The.Economist.2007-02-10 (966424), страница 8
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Congress's final tax and spending decisions often bearscant resemblance to the White House's requests. But even by those standards, Mr Bush's budget fellflat.Some accused the White House of legerdemain. Kent Conrad, top Democrat on budget matters in theSenate, said it was “filled with debt and deception”. Many accused Mr Bush of ignoring the politicalchange on Capitol Hill. Extending tax cuts and squeezing social spending will have little chance in the newDemocratic-controlled Congress. Even Republicans were dismissive.
“I don't think it has got a whole lotof legs,” said Judd Gregg, top Republican in the Senate budget committee.Some of the criticisms are warranted. Mr Bush's promise to balance the budget by 2012 (see chart)depends on some unlikely assumptions, notably that the Alternative Minimum Tax will ensnare some 25mAmericans after 2008 (up from 4m in 2006). His forecasts also include oddly rosy revenue projections,particularly after 2010. As economists from Goldman Sachs point out, the White House has slightlylowered its estimates for output in 2011 but has increased projected tax receipts.In one important area, the costing of the war on terror, this budget is more honest than its predecessors.For the first time, Mr Bush has included a complete tally of spending in Iraq and Afghanistan this year($163 billion), an estimate for 2008 ($145 billion) and a guess for 2009 ($50 billion).The budget may not be a model of transparency, but much ofCongress's harrumphing is disingenuous.
Democrats complainloudly about Mr Bush's focus on tax cuts. But beyond a(sensible) plan to create standard deductions for healthinsurance, which anyway should raise revenue over themedium term, Mr Bush's budget is mercifully free of new taxcuts. The budget does make the case for extending his existingtax cuts beyond 2010, the year in which, under current law,they all expire. But that argument is not pressing in this year'sbudget debate.By the same token, Congress's decisions on domestic spendingmay end up closer to Mr Bush's budget than the currentrhetoric suggests.
Democrats have raised eyebrows overproposed increases in military spending—a 10% increase in thePentagon's budget next year in addition to the money for Iraqand Afghanistan. They have promised to probe the figurescarefully. But given the party's determination to avoid anyblame for the Iraq mess, Congress seems unlikely to squeezethe defence budget hard.Similarly, Democrats are determined to show voters that they are the more fiscally prudent party.
Thatwill limit their domestic spending ambitions. Some of Mr Bush's proposals, such as his plans to tighteneligibility criteria for SCHIP, the government health-scheme for children just above the poverty line, or tocut home heating oil subsidies for the poor, are sure to be loosened. But a spending bonanza is unlikely.Where Mr Bush and Congress will differ most is in their appetitefor attacking big entitlement schemes, particularly Medicare.The government health plan for the old and disabled is widelyknown to be the source of America's biggest long-term fiscalproblem, thanks to an ageing population and rapidly risingmedical costs.Mr Bush's budget takes some useful snips at the behemoth. Forinstance, he wants to introduce some means-testing to therecent prescription-drug benefit and broaden the means-testingthat already exists in the rest of Medicare.
More affluent oldpeople would pay higher premiums for their health-insurancecoverage. Mr Bush also intends to trim payments to manymedical providers by reducing the automatic inflationadjustment they get every year.The immediate impact will not be huge. Overall, the Bush budget aims to slow entitlement spending byalmost $100 billion over the next five years, with around half the savings coming from Medicare. Butover the longer term the reforms would yield significant savings. The present value of Medicare's financialhole over the next 75 years is the astonishing sum of $32 trillion. The White House estimates that itsplans would reduce that gap by some $8 trillion.Since every politician in Washington knows that Medicare reform is essential, these proposals ought to betaken seriously. Yet they have been assailed from all sides.
Fiscal hawks complain that the Medicaresavings are much smaller than the cost of extending Mr Bush's tax cuts, a point that is true butirrelevant. Top Democrats cannot resist lambasting a budget that “cuts Medicare and Medicaid” while“sending more taxpayer dollars to Iraq”. Yet Congress shows no sign of coming up with its own ideas forMedicare reform.
Dismissing Mr Bush's plans as fantasy is easier than dealing with fiscal reality.Copyright © 2007 The Economist Newspaper and The Economist Group. All rights reserved.About sponsorshipThe politics of the Iraq warShowcasing disunityFeb 8th 2007 | WASHINGTON, DCFrom The Economist print editionAmerican politicians are sounding more and more anti-war. It is still mostly talk, but talkmattersTED KENNEDY is angry. “The cost in precious American lives isreason enough to end this mistaken and misguided war,” hetold the Senate on February 6th.
“But the cost at home herecame into full view yesterday as we received the president'sbudget.” George Bush is asking for another $145 billion for thewar on terror, most of it for Iraq and Afghanistan. “Where doesthe money come from?” asked the senator, his voiceapproaching a roar. It comes from children's health insurance,he said, from education and from heating-oil subsidies for thepoor.The Senate tried to debate Iraq this week.
But since thechamber is split 51-49 between Democrats and Republicansand it takes 60 votes to break a filibuster, senators could noteven agree on which bills to consider. Still, the House ofRepresentatives is expected to tackle the same issue nextweek. In both chambers, nearly all Democrats and someRepublicans want to express dismay at the way things are going in Iraq and opposition to “surge”, MrBush's plan to send 21,500 extra troops.Congress controls the purse.
The Democrats in charge could, in theory, end America's participation in thewar in Iraq by refusing to pay for it. There is little chance they will do so, however, for then they wouldbe blamed for the civil war that might follow. So for now, the only bills likely to pass either the House orthe Senate will be non-binding, symbolic ones, and the dollars will keep flowing.Mr Bush's latest request (to which must be added a supplementary $100 billion for the current fiscalyear) would bring the total cost of the wars in Iraq and Afghanistan to $661 billion since 2001. Thatwould make them a greater swallower of American treasure than the Vietnam war (in real dollars),though nowhere near as costly to America in terms of blood (3,100 deaths so far, versus 58,000).
Totalmilitary spending for 2008 is projected at 4.4% of GDP. That is a lighter burden than during previouslarge conflicts: America spent more than 9% of GDP on defence at the height of the Vietnam war, 14%during the Korean war and 37% during the second world war.It is not the money that worries Americans so much as the fear that the cause is hopeless. The averagenumber of daily attacks by insurgents and militias in Iraq leapt from 75 at the beginning of last year to185 in November. Two-fifths of the Iraqi professional class have fled the country.
Even America'ssuccesses give little relief. Late last month, American and Iraqi troops smashed a Shia cult called the“Soldiers of Heaven”. A victory is a victory, but what struck viewers in Iowa was that Iraq has heavilyarmed apocalyptic factions they have never even heard of.A National Intelligence Estimate issued last week added to the gloom. Even if extra American troops cancurb the violence, reconciliation looks unlikely, it said.
On the other hand, were America to pull rapidlyout, the situation would get much worse. The ensuing civil conflict would probably cause “massive civiliancasualties” and perhaps prompt neighbouring states to intervene.A sudden pull-out is unlikely, but an eventual withdrawal is all but certain. Ideally, this would happenafter the surge restores a measure of peace and Iraqi politicians find a way to hold the country together.Failing that, it may happen anyway.
Democratic presidential candidates are sounding more anti-war thanever. Hillary Clinton promises that she will end the war if elected president. Barack Obama is proposing abill to withdraw American troops by March 2008. John Edwards says it is “a betrayal” for Congress not tostop Mr Bush sending more troops now.The war's remaining advocates worry that when American politicians sound so keen to abandon Iraq,Iraqis will believe them, and will arm for war once the Americans are gone. “For the Senate to take up asymbolic vote of no confidence on the eve of a decisive battle is unprecedented,” said Joe Lieberman, aDemocratic-turned-independent senator. “But it is not inconsequential.
It is an act which, I fear, willdiscourage our troops, hearten our enemies, and showcase our disunity.”Copyright © 2007 The Economist Newspaper and The Economist Group. All rights reserved.About sponsorshipLos Angeles' homelessOn the skidsFeb 8th 2007 | LOS ANGELESFrom The Economist print editionThe police have cleaned up Skid Row. They have not got rid of itAP“SEE the one sitting against the wall? He is close to death.” By the timeAndrew Bales has taken 100 steps down Gladys Avenue, he has pointedout a severely emaciated man, several heroin addicts and a prostituteplying her trade from a tent.
Yet Mr Bales, who heads the Union RescueMission in Los Angeles, is in a cheerful mood. Such pockets ofdegradation now have to be deliberately sought out, he says. Before thepolice arrived, many of the 50-odd city blocks that comprise Skid Rowwere like Gladys Avenue.Many American cities are ratcheting up their campaigns againsthomelessness.
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