Monday, June 30, 2003

Federal outlays jumped by $222 billion in President Bush’s first two years, a spending increase that is expected to accelerate under the administration-backed $400 billion prescription-drug bill that is speeding through Congress.

Much of the spending increases have been for defense and the war on terrorism at home and abroad, according to White House and congressional budget analysts.

The two-year increases represent 1 percent of the economy’s annual gross domestic product, four-tenths of which was devoted to national security.

But outside spending critics, and even some officials within the administration, still say overall spending is rising too fast and that the Medicare bill to subsidize prescription-drug costs for the elderly will substantially expand the size and scope of government.

“Spending of all sorts is rising at a very rapid rate I figure that discretionary spending was up by more than 15 percent this year. That’s a pretty good clip,” said Robert Reischauer, former director of the Congressional Budget Office.

Overall annual spending under Mr. Bush over the past two years has gone from $1.789 trillion in fiscal 2000 to $2.011 trillion in 2002, according to congressional budget officials.

The White House projects that spending will rise to $2.2 trillion in the 2004 fiscal year, which begins Oct. 1.

But budget officials say those dollar amounts do not fully measure the growth in spending. They prefer to measure spending increases as a percentage of the total size of the economy, or its gross domestic product. In 2000, President Clinton’s last year in office, total outlays accounted for 18.4 percent of the GDP. By 2002, the budget consumed 19.5 percent of the GDP.

A large chunk of overall spending increases was for national defense, which rose from 3 percent to 3.4 percent of GDP and now totals nearly $400 billion.

“Spending has gone up roughly a full percentage point of GDP under Bush. And about four-tenths of a percentage point is in national defense alone,” a senior House budget official said.

Democrats have been loudly complaining that domestic social welfare spending has been cut under the Bush administration.

But congressional budget officials say that over the past two years such spending for education, job training, unemployment assistance, Medicare, Social Security, veterans benefits, food stamps and other “human resources” has risen from 11.5 percent of GDP to 12.7 percent.

The impending prescription drug bill, with its huge 10-year price tag and the historical trend that Medicare entitlement costs outpace the initial predictions, has prompted a round of worries abouy Bush administration spending.

The prescription-drug bill “won’t break the budget, but it sure is not going to help any,” said a dismayed administration official on the condition of anonymity.

“There’s a growing concern about big government, but it has nothing to do with the deficit. It has everything to do with expanding the size and scope of government,” said Michael Franc, vice president for governmental affairs at the Heritage Foundation.

The size of the pending prescription-drug entitlement tied to Medicare is not the only spending that has stirred deepening concerns at such conservative think tanks as Heritage and at budget-watchdog groups.

They point to $3.5 billion in a refundable, add-on child tax credit for families who pay no income taxes, which the White House supports, and a massive $360 billion highway bill, which it opposes, as symptoms of spending that is speeding out of control.

“The rumblings are beginning to be heard a little bit more, on the radio talk shows,” said Tom Schatz, president of Citizens Against Government Waste. “They really don’t blame the president for the increases in the deficit. They know it’s the Congress that is doing the spending, especially the Senate” where Republicans have a one-vote majority.

The administration has increased spending in several high-visibility, politically sensitive areas, including the Department of Education, though the increase there was $10 billion less than the Democrats wanted.

Mr. Bush also has raised spending for veterans benefits, medical research and a multitude of homeland defense programs to combat terrorism.

Democrats maintain that under the Clinton administration spending was kept under control and that this helped produce the sizeable surpluses in the last half of the Clinton years. Total outlays fell under Mr. Clinton, from 22.2 percent of the GDP to 18.4 percent of the GDP in 2000.

But Republican Budget Committee officials say that one of the biggest reasons for that was the sharp decrease in defense spending during the Clinton years.

Still, administration supporters on Capitol Hill argue that Mr. Bush’s $1.7 trillion in tax cuts will reduce the expected flow of federal revenues and thus eventually slow the rate of spending over the coming years — as happened during the Reagan administration.

“The bottom line is that the Republicans and the administration have created a situation where the government does face future revenue constraints that will ultimately translate into spending restraints,” a House Republican budget analyst said.

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