Wednesday, January 21, 2004

President Bush last night proposed an ambitious package of domestic spending that will drive up discretionary expenditures far more rapidly than his recent predecessors.

The State of the Union initiatives that he wants passed this year include more spending for the Department of Education, a new assistance fund to help manufacturers recover from their recession and funding for a major, long-term expansion of NASA’s space budget.

Early projections indicate passage of Mr. Bush’s proposals will increase non-defense spending well beyond the 4 percent to 5 percent the administration has budgeted for the current fiscal year, nearly double the average annual increases of about 2.5 percent by President Clinton during his two terms.

“One thing that Bush tends to do in these State of the Union speeches, which tends to be counterproductive, is that he has adopted the Clinton style of presenting this shopping list of these programs that will solve every problem that afflicts America,” said Stephen Moore, who heads the Club for Growth which has cheered Mr. Bush’s tax cuts while denouncing his spending increases.

“That only reinforces the concern that he is a big government Republican,” Mr. Moore said last night.

Mr. Bush’s latest proposals might not, in and of themselves, be that egregious, but critics, including conservatives concerned about spending levels, say they follow three years of big spending bills he has signed into law.

They cite Mr. Bush’s failure to ever veto a single appropriations measure — including an expansive farm subsidy bill and last year’s $400 billion Medicare prescription drugs measure, which made him the first Republican president to sign into law a new federal entitlement, as examples of dangerous precedents.

“Thus far, the president has had a lot of specific proposals of where to increase spending, but he has been vague on where to cut spending,” said budget analyst Brian Riedl of the Heritage Foundation. “He has specified increases for education, job training, Medicare, homeland security and corporate welfare, but we’ve only heard vague statements about fiscal responsibility on the spending-cut side.”

“A year ago at this time, the president talked about 4 percent spending growth and we’re about to finish this fiscal year with 9 percent spending growth once the omnibus spending bill passes,” Mr. Riedl said.

The political impact of Mr. Bush’s spending increases remains unclear at this point. His job approval polls going into 2004 range from 53 percent to 58 percent, according to the latest voter surveys. But conservative strategists here say that if he does not show some toughness on spending soon, his core conservative support is going to erode.

The White House is betting that is not going to happen because Mr. Bush has shored up his base support by delivering on several key issues of importance to conservatives. Economic conservatives got a big tax-cut bill they wanted and are cheering the president’s call for letting workers invest part of their Social Security payroll taxes in stocks and bonds and expanding free trade agreements in Latin America.

Social and cultural conservatives saw Mr. Bush sign the partial-birth-abortion bill and support his efforts to enact his faith-based grant proposal and reauthorization of a tougher welfare-reform plan.

“Our support in our conservative base remains strong because we have delivered on their issues,” said a Bush campaign adviser.

Mr. Bush last night also called for making his tax cuts permanent, which Democratic presidential challengers have largely blamed for the growing budget deficit that could total nearly $500 billion before this fiscal year ends in September. The tax cuts will total $1.7 trillion by the end of this decade.

Many of the president’s proposals are seen as election year efforts to court voters, but White House officials regularly cite the tax cuts for spurring stronger economic growth and as the only way to reduce the deficit.

In defense, administration budget officials said that a large part of the spending increases under Mr. Bush have been for the Pentagon, intelligence agencies and in homeland security as a result of the war on terrorism and two back-to-back wars that toppled the terrorist regimes in Afghanistan and Iraq.

White House Office of Management and Budget officials say that when increases for defense, the wars and all homeland-related security programs are subtracted from the spending increases, the Bush spending increases are closer to 4 percent a year.

Mr. Riedl concedes that when these national security budgets are excluded, non-defense discretionary spending that has to be appropriated each year is somewhere in the 4 percent to 5 percent range.

The Club for Growth has put out tables showing that Mr. Bush’s spending is far above the 2.5 percent average annual real increases in domestic discretionary spending under President Clinton. But budget officials said yesterday that the bulk of Mr. Clinton’s budget savings came out of defense spending during his presidency when his administration was entering the post-Cold War period that saw military spending drop dramatically.

“Clinton was taking advantage of rapidly declining defense spending while Bush is ramping up defense expenditures,” Mr. Riedl said.

“Defense and homeland security are important priorities, but fully funding them requires finding savings in nonpriority programs” and Mr. Bush has not been able to achieve any significant savings elsewhere in the government, he said.

According to Mr. Riedl’s analysis, which has been distributed widely on Capitol Hill by spending and deficit hawks, total discretionary spending outlays — defense and nondefense spending — increased by 39 percent between 2001 and 2004.

“These agencies don’t need yet another 4 percent increase on top of that,” he said.

The politics of Mr. Bush’s fiscal policies generally follow in the footsteps of President Reagan who also slashed taxes, sharply boosted defense spending and allowed federal spending to rise from $600 billion in 1980 to nearly $1 trillion by the end of his presidency amid soaring deficits.

Democrats denounced the deficits but Mr. Reagan won re-election in a 49-state landslide in 1984 and left office at the height of his popularity.

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