(Archived document, may contain errors)
2/10/92 322
THE BUSH BUDGET: AUDIT #1 REAL INCREASES, PHANTOM I CUTS
Despite their pro forma'criticism of the Bush Administration's
fiscal 1993 budget, leading Democrats in Con- gress have not
immediately declared it "dead on anival," as they have previous
budgets. One reason: despite talk of cut s by the White House,
domestic spending is on track to increase m ibre during four years
of George Bush 'than during twelve years of Jimmy Carter and Ronald
Reagan. This meahi; that there am more taxpayer dollars --than
expected to fund Congress's pet pro j ects. But skillful White
House accounting tricks cover up this fact. The Administration
claims that it is keeping spending growth in line. Although total
federal spending tops $1.5 trillion, says Office of Management and
Budget (OMB) Director Richard Darm a n, this is only 2.8 percent
(or $41.6 billion) higher than the fiscal 1992 budget. This claim
is deceptive. For one thing, the Administration makes use of actual
reductions in defense spending and the costs of bailing out failed
Savings and Loans (S&Ls) t o mask huge increases in domestic
spending. When the mask is removed, ho@vevdr, -total domestic
spending in fiscal 1993 (excluding the S&L bailout costs and
not interest costs on the federal debt) climbs to $907 billion, -
up nearly $52 billion-or 6.0 perc e nt-over fiscal 1992. The Ekish
Elinge: Domestic Worse still, even after adjusting for inflation
this record Spending Has Grown More Than level of domestic spending
is more than 23 piercent higher Under ' Carter, Reagan Combined
..than domestic spending in Ronald Reagan's last budget in
Parcentaos Inoreales In Dow."fic ftending fiscal,1989 (again,
excluding S& L bailout and net interest 25%_/ ... costs). B'
comparison, total domestic spending grew by X.: y only 22 percent
in real terms between 1977 and 1989 . .... ......... 20%_ Spending
Binge. If his 1993 budget becomes law, Bush will have increased
domestic spending by an average of ............ nearly $37, billion
per year, after adjusting for inflation. ,This is-not only seven
times the average under Reag a n, but .............. .. 10%_, also
is double the annual average of $19 billion under Jimmy Carter.
Maintgining.the official pretense that spending is being 5%-' State
of the Union message that N cut, Bush declared in his A
.............. we must get the f ederal deficit under control." And
Ad- . . . . . . . . . . . . . . . . . 0%2 @P= ministration
officials point out that the budget eliminates Carter Reag Carfor
and Bush 246 "unjustified programs" and reduces spending on 84 114
Years) (6 fta9an (4 Waris) ( 1 111 Veare) others. What these
officials omit telling taxpayers is that 1"te. Increase represents
overall increase In domestic sperding these savings 'go to finance
higher spending in 177 other over tum term ot pneeldancy. in
constant i9ae dollars. J p gra ms. Sourcei Budget of the U&
Government. FY.1903. Harlts"Doeftwt ro
To pull off this slight-of-hand, Bush budget officials are taking
advantage of taxpayers' ignorance of two ar- cane budget terms:
budget authority and budget outlays. Budget authority is like the
line of credit a bank or a credit card company might give a
customer. Just as the customer can make, purchase commitments under
a line of credit, so budgetauthority allows federal agencies to
commit themselves to now spending. Outlays, by contrast, am the
annual disbursements. These are the same as checks written b y a
family. Increasiqg Outlays. What the Bush budget does is freeze
budget authority for domestic discretionary pro- grams at the same
level as fiscal 1992,. roughly $203billion. But at the same time,
it allows domestic discretion- ary outlays to grow by $ 8.5 billion
in fiscal 1993 or about 4 percent. Thus in fiscal 1993 the savings
achieved by eliminating or reducing spending for 330 programs
totals.$13.1 billion in budget authority-but only $1.5 billion in
outlays. Meanwhile, 177 programs-'receive increa s ed fund- ing.
Although this costs the -government roughly $13 billion in budget
authority- Bush Cuts Budget Authority, equal to that "saved"-from
the eliminations- But Outlays Gfow outlays will increase. by $9.7
billion. So.al- though the line of credit s t ays the same, the net
amount of checks written goes. up $8.2 billion.1 The increases in
program funding are de- Reduce'---M'7IXW fended as part of
the-President's economic Total growth package,. intended to
jump-start the economy. But while certain types o f govern- EIJI
ment spending may contribute somewhat to Not. Budget Change the
economy's performance, the cost , to,the 11M a# economy in taxes on
borrowing usually off- M111t:111691t 0ovemment.-FY-1993. sets any
benefit. %For example, more money for the S uperconducting
Supercollider certainly will give a boost to the. local -economy
in'Texas, where the proj- ect is located, but the money taken away
from taxpayers in New England to pay -for it will mean fewer jobs
and less growth in that region. Thus the B u sh Administration's
attempt to spend America back to prosperityamounts to little more
than shuffling the deck chairs on an economic Titanic.
Real.Speading. Cuts Needed. There are many "economic recovery".
plans currently swirling around the halls of Congr e ss. Some plans
would pay for cutting taxes on. some income 3 groups -by rai ing
the taxes on another in- coine.-group. Odierplans, like the
President's, would help in some.. waisbu t largely use accounting
maneuvers to suggest to taxpayers that something i s being done..
Each. of these approaches is flawed because each ignores the core
economic problem facing America: runaway federalspending is
draining the lifeblood out of the private sec- tor. A
sound-economic recovery plan must do one simple thing: cut t he
growth in federal spending and return -the money in tax-relief to
ordinary Americans.
Scott A. Hodge Grover M. Hermann Fellow in Federal Budgetary
Affairs
F or further information: Scott A. Hodge, ad, A - Prosperity
Planfor A merica - Fiscal 1993 (Washington, D.C.: The Heritap
Foundation, 1992)
I The budget increases other discretionary programs by $300
million. This unspecified spending, when combined with the $9.2
billion net increase totals $8.5 billion, equal to the overall
increase in damestic discretionarY spending
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