The War on the Budget:
Undermining the Common Good

Friends Committee on National Legislation Newsletter, June 2003


As the military assault on Iraq got underway in March, President Bush and his allies in Congress were already advancing on another battle front: the federal budget. While everyone was distracted by the Iraq war, the Administration charged ahead with a budget plan that would build a global U.S. military colossus, and, at the same time, would ultimately force cutbacks for most other discretionary federal programs. The costs of the expanding "war on terror," soaring military spending, and huge tax cuts, combined with a stagnant economy and the rapidly rising costs of Medicaid, Medicare, and Social Security, will likely plunge the federal government into a fiscal crisis in the years ahead, undermining its capacity to advance the common good.

The legislative maneuvers included enacting a $79 billion emergency spending bill to pay for the wars in Iraq and Afghanistan; enacting a $350 billion ten-year tax cut; and passing military authorization bills that would increase spending to over $400 billion next year. The tax cuts follow the $1.4 trillion ten-year tax cut enacted in 2001, and the President has vowed to fight to make the temporary tax cuts in both laws permanent-which would dramatically increase their cost to the U.S. Treasury. The pending $400 billion military budget would be more than $70 billion larger than when President Bush took office. The President proposes to increase the military budget to over $500 billion per year by 2009, spending more than $2.7 trillion on the military over the next five years.

These were risky maneuvers as the fiscal terrain was already precarious. Reduced revenues due to the stagnant economy and huge previous tax cuts, combined with the sharply rising costs of entitlement programs, already promised deep deficits for 2003 and 2004. Now, with the President's priorities added on, the deficit is expected to pass a record $400 billion this year and could reach $500 billion next year. This year, gross federal debt will likely pass $6.8 trillion-almost two-thirds the size of the U.S. gross domestic product. By 2011, the debt is expected to grow by another $3.6 trillion.

Those in Congress who were supposed to defend the government's fiscal integrity were all too quick to surrender. Now congressional appropriators are wondering how they are going to pay for vital public programs and services. They are concerned there is not enough in the budget to sustain current levels of effort, let alone to meet growing demands during hard times. Yet, the April Budget Resolution requires Congress to cut $10 billion from the President's already meager budget request for non-military discretionary programs.

Who is winning the budget battle? So far, the President, his allies in Congress, military contractors, and the wealthiest households in the U.S. are winning big at everyone else's expense. The top 10 percent of households by income will receive almost 70 percent of the tax cut benefits, according to Citizens for Tax Justice. Middle income tax payers will have to assume a greater share of the tax burden, and the costs of future budget cuts will likely weigh most heavily on those who can least afford it - the disadvantaged, the unemployed and working poor, the elderly, and future generations.

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