. Where will this big-spender get the bucks for this? What programs will he sacrifice for the sequel to Star Wars? He won't say. But he has put military spending on a collision course with the rest of the budget. (By the way, Bush's surplus projections conveniently leaves out an additional $800 billion to $1 trillion in spending and reduced revenue--including further tax code changes--that are likely to occur, with Bush's support. So his current numbers are rosier than a hooker's cheeks.)

No shock here, the Democrats immediately pounced on Bush--like chickens pecking at a dead bird. (The Dems should be so lucky.) Senator Robert Byrd, who chairs the Senate appropriations committee, lashed out at Bush for asserting that the public should pressure Congress not to overspend. "The administration needs to take a look in the mirror and get a clear view on who has done and who is doing the spending." He had in mind the tax cut and Bush's call for more military spending. Other Democrats huffed that Bush had in seven months squandered a decade's worth of surpluses. Yet these critics declined to mention that 12 Democratic senators had voted with the Republicans in favor of Bush's surplus-swallowing tax cuts. In fact, several had even run ads bragging that they had voted in favor of the measure.

The big problem for the Democrats is what to do after they blast Bush. The Miscalculator-in-Chief is an easy target. But do they advocate dipping into Social Security surpluses to fund needed programs? Of course, not. They don't want to be whacked for breaking their lockbox pledge. In the coming budget battle, they're going to spend most of their time and energy pointing fingers at Bush and the Republicans. The GOPers do deserve to be rapped. But the way out of the hole is to undo the damage done, meaning decut the tax cut by repealing the most egregious elements: the reduction in the top tax rate and the eventual repeal of the estate tax. Few Democrats will be willing to lead this charge and risk being branded a tax-lover. Better to stick to the blame-game. It's tougher to argue "it's our money," and we must stop it from being misused on a relieve-the-rich tax cut.

As part of the Official George W Bush Self-Defense Tour of Summer 2001, the president appeared at Harry Truman High School in Independence, Missouri, to deliver a speech. He sternly warned Congress not to increase spending. But he declined to mention his own profligate ways. Give ÎEm Hell Harry had a sign on his desk: The buck stops here. Give 'Em Bunk George should have one of his own: The surplus stops here--and so does common sense.

David Corn, Washington editor of The Nation, writes on a host of subjects, including politics, the White House, Congress and the national security establishment.

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