Spending away our future: despite modest cuts in some government programs, the Bush administration's proposed budget for 2007 will continue to add to an exploding national debt.

The Bush administration on February 6 released its $2.77 trillion 2007 fiscal year budget proposal to Capitol Hill, where it generated the predictable caterwauling from Democrats and some moderate Republican lawmakers who dismissed it as unacceptable. Did they find it objectionable because it calls for a projected near-record budget deficit of $354 billion and a projected $9.3 trillion federal debt? No. What they find objectionable is Bush's plan to cut "discretionary" spending outside defense and homeland security, and his request to renew tax cuts while eliminating or limiting spending in over 141 domestic programs. That has alarmed spendthrift lawmakers on the Hill, especially in what is shaping up to be a contentious mid-term election year.

It appears likely that Bush's modest cuts will meet with strong opposition resulting in compromise, despite the fact that the budget will still grow overall even if all the cuts are made.

Is Bush's new 2007 FY budget proposal really fiscally conservative? Much of the outcry from liberal lawmakers has centered on the proposed 28 percent cut in education, but this cut merely reflects a scaling back of the staggering 59 percent increase Bush added to education spending during the past four years. Also, the 2.2 percent increase in projected outlays between FY 2006 and FY 2007 may look modest, but only when considered in light of Bush's record of 7 percent annual average rate of budget growth since 2002. A close look at some parts of the recently proposed budget reveals that despite some modest cuts in some areas, the Bush administration will continue to fund unconstitutional programs and initiatives of dubious value, while increasing the cost of government through continued borrowing. In what has become a pattern for the Bush administration, the requested budget, even despite its limited programs cuts, will continue to add to an exploding national debt.

A Closer Look

Bush's new budget calls for a 7 percent increase in defense spending, up from $412 billion to $441 billion to cover all military operations, not including military action in Afghanistan and Iraq. Those activities are financed through supplemental requests, a practice that has become Bush's preferred method of funding the war. In February, the Bush administration requested its sixth war-related supplemental--$72.4 billion, which includes $4.2 billion for foreign assistance. The White House said it will also request $50 billion in early fiscal year 2007. Lawmakers, reluctant to be seen as short-changing the troops, will likely continue to enact Bush's supplemental requests, possibly bringing the cost of fighting the war to nearly $500 billion by the end of next year.

Supplemental requests such as these are meant to be reserved for emergency or unanticipated requirements that are not part of the regular appropriations process. Bush's liberal use of the supplemental request has raised questions about whether war-funding should fall under the regular appropriations process.

The Department of Homeland Security also benefits from President Bush's FY 2007 budget proposal. A 10 percent increase raises its budget from $28.3 billion to $31 billion. Bush proposes to help fund the growth through an increase in airline security ticket fees, an action that is sure to rankle the airline industry and face stiff congressional opposition. The Homeland Security budget also includes funds to launch Bush's controversial guest worker/ amnesty program. Despite division among the Republican Party over the issue, Bush appears determined to push it through.

Other winners in Bush's FY 2007 budget proposal include the State Department, the Labor Department, Department of Veterans Affairs, and various foreign assistance agencies:

* State Department: $15.4 billion, representing a 13.6 percent increase. Included in the budget is $474 million to cover Educational and Cultural Exchange programs with an emphasis on interaction between the U.S. and Muslim countries. The budget also sets aside $1.1 billion to fund UN peacekeeping missions throughout the world, representing an 11 percent increase over fiscal year 2006.

* Labor Department: 5.5 percent increase to $54.1 billion, including $12 million for OSHA to enforce regulations and to train employees in Spanish and English.

* Department of Veterans Affairs: 10.4 percent increase to $77 billion. Most of the increase will cover a boost in healthcare programs to be financed by a new-patient $250 enrollment fee and an increase in drug co-payments.

* International Assistance Programs (a.k.a. foreign aid): $17.6 billion representing a 12.8 percent increase. In the ongoing effort to transform foreign countries, Bush is asking for $3 billion for his Millennium Challenge Corporation designed to encourage countries to promote democracy, human rights, and economic development. Bilateral assistance includes $2.3 billion in military aid to Israel and $1.3 billion in military assistance to Egypt.

Borrower or Conservative?

President Bush's claims to fiscal conservatism are based largely upon his willingness to champion tax cuts. In the FY 2007 budget, President Bush proposes to make permanent the 2001 and 2003 tax cuts that reduced individual rates, set a 15 percent rate on capital gains, and increase the child credit to $1,000.

While the tax cuts are certainly laudable, the reality is that federal spending must also be cut to reduce the government's burden on the economy. Though Mr. Bush does propose some modest budget cuts, his budget also calls for an overall increase in spending and (no surprise here!) deficits that, like taxes, also burden the economy.

The annual deficits are added to the national debt. To finance growing federal indebtedness, the government regularly issues Treasury bonds purchased with new money created by the Federal Reserve System.

Treasury borrowing has significantly increased under President Bush's tenure. According to U.S. Treasury figures, foreign holdings of Treasury bonds (U.S. debt) alone have more than doubled under President Bush, growing from $1.01 trillion in 2001 to $2.06 trillion in 2005. The United States is now indebted to a long list of countries, including China to which it owes $248 billion as of August 2005. This dangerous trend shows no sign of abating.

The national debt is additionally financed by borrowing from government trust funds like Social Security. Although the government pays interest on these loans, the money ultimately comes from the U.S. taxpayer. In reality, this sort of borrowing increases the national debt, but clever accounting gimmickry permits the government to claim money borrowed from trust funds as revenue.

Debt Distraction

Since George Bush assumed presidential power, the gross federal debt has jumped from $5.8 trillion in 2001 to a 2007 estimate of $9.3 trillion--an amazing 60 percent increase. Despite his claim of fiscal conservatism, his predilection for record deficit spending and borrowing continues along a historically high path. President Bush's modest FY 2007 spending cuts, which do not offset the spending increases, cannot disguise the reality that an ongoing costly war, coupled with spendthrift tendencies from both sides of the aisle, ensures a continuation of runaway spending policies. Americans must insist that lawmakers take seriously their constitutional duties, or live with the unsettling thought that their future is being mortgaged away.

Michael E. Telzrow is a historian/museum professional living in De Pere, Wisconsin.