Showdown on Government Investment

The White House released data last week indicating that the federal deficit for the 2007 fiscal year, which will end on Sept. 30, will be $205 billion rather than the $244 billion that the White House predicted back in February.

A $39 billion mistake in estimating the deficit isn’t as big as it might seem—the variation equals only a little more than 1 percent of total federal spending for the year. But the estimating error does provide some perspective on the looming battle over the 2008 appropriation bills.

The Congress maintains that an additional $20 billion is crucial to maintain federal efforts in a variety of areas during the 2008 fiscal year. The White House is threatening to veto because the additional $20 billion will add about $10 billion to the 2008 deficit. (Only about half of the appropriated funds will actually flow out of the Treasury in the first year.) That means the veto standoff that the White House is threatening is over an amount equal to about one-quarter of the estimated error the White House recently conceded making in projecting the fiscal 2007 deficit.

The president argues that the additional funding proposed by Congress is unneeded because his budget already contains a $60 billion increase in discretionary spending. The problem with the president’s argument, however, is that all of that increase goes to just four of the 12 appropriation bills—the four bills that fund defense, veterans affairs, foreign affairs, and homeland security. The entire domestic side of government is frozen, which means—when you consider the effects of inflation, the growth of the economy, and population—that they are facing substantial cuts. There are some programs that many Americans would agree should be cut, but any responsible citizen should carefully examine where the Congress is intending to add money before deciding whether to support President Bush or the Congress.

In some instances, sticking with the president’s recommendation will in my opinion force cutbacks that most Americans would view as painful and unnecessary. The effects in other instances will be more than painful—they will force policies that a very large majority of citizens would find mindless and even absurd.

Nearly $4 billion of the $20 billion added by Congress will go toward improving administrative services and medical care for returning veterans. The Congress is providing the VA Medical system with sufficient funds to keep up with inflation and the added cost of providing medical care to the increased patient load resulting from the conflicts in Iraq and Afghanistan.

Money is also being provided to streamline wounded veterans’ transition from military health care facilities to facilities administered by the Department of Veterans Affairs and to improve treatment of traumatic brain injury and post-traumatic stress disorder. When these increases were put to a vote in the full House Appropriations Committee, not a single member of the president’s party sided with the White House.

Another $2 billion of the $20 billion increase will go toward improving the security of our ports and the equipment and training of our first responders. Both of these efforts have been listed as top priorities by blue ribbon panels and various homeland security experts since the 9/11 attacks. While politicians in both parties like to get their pictures taken with our police and firefighters, this is the first major move to make the long overdue investments necessary to ensure that our ports and first responders are ready to cope with the dangerous world we now live in.

The American people have become far more aware over the past several years of the threat that dependence on foreign oil poses to our economy and national security. We have also come to realize that catastrophic climate change could be a real possibility if we do not develop and choose our energy sources more carefully. Despite that fact, the White House proposed in fiscal year 2008 to cut research at the Department of Energy on energy efficiency and renewable energy by $238 million below current-year levels, research on fossil fuels by $26 million, and research on electricity by $23 million. Congress has not only restored those cuts, but has also provided major increases in each area. In total, Congress has added $800 million to the president’s FY2008 request in these areas. It is also providing substantial additional funding to the Interior and Commerce, Justice, and Science appropriations bills for a variety of climate change research and monitoring activities.

The biggest share of the proposed congressional increase in discretionary spending is directed toward improving the quality of the future American workforce. The skill and productivity of the next generation of workers is likely to be the single most important factor in determining the long-term prosperity and fiscal health of the nation.

Nearly $7 billion of the total increase is directed at that purpose. The biggest share, $3.3 billion, goes to increasing student assistance so that everyone qualified to attend college will get a shot at a college diploma. The Pell Grant program will receive $2.4 billion of that amount. When President Bush was running for the presidency in August of 2000, he promised to increase the a maximum grant awarded under that program to $5,100. Yet today it remains stuck at $4,310—nearly $800 below the level promised and a fraction of the amount needed to cope with rapidly rising tuition fees. The result is that attaining higher education is moving further and further beyond the financial reach of many qualified middle- and lower-income students.

The bill also partially restores the decline in assistance to support elementary and secondary education over the past five years. Under the president’s request, inflation-adjusted support to local school districts for elementary and secondary education would be 7 percent below 2003 levels in 2008. The House passed a Labor-HHS-Education bill that funds those programs at about 1 percent below 2003 levels. Congress also restores cuts made in the Head Start Program and in a variety of job training programs.

The president’s 2008 budget also cuts federal support for biomedical research. Funding for research at the National Institutes of Health declines by $333 million, or 1.3 percent below current-year funding. If the increased cost of performing health research is considered, the actual research effort on diseases such as cancer, stroke, diabetes, and Alzheimer’s in the coming year will be a full 5 percent below current levels. Congress has added a little more than $1 billion to the amounts requested by the president to maintain current research efforts. That will still, however, leave those efforts at a level 7 percent below where they were just three years ago.

Finally, Congress is attempting to address the growing problem of providing health care for uninsured Americans. The Census Bureau estimates indicate that the number of Americans without health insurance grew by 7 million between 2000 and 2007. The administration’s budget for 2008 responds to that fact by cutting federal programs that provide health care services to the poor and uninsured slightly below 2007 levels despite projections that the cost of providing health care services will rise by 3.7 percent. The House appropriation bill adds $645 million to those programs—not only offsetting the impact of inflation, but also extending health care services to 2 million individuals who cannot be served at current funding levels.

There is, of course, one great flaw in the administration’s argument that they are opposing these increases for the sake of fiscal discipline. While polling data indicates that nearly all of the government activities listed above are supported by large majorities of Americans—and in some instances by majorities within each of the two political parties—the Bush administration still supports one activity of the federal government that is opposed by large majorities of the American people. That activity is the Iraq war.

According to recent estimates, the Iraq war is costing taxpayers more than $10 billion a month, or about as much in outlays in a month as the above programs will cost in a year. If it were true that we cannot afford to make the investments that Congress is insisting on, the reason would clearly be that efforts to care for our veterans, protect our environment, educate our children, and find new treatments for dreaded disease are being crowded out to pay for a war that most Americans believe we cannot win and is in fact harmful to the nation’s long-term security interests.

That is a message the White House and its allies in Congress will be reluctant to embrace, but it is hard to examine the arguments that they are putting forward and reach any other conclusion.