EDITORIAL: Bush S Budget: Headed the Right Way

Feb 06, 03:41 AM

Current Headlines: By The Philadelphia Inquirer

Feb. 6--The $2.9 trillion federal budget submitted by President Bush yesterday is, in some areas, more realistic and more progressive than his previous spending plans.

But this budget is built on an illusory foundation. It pretends that the federal government can balance its books within five years while extending Bush's tax cuts. That's an unrealistic assumption, fiscally and politically.

Until Congress decides whether to renew those tax cuts -- not likely to happen this year -- no one really knows what other choices will have to made to achieve a balanced budget.

If tax cuts are extended beyond 2010, the nonpartisan Congressional Budget Office forecasts long-term deficits, into the years when the obligations for Medicare, Social Security and Medicaid really begin to soar.

There are signs in the fiscal '08 budget, which begins Oct. 1, that Bush is making an effort to reach out to the new Democratic majority in Congress. For the first time, the president includes the cost of the war in Iraq and Afghanistan ($141 billion in FY08) in his proposed spending blueprint, rather than treating it as an "off-budget" accounting gimmick.

The cost to taxpayers is the same either way, and it might be a small point to those lawmakers who want to end the war. But including war costs in the deficit is a more honest way of showing the impact on the government's financial picture.

The president's proposal to require Medicare recipients with annual income of more than $160,000 per couple to pay more for their premiums is a sensible way of attacking the growth of the entitlement program. On education, Bush proposes to increase the maximum Pell Grant award for low-income college students from $4,050 to $4,600. The president also would boost spending on Title I programs for high-poverty public schools by 9 percent, to $16.9 billion.

Bush would remove limits on the number of Section 8 housing vouchers, which could add 180,000 families to the program. The program has problems in execution sometimes, but its purpose is vital.

Other budget trade-offs are less laudable. The proposed budget would induce states to stop providing health care for some children in low-income families. It would cut Head Start funds. Low-income elderly would face cuts in food and home-heating assistance. All that, while preserving tax breaks that average $160,000 per year for families with incomes above $1 million?

The Bush administration argues that the tax cuts must be extended to keep the economy growing, and that economic growth spurred by the cuts is now boosting revenues. But the current surge in revenue is only restoring federal receipts to the levels they were before the tax cuts. And the ongoing recovery has been weaker, with the benefits distributed less evenly, than other such growth cycles since the end of World War II.

The government's massive borrowing of the past six years, financed increasingly by foreigners, cannot last much longer. Washington must address that reality, soon.

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