Feb 8 2005
Analysis: Holding the line?, 8 Feb
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"Several of the proposed cuts are surprising, others (for Mr Bush) less so. In the surprising category is farming: the president proposes cutting the Agriculture Department’s spending by $2 billion, or 9.6%. Much of this reduction would come by capping subsidies (much of which go to big farms) at $250,000 per farm. This will infuriate communities in the farming states of the south, mid-west and west, most of which have up until now been firm supporters of Mr Bush.
But Mr Bush’s new-found fiscal conservatism is patchy. His current deficits are primarily the result of a collapse in tax revenues, down from 20.8% of GDP in 2000 to 16.8% this year, yet he intends to make his tax cuts permanent. Security spending is also largely exempt from his tight-fistedness. Next year, defence spending will grow by 4.8% in nominal terms, to $419 billion; homeland-security outlays will go up by 1.2%, to $29 billion. And the budget does not include likely 'supplementals' for ongoing military operations in Iraq and Afghanistan. "
Financial Times, 8 Feb
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"Tough talk, but not enough to reassure the world that US public finances are in safe hands: the White House budget does mark a departure from the spendthrift ways of George W. Bush's first term as president. Planned cuts in non-security discretionary programmes will cause real pain - if they survive Congress. But even quite savage cuts to limited categories of spending will do little to restore America's long-term fiscal health. The bigger questions of what to do about taxes, military spending, Social Security and Medicare remain unanswered...
But brutal though these cuts appear, even if they do make it through Congress they will not do much to change America's fiscal position. Non-security discretionary outlays make up only a small proportion of federal spending: under 20 per cent. Mr Bush continues to pump up the already bloated defence budget. Meanwhile the giant Social Security and Medicare remain on autopilot. Even more importantly, there are no moves to raise extra tax revenues, even though revenue shortfalls are responsible for two-thirds of the deterioration in public finances since 2001...
Indeed, it is worth noting that for all the talk of a Social Security "crisis", the sums on deficit reduction only add up because both Social Security and Medicare will continue to run big cash flow surpluses for some years to come. A real fiscal conservative would seek to balance the budget excluding these trust funds over the economic cycle. Alas, Mr Bush is not such a man."
Financial Times, 8 Feb
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" 'Mr Bush is still failing the test of being a fiscally responsible president,' said Chris Edwards, head of fiscal studies at the Cato Institute, a Washington think-tank. 'Overall spending is projected to rise 3.6 per cent in 2006 even without further money for Iraq.'
During his first term, overall spending rose at its fastest rate since the mid-1970s, according to the Office of Management and Budget - by 7.9 per cent in 2002, 7.4 per cent in 2003, 6.1 per cent in 2004 and 8.2 per cent in 2005. "
Spending growth has averaged 7.4 per cent a year under Mr Bush compared with 3.5 per cent under Bill Clinton, his predecessor.
The Guardian, 8 Feb
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"In a package hailed by the White House as the toughest since the days of Ronald Reagan in the 1980s, only defence and homeland security were spared from the fiscal squeeze.
The dollar rose on the foreign exchanges as Mr Bush responded to growing concern on Wall Street at the deteriorating budgetary position with a package that he said would cut the deficit from more than $500bn (£270bn) in 2004 to $251bn by 2008...
Mr Bush inherited a surplus from the Clinton administration but an economic downturn, huge tax cuts aimed at the wealthiest Americans during his first term and the war in Iraq have left the administration deep in the red.
The department for housing and urban development is facing some of the biggest cuts. Mr Bush has proposed a $3.7bn reduction in spending, 11.5% of the agency's budget, with programmes targeted including housing grants for the disabled, Aids patients and urban renewal schemes.
Another $500m is being trimmed from the environmental protection agency, almost 6% of its budget."
Syndey Morning Herald, 9 Feb
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"The $US2.57 trillion ($3.35 trillion) budget that the US President, George Bush, sent to Congress and that he described as responsible and 'lean', was immediately condemned by Democrats as a hoax, while most independent analysts said the budget would little to tackle the record $US427 billion budget deficit."
