Politics with Ron Elving: President Bush's Budget
ALEX CHADWICK, host:
And still in Washington, this is budget day. The president releases his plan for the next fiscal year beginning next fall. This always happens on the first Monday in February every year. The plan outlines both the broad spending priorities of the administration and many of the details of federal government programs.
So, this new version now calls for $2.77 trillion in spending. There are big increases for defense in homeland security, and there are big cuts for Medicare and other forms of social spending. Despite the cuts, there's a projected budget deficit of more than $400 billion.
Here with more on the big numbers is NPR's senior Washington editor Ron Elving. Ron, biggest budget ever and biggest deficit ever. Is that true?
Mr. RON ELVING (NPR Senior Washington, D.C. editor): Yes, in nominal dollars, Alex. But a two percent increase in the federal budget is not too surprising, considering that every year inflation increases most of the value of most of the things that the federal government does and buys.
With inflation, you're going to see it bigger most every year. And that has a lot do with the deficit figure, as well. So, the 2007 figure for the deficit may be the highest ever if you don't account for inflation but not nearly if you do.
We're looking at a deficit that represents about 2.8 percent of the gross domestic product. And if you go back into the 1980s and early ‘90s we were regularly at four and five. And actually we're at about half the all-time peak.
CHADWICK: OK. Well, there are substantial increases for defense and for homeland security.
Mr. ELVING: Up about seven percent in the defense department budget, seven percent against a budget overall increasing two percent. And the big figure now is $440 billion. And, of course, that may not seem a surprise. We're at war in Iraq, of course, and Afghanistan still. And the military's running through a lot of equipment and needs more people all the time.
But the surprising thing here is that most of the Iraq and Afghanistan cost is getting covered outside the budget by supplemental appropriations. For instance, there's going to be one this spring for about $70 billion, another one next fall.
And really what this money is going for, this budget in defense department money, is the rest of the operation of the military. And that includes the rest of the world. We're looking at crisis in the Iran area. And there's a new four-year projection from the defense department today that puts a lot of emphasis on the Pacific Ocean.
So yes, national security, that's the top line of this budget.
CHADWICK: And you're saying $440 billion for defense. And that's, is there actually going to be two more substantial appropriations this year?
Mr. ELVING: Above and beyond that money, yes. Now, of course, the $440 we're talking about is in fiscal 2007. But I don't think there's anyone who doubts that we'll have appropriations, emergency as they call them, supplemental appropriations, in 2007, assuming that we're still in Iraq and Afghanistan.
CHADWICK: OK. Cut in growth of spending for Medicare.
Mr. ELVING: Yes, $36 billion over five years. The White House has had great pains to say this is not a cut. It's not a cut; it's a restraint in the rate of growth.
But if you are a higher-income Medicare beneficiary who's targeted for some restraint in that growth, or if you're a hospital or another provider, it's going to feel very much like a cut.
Growth entitlement programs is where the budget is if you go out five, 10, 15 years, most out of control. We don't know what will happen in terms of war or national security. But we do know that these entitlement programs will continue to grow, particularly as the baby boom retires.
CHADWICK: This is an election year, Ron. How about fiscal discipline and Medicare cuts in an election year?
Mr. ELVING: It's going to be a big problem. Congress just passed a lot of cuts in Medicare and Medicaid of its own. And it did so by the absolute minimum margin. You had to get Vice President Cheney into the senate to break the tie there. And the vote in the House was 216 to 214.
So, if you try to do that again in an election year this year, I don't think it's going to happen.
CHADWICK: And there are other cuts, of course.
Mr. ELVING: The president has slated 141 programs for reduction or elimination. That, of course, means mostly reduction. And that would help, of course, if all those cuts got made.
But last year, his list of such cuts and reductions was over 150 programs and only a minor fraction of that actually got cut. And the savings were in the, about, $6 billion range. So, that's not going to go too far against the deficit of $400 and some billion.
CHADWICK: Ron Elving, NPR senior Washington editor. Ron, thank you again.
Mr. ELVING: Thank you, Alex.
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