More on Those Budget Cuts

While we have been distracted on the leak investigation Congress has been working assiduously to cut Federal spending. The rationale, of course, is that with a very large and intractable deficit, we have to exert discipline or ‘make painful decisions’ in order to correct the problem. As I have said before this is a sham. The problem lies not in the amount spent, except in the pork barrel transportation bill and its infamous ‘bridge to nowhere’, but rather in the amount collected. Federal revenues as a percentage of total GDP [Gross Domestic Product, which is the measure of the size of economy] are at a post World War II low. Spending is not at a historic high, but has risen sharply since Bush took office. For those who like their numbers: revenues in 2005 are at 16.82% of GDP, down from 20.86% in 2000; while spending has risen from 16.13% to 18.62% over the same period. When you include the impact of interest on the national debt, which has actually shrunk as a percentage of the economy because of the low interest rates recently, the budget has gone from a surplus to a deficit in just a few years. The main reasons are the Bush tax cuts which account for about half the decline, and rising defense spending which accounts for a further third. Domestic spending programs account for only a sixth of the shift to deficit, yet they occupy the entire focus of the Republican budget planners. Programs such as special education, the environment, children and families programs, housing vouchers for the poor, and vocational education are all to be cut. Particularly galling is the planned cut in home energy assistance for the poor which is being slashed by 12.7% right as energy prices are rising sharply. There could not be a clearer statement about Republican Party priorities than a cut in energy assistance as heating costs rise dramatically! All this cutting hits the poor and working class, so they are being asked to bear the burden of the tax cuts the wealthy received over the last few years. Oh … and did I mention that as these cuts a being made to help ‘improve’ the budget, the exact same Finance committees are contemplating the continuance of some $70 billion of tax cuts that were due to lapse? Yes that’s right. Those cuts in heating for the poor will be swallowed by tax cuts for the rich. That’s getting your priorites right!