Last Thursday I noted in this column that President George W. Bush had finally “acknowledge[d] the corruption and fiscal irresponsibility of the earmark process” when he signed an executive order “directing Federal agencies to ignore any future earmarks included in report language, although not in the actual text of appropriations legislation, which is generally how earmarks receive their designation.” It seemed as though President Bush finally had realized the value of fiscal restraint.
On Monday, February 4, President Bush released his budget proposal for Fiscal Year 2009, which begins October 1, 2008. The $3.1 trillion budget proposal, the first time in history the Federal Government will spend more than $3 trillion in a 12-month period, is a disappointment for those who thought fiscal restraint would prevail. The budget proposal does contain some positive features but also would increase the deficit significantly.
Among the praiseworthy features of the proposal are plans to eliminate 151 government programs, 47 of which are in education, to save $196 billion over five years in Social Security, Medicaid and Medicare, and to extend his tax cuts through 2013. (Currently they are scheduled to expire in 2011.)
Yet even with the reduction in spending for entitlement programs, particularly Social Security and Medicare, spending is projected to rise 6% overall in 2009 as more “Baby Boomers” retire. Nor does the proposal account for the cost to fix the Alternative Minimum Tax (AMT) past 2009. AMT, a parallel tax system enacted in 1969 to ensure that the wealthy paid income tax, increasingly affects middle-class families, many of whom are suffering under its onerous code. Instead of aggressively pursuing the permanent elimination of AMT, Bush includes the cost of a fix for 2009. After that, however, the Congressional Budget Office estimates that fixing AMT in 2012 would cost $118 billion. American taxpayers safely can assume that it will become increasingly more difficult to eliminate this unfair tax as the loss of revenue to the Federal Government increases. Therefore, President Bush should act now to abolish AMT permanently instead of incorporating a one-year AMT fix into the budget.
Additionally, Bush’s proposal includes only $70 billion for the wars in Iraq and Afghanistan for FY 2009 and no money after that. Costs for the wars may reach $200 billion next year and likely will continue past FY 2009. This oversight, whether or not intentional, means that Bush’s assumed deficit of $407 billion for FY 2009 will be much higher.