- The Washington Times - Saturday, March 19, 2005

Republicans ran the table in the November presidential, Senate and House elections, but the governing party has had difficulty enacting fiscal restraint worthy of the term. The fiscal 2006 budget season began with a flop, and, based on what the GOP-controlled Senate and House did this week in crafting their five-year budget resolutions, the 2006 budget season continues downhill.

The Senate’s Republican majority increased by four seats in the November elections, rising to 55, but one would be hard-pressed to tell the difference after examining the upper chamber’s 2006 budget resolution. Indeed, several modest proposals to restrain the growth of entitlement spending were reversed by amendments that were supported by more than a handful of Republicans. Then, the proposed five-year tax cut was virtually doubled to $134 billion.

Meanwhile, by a narrow 218-214 margin, the GOP-controlled House, which now has more Republicans than at any time since Harry Truman was president, squeezed out its own budget resolution, which managed to reduce the growth of runaway entitlement spending over five years by $69 billion. That was $51 billion more than the Senate’s five-year entitlement-growth reduction of $18 billion.

The fiscal follies began when President Bush submitted his 2006 budget. On the first page of the “Overview of the President’s 2006 budget,” the administration proclaimed that “the 2004 deficit came in $109 billion lower than originally estimated [at $521 billion.]” Never mind that the fiscal 2004 budget deficit set a nominal record of $412 billion during a 12-month period when the unemployment rate averaged a near-full-employment level of 5.6 percent.

In fact, however, in its fiscal 2002 budget, which included more than $1.6 trillion in tax cuts over 10 years and an associated $420 billion increase in debt-service costs, the administration “originally estimated” that fiscal 2004 would have a $262 billion surplus. And five months after September 11 and nearly two years after the S&P; 500-stock index peaked, the administration still projected a paltry 2004 deficit of $14 billion. It wasn’t until fiscal 2004 was more than a third over, in February 2004, that the administration offered what some budget analysts called a high-ball 2004 deficit projection of $521 billion. That’s the figure the White House now embraces as the standard by which it wants to be judged in its pledge to cut the deficit in half by 2009.

The 2004 deficit fiasco was the least of the smoke and mirrors that appeared in — or, as the case may be, disappeared from — the president’s 2006 budget. Apart from a small portion of the $82 billion 2005 Iraq-related supplemental, which had not even been released yet, the fiscal 2006 budget contained no money for the costs of military operations in Iraq and Afghanistan.

Nor was a dime allocated for 2006 or later to finance the administration’s long-standing commitment to alleviate the Alternative Minimum Tax (AMT), which threatens to engulf more than 20 million taxpayers in 2006, more than five times the number expected to be snared by the AMT in 2005. The Congressional Budget Office has estimated that fixing the AMT will cost nearly $700 billion over 10 years, excluding interest. Fortuitously for the administration, its proposal to borrow $754 billion through 2015 to finance personal retirement accounts was released too late to be incorporated into the 2006 budget.

The small reductions in the growth rates of entitlement spending that did make their way into the president’s budget were mostly neutralized by the Senate. Mr. Bush proposed reducing the growth rate of entitlements over five years by $51 billion, which the Senate initially chopped to $32 billion, including a $14 billion cut for Medicaid. Then, the Senate passed an amendment restoring the $14 billion spending for Medicaid, reducing its five-year entitlement adjustment to a mere $18 billion. The Senate also passed amendments that added an extra $5.4 billion for education. Another amendment effectively chopped two-thirds of the cuts from the president’s proposals for agriculture and nutrition programs.

The Senate’s refusal to adequately address entitlement growth puts its budget on a collision path with the House budget, which called for reducing the growth of entitlements by $69 billion over five years, including $20 billion for Medicaid. If the two chambers cannot reconcile their differences in conference, then a bright spot in the Senate resolution — its authorization to explore for oil in the Arctic National Wildlife Refuge — will go down the drain.

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