StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



The Bush Legacy Is Set

21 Jan 2008
Posted by Stan Collender

Here's my latest "Fiscal Fitness" column from  Roll Call.

 

President Bush’s Budget Legacy
Already Set in Stone
Roll Call
January 22, 2008

Although it certainly wasn’t meant to be funny, I couldn’t help but laugh when I read the Jan. 14 Roll Call story “Bush May Target Earmarks.”

The story quoted Sen. Jim DeMint (R-S.C.) saying that, by finding a way to refuse to spend the earmarks associated with the fiscal 2008 omnibus appropriations bill, President Bush had ³a chance to ... secure a lasting legacy on the budget.

With all due respect to DeMint, the lasting Bush budget legacy, which is decidedly negative, was determined long ago and nothing that happens in the remaining 11 months of his presidency will change that.

Let¹s start with the earmarks DeMint reportedly wanted the president to focus on.

Even if the president gets religion now and refuses to allow any of the designated spending in the fiscal 2008 appropriations to be spent, it will happen after he spent six years of watching idly as the largest growth in earmarks in U.S. history took place.  (In 2007, the first year of Democratic control, Bush vetoed the Labor-Health and Human Service appropriations bill, citing “excessive” spending.)

None of these earmark-laden spending bills was vetoed; Bush signed every appropriation bill sent to him to by Congress.  As a result, he bears as much of the blame for the earmarks as the Congress that sent the bills to him.

The total amount of dollars in the earmarks approved by President Bush between 2001 and 2006 dwarfs the amount that would be saved if he put his body in the way of those enacted in 2007 as DeMint wants.  The Bush legacy on earmarks is set.

After earmarks, let’s go to the bottom line.

Regardless of the reasons you think it happened, when the Bush administration officially began in January 2001, the federal budget was in surplus.  In fact, this was the first time since 1927-1930 that there were four consecutive annual surpluses and it was a reason for celebration and wonder by policymakers.

Bill Clinton as he left office and Bush as he was taking the oath both said the federal debt would be all but eliminated by around the end of this decade.  The Federal Reserve wondered out loud about how it was going to control monetary policy if there were no more Treasury bills, notes, and bonds for it to buy and sell.  And academics were discussing whether it was better for the economy to use the surplus to pay down the federal debt or cut taxes.

All that changed almost as soon as the Bush administration began and the budget surplus that had been projected to grow quickly changed to a deficit. The red ink we were told would quickly turn back into a surplus instead grew into several consecutive nominal all-time-high deficits. The White House’s mantra was that the deficit was “manageable,” even though it never explained what that meant.

Then it said the deficit would be cut in half by 2009 even though it never explained why that was an acceptable goal.  After all, the budget had been in surplus when the Bush administration began and half of a surplus is still (drum roll, please) a surplus.  Then again, the president pledged to cut the deficit in half not from the actual nominal record high set during his administration, but from a projected level that was $100 billion or so higher even though few people actually believed it was real. And it wasn’t.

The Bush legacy also includes one of the most effective efforts to limit the debate and, therefore, minimize the issue, in the history of federal budgeting.

The Bush White House very effectively limited the public discussion about its budget by ignoring it.  The current and past two Bush-appointed Office of Management and Budget directors have been three of the least visible in OMB’s history (Can you even name all three?) and the administration went to great lengths to keep them and the budget as far below the radar screen as possible. The almost standard practice of having the OMB director and other senior economic spokespeople appear on Sunday talk shows the week before and after the president’s budget was sent to Congress stopped during the Bush administration.  To this White House, by allowing no appearances and speeches on the budget allowed it to make believe there was no problem to be solved.

The Bush legacy on spending has also been cast in stone for quite some time.

While the White House tried to make a big deal about the president’s efforts last year to keep domestic appropriations at the level in his budget, fiscal conservatives were saying that was far too little too late.  Budget experts in think tanks whom Bush should have been able to count on as supporters have been among his harshest critics on this subject.  They’ve focused additional criticism on mandatory spending increases the president supported, did not stop when he could have, and ultimately approved.

But the most important and longest lasting budget legacy of this president will be the increase in the national debt that occurred while he was in office.

Rather than dramatically reducing federal borrowing as the president promised when he took office, by the time the administration ends, federal debt held by the public will have increased by more than $2 trillion.  As a result, the dramatically lower annual federal interest payments that would have had a significantly positive impact on the federal government’s long-term fiscal outlook, changed into a large negative.

Because of all of this, it’s hard to see how anything George W. Bush may do on earmarks will make any difference in how his fiscal stewardship is viewed by historians.  And even Sen. DeMint’s optimism about this may be overblown.  At the end of last week, it appeared the Bush administration might be backing down from that budget fight anyway.

additional $4.1 trillion debt

The Federal debt has grown from $5.9 trillion to about $10 trillion in the 7 years of Bush/Cheney finance. My math says that is $4.1 TRILLION increase. You say "federal debt held by the public will have increased by more than $2 trillion..." If Everett Dirksen was here he might say, "a trillion here, a trillion, there. Pretty soon were talking about real money." Could you explain the discrepancy of $2.1 trillion?

You're referring to the debt

You're referring to the debt subject to limit, which includes debt head by the trust funds and is not an indication of the additional amount of borrowing that results from policy changes. That is debt held by the public, that is, funds borrowed to finance government operations. FYI...I don't think even otal federal debt has reached $10 trillion yet.

Stan, thanks for

Stan, thanks for clarification. I assumed the discrepancy was the accounting for "trust funds" vs. "public borrowing." The debt limit authorization "nearing $10 trillion" (more precisely $9,815,000,000,000) and per National Debt Clock (www.brillig.com/debt_clock/) debt now stands at $9.1 trillion. I miss Everett Dirksen.

Bush Legacy - Republican Legacy

While it is true that Bush did nothing in terms of fiscal responsibility, he was acting in complete accord with the Republican majorities in Congress. Bush and the Republicans in Congress pushed for extraordinary tax cuts targeted to favour wealth and corporate profits, combined with earmarks designed to secure votes in Congress. The total effect was fiscal irresponsibility of the highest order. The legacy belongs both to Bush and Republicans in Congress.


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