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President Bush, who campaigned as the enemy of big government, is kicking off what could become a tax-cutting and spending spree of historic proportions. Even as Bush criticizes big spenders in Congress, he's proposing trillions of dollars in new tax breaks and a broad, new array of direct government subsidies in his 2003 budget proposal.
How can this be? Blame it on Osama bin Laden. While only about one-quarter of the President's new initiatives are actually tied to the war on terrorism, bin Laden has given every pol in Washington the excuse they need to bust the budget. In the current climate, "Osama made me do it," is the best excuse in town for a new spend-a-thon.
FOLLOW THE MONEY. A quick look through Bush's State of the Union address and his fiscal 2003 blueprint released on Feb. 4 uncovers new initiatives that could cost $2 trillion over the next decade. That would more than eat up all the remaining surplus -- which has already plunged from $5.6 trillion to $1.6 trillion, thanks to a sour economy and Bush's 2001 tax cut. And it would leave the government trillions of dollars in debt just as it must begin honoring the Social Security promises it has made to the first wave of retiring baby boomers.
Oh, the White House says it will insist that Congress pay for much of this by holding down spending in other parts of the government. But that's what the President said last year, just before he and Congress agreed to boost non-Medicare, non-Social Security spending by double digits. This year will be at least as bad.
Here are a few highlights from the plan:
• Bush would make the '01 tax cuts permanent, rather than phase them out. His budget office says this will cost $600 billion. But congressional estimates figure it will run closer to $800 billion.
• Bush would create $90 billion in new tax breaks to help subsidize the cost of health insurance.
• He would spend $190 billion on a new Medicare drug program, subsidizing the pharmaceutical costs of some older patients.
• He has reluctantly embraced a $70 billion increase in farm subsidies that has strong bipartisan support on Capitol Hill.
• He wants to to spend about $600 billion over the next decade on homeland security and new defense initiatives.
Bush says his budget represents a fundamental shift of priorities to a war footing. And his budget director, Mitch Daniels, compares this to the wartime budgets of Franklin D. Roosevelt and Harry S. Truman.
TAX CUTS, TOO. I think his argument is wildly overblown. This is not World War II. By 1944, military spending accounted for more than 40% of gross domestic product (GDP) and nearly 90% of all federal outlays. Today, it represents less than 4% of total GDP and barely 16% of federal spending. This is not, as FDR said of WWII, total war. There is, at least in the short run, no fiscal crisis. And anyway, in 1942 and again in 1944, FDR raised taxes. Bush wants to cut them.
Certainly, the U.S. is waging a war on terrorism. And the country faces a serious long-term problem, as Washington continues to postpone the issue of how to pay future Social Security and Medicare benefits. But that wall won't be hit for years. Today, an election is coming up, the President has said near-term deficits don't matter, and the best scapegoat in the world is still hiding somewhere in Central Asia. Put it all together, and Washington may be about to bust the budget in ways Americans haven't seen in years.
Gleckman is a senior correspondent in BusinessWeek's Washington bureau. Follow his views every Tuesday in Washington Watch, only on BusinessWeek Online Edited by Douglas Harbrecht
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