Winter Budget Blues

"Today because my shadow I see,
six more weeks of winter there will be."

That very day, President Bush released his budget for fiscal 2005, and thus affirmed (to cite another popular poet, Shakespeare) that this would be the winter of our discontent. Democrats in Congress declared:

"Today's big budget is still stingy;
We need more dough domestically."

The President's budget recipe includes all the ingredients needed for controversy and gridlock. The spending proposals seem unrealistically low, and tax policies will certainly come under attack for favoring upper-income people and for depriving the government of revenues it needs.

Consider the spending side first. Federal spending has been growing at a rapid pace, pushed by recession and the 9/11 attacks. Discretionary spending-comprising defense outlays and most domestic programs, but not Social Security, Medicare or other entitlements-grew by 12.8 percent in 2002 and by the same amount in 2003. In the current fiscal year, it's projected to increase another 9.9 percent, says the Office of Management and Budget. Enough is enough, Bush says in his budget, predicting that discretionary spending will peak in 2005, and then decline by 6.5 percent in real terms over the next five years. In constant 2000 dollars, discretionary spending would drop from $824.2 billion in 2005 to $770.7 billion. Domestic programs would absorb virtually all of the decrease.

These spending estimates do not include the full cost of operations in Iraq and Afghanistan during 2005-they have been kicked down the road to a supplemental appropriation (estimate: $50 billion) that won't come until after this fall's election. Moreover, history suggests that Congress will not go along with deep cuts in domestic programs; the pending highways bill, for example, shows that Republicans are as avid as Democrats in busting parts of the Bush budget. And surprises can come too in the huge entitlement programs-as was demonstrated when the administration suddenly discovered that the new prescription drug program was going to cost $135 billion more than estimated in the next five years.

Even with no real increase in domestic discretionary accounts, the budget projects an eye-popping $2.4 trillion in spending for 2005. And that doesn't capture "tax expenditures" worth another $1.5 trillion. The sum of the two figures might be considered the real budget, notes longtime budget critic Stan Collender in a column carried on GovExec.com, observing that "the federal government accomplishes much of what it tries to do through the tax code rather than through spending measures." In the face of large projected deficits, the president is advocating additional tax cuts along with spending over the next five years that would increase the national debt by $1.4 trillion given optimistic estimates of economic growth.

In passing, one might note budget experts' estimates that Social Security, Medicare and Medicaid will double their claim on the economy over the next 35 years, from 8.5 percent of GDP to 17 percent. That huge problem isn't much part of the current budget debate.

Like funding for Iraq and Afghanistan operations, this problem is just kicked down the road. Government Executive readers responsible for delivering federal services in the here and now can certainly be forgiven if, like the political leadership, they see the entitlements crisis as a problem for the next generation. They have enough to worry about in the immediate future. The Joint Chiefs of Staff already have told Congress of their concerns about the mysterious supplemental, and other government leaders likewise will be worrying about gridlock, delay and the seemingly perpetual gap between agencies' missions and the resources available to meet them.

As important as budgets are, many other trends and developments are worth considering, such as these found in the current issue of our magazine:

• The growing reliance of government agencies on a huge database about people-some 19 billion records, assembled by a private firm, ChoicePoint Inc. (see page 30).
• The Pentagon's practice, perhaps about to change, of relying on small business (in a $2.2 billion set-aside) to procure vitally needed satellite air time (see page 56).
• The movement by federal immigration authorities to bolster their own policing capabilities (2,000 agents to monitor some 8 million illegal immigrants) by soliciting help from the nation's 600,000 state and local police officers (see page 38).