This Administration has turned large unified surpluses (real small general fund deficits) into unified deficits (real large general fund deficits) in part because of their tax “shifts” (called cuts but really deferrals) and in part because Federal spending has increased faster than GDP. John McCain and other Republicans will blame domestic spending but Richard Kogan carefully documents why any such claim is not true:
Both last year and this year, President Bush called for large funding increases for defense and related programs while demanding considerable restraint in domestic appropriations. And this year, like last year, he has threatened to veto appropriations bills if Congress does not adhere to his tight domestic levels. Some may think the President’s recent attempts to squeeze domestic appropriations are being made in response to an explosion of domestic discretionary funding during his Administration’s first six years. But this is not correct: there has been no such funding explosion for domestic discretionary programs. Between fiscal year 2001 (the last year for which appropriations levels were set under President Clinton) and fiscal year 2008, funding for domestic discretionary programs has been more constrained than any other area of the budget and has shrunk both as a share of the budget and as a share of the economy. In contrast, appropriations for defense and other security-related programs have increased more rapidly than any other area of the budget — even more rapidly than the costs of the “big three” entitlement programs: Social Security, Medicare, and Medicaid.
Table 2 is of particular interest as it shows the average annual increase of various subcategories of program costs not only in nominal terms but also in real terms as well as real spending per capita. Domestic discretionary spending – which is the favorite whipping boy of the GDP – has grown by only 0.3% per year in real per capita terms. Defense and security, which is the favorite cash cow of the GOP – has grown by 8.1% per year in real per capita terms. The former’s share of total program cost has declined from 18.4% to 14.7% while the latter’s share has increased from 21.7% to 29.2%. Anyone that is calling for more wars and more defense spending cannot be taken seriously as a fiscal conservative.