AB reader ILSM directs our attention to a few tables from the OMB that give the illusion that Federal revenues will almost catch up with Federal expenditures by 2010. Before we get to the smoke and mirrors of these projections, a couple of items that have caught the attention of the Reality Based Community starting with some praise of Karl Rove from the Los Angeles Times including these goodies:
But the most significant element of Rove’s effort to help four-term Rep. Thomas M. Reynolds keep his job may have occurred behind closed doors, when the White House strategist met with a federal disaster relief official contemplating how to respond to the storm. Four days later, Reynolds announced that President Bush would authorize millions of dollars in federal disaster aid for the area … In Missouri, Sen. Jim Talent is struggling to retain a seat that is considered vital to maintaining the GOP’s Senate majority. Talent, whose mother died of breast cancer, has made support for fighting the disease an element in his campaign. Recently, Rove’s deputies arranged for First Lady Laura Bush to appear with Talent to promote Breast Cancer Awareness Month. Once a year, the National Park Service bathes the soaring Gateway Arch that dominates downtown St. Louis in pink light – the signature color of the breast cancer awareness campaign. This year, the pink lighting coincided with Laura Bush’s visit. The White House says it encouraged the action. Similarly, the Transportation Department, responding to White House prodding, dispatched the federal highway administrator to Columbus, Ohio, last week to announce grants for a transportation hub to facilitate moving freight among air, rail and highway carriers. The event was designed, an administration official said, to boost prospects for Rep. Deborah Pryce of Ohio, the No. 4 Republican in the House, who is trailing her opponent. And when environmentalists from the San Francisco Bay Area sharpened their attacks on Rep. Richard W. Pombo (R-Tracy), chairman of the House Resources Committee, the White House political office arranged for President Bush to stop in his district to sign legislation protecting wetlands – with Pombo standing by his side.
So when President Bush says we should spend taxpayers’ monies on priorities, you get the idea what he really means. But how to pay for all of this? Joe Galloway seems to have one form of fiscal restraint:
Oh yes. One other bit of news: the White House that says nothing is too good for our troops has turned its back on a plea by Army leaders for a $25 billion increase in its 2008 budget so it can carry out the missions the administration has assigned to it. The White House Office of Management and Budget rejected Army chief Gen. Peter J. Schoomaker’s extraordinary plea by for the additional funds to pay for repairing and replacing thousands of worn out and blown up tanks, Bradley fighting vehicles and Humvees.nInstead of the $25 billion that Schoomaker says the Army needs just to keep doing what it’s been doing with spit, adhesive tape and baling wire for the last five years, the Pentagon says the Army can have $7 billion.
Read the whole piece as Mr. Galloway seems to be a bit upset with the Commander-in-Chief.
But back to those OMB tables. It seems total Federal debt is expected to grow by 34% from 2006 to 2011 as compared to only a 30% increase in nominal GDP (combination of real GDP growth and inflation) so the OMB is forecasting that the debt to GDP ratio will continue to climb. And I thought they had the Federal deficit under control! Hmm. It must be the unified deficit that is forecasted to decline because of those Trust Fund surpluses. I see.
But is this notion that Federal spending, which was 20.8% of GDP, is projected to decline to only 19% of GDP by 2010 a credible forecast? Take a look at table 5.3, which reports the “growth in discretionary budget authority by major agency” from 2001 to 2006 and the projection for 2007. First of all, the reported 31% increase from 2001 to 2006, which represents a 5.6% per year increase, is odd given the fact that total Federal spending grew by an average 6.6% per year. But there lies my problem with reporting discretionary spending – you can hide a lot of spending increases by re-labeling something from the discretionary side to the mandatory side. Also notice that the OMB wants to claim a 5.2% per year average increase by pretending that nominal discretionary spending will only grow by 3.2%.
Some of the details are fascinating. For example, the OMB wants us to believe we are about to cut discretionary Federal education spending so that’s its cumulative growth over six years would be less than 36% (from $40.1 billion to $54.4 billion). The Bureau of Economic Analysis had total Federal spending at $47.3 billion in 2001 and at $70.1 billion as of 2005 for a 48% increase over just four years. Did this Administration massively increase “mandatory” education spending or is it planning to slash the education budget after all those years of bragging about its commitment to education. Don’t we voters deserve to know before we go to the polls?
Of course discretionary defense spending is projected to grow by another 6.9% according to this document. If there is some over/under contest, place my bet on the over. But fiscal conservatives might be elated to know that discretionary spending on agriculture will fall next year so its cumulative six year increase will be a paltry 2.5%. But again – something is amiss as the OMB is reporting agriculture spending just over $20 billion. But if we look at total spending on agriculture, it was $68 billion and had increased to almost $82 billion by 2005 according to this source. And this source puts 2006 spending on agriculture at $94.6 billion, which represents a 39% increase over 2001 spending levels. I guess handing out farm pork is another one of the President’s priorities.