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Thursday, October 07, 2004

White House plans to cut spending on homeland security, veterans affairs and education–but keep tax cuts for the wealthy

Jonathan Weisman writes in today's Washington Post:

"One group, led by Treasury Secretary Paul H. O'Neill and White House budget director Mitchell E. Daniels Jr., watched anxiously as the government's 2002 balance sheet swung from a record $313 billion surplus projected when Bush took office to a $157 billion deficit projected that August. How could the president demand fiscal discipline from Congress, they argued, then push expensive reforms of Social Security and the tax code if he continued cutting taxes?

The other side, led by White House economists Lawrence B. Lindsey and R. Glenn Hubbard, focused on economic growth...

After weeks of debate, Bush made his choice clear, unveiling a $674 billion tax-reduction package on Jan. 6, 2003, that was larger and bolder than even Hubbard and Lindsey had expected. The proposal locked in Bush's record as a tax cutter. But it also contributed to mounting budget deficits and debt that may prove to be one of Bush's most enduring legacies.

When Bush took office in January 2001, the government was forecasting a $5.6 trillion budget surplus between then and 2011. Instead, it is now expecting to accumulate an extra $3 trillion in debt -- including a record $415 billion in the fiscal year that ended Sept. 30. The government has to borrow an average of more than $1.1 billion a day to pay its bills, and it spends more on interest payments on the federal debt each year -- about $159 billion -- than it does on education, homeland security, justice and law enforcement, veterans, international aid, and space exploration combined...

The consequences are just coming into view. The White House has ordered draft budgets for 2006 that would cut spending on homeland security, veterans affairs and education, according to White House documents. Some economists -- although by no means most -- see a reckoning on the horizon, when foreign lenders reject U.S. debt, interest rates rise, and the value of the dollar crashes."

Story continues here.


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