Wednesday, November 12, 2003

"Official" Figures Show 27% Increase in USG Spending in 2 Years

Government Outgrows Cap Set by President

Discretionary Spending Up 12.5% in Fiscal '03
By Jonathan Weisman in the Washington Post

Confounding President Bush's pledges to rein in government growth, federal discretionary spending expanded by 12.5 percent in the fiscal year that ended Sept. 30, capping a two-year bulge that saw the government grow by more than 27 percent, according to preliminary spending figures from congressional budget panels.

The sudden rise in spending subject to Congress's annual discretion stands in marked contrast to the 1990s, when such discretionary spending rose an average of 2.4 percent a year. Not since 1980 and 1981 has federal spending risen at a similar clip. Before those two years, spending increases of this magnitude occurred at the height of the Vietnam War, 1966 to 1968.

The preliminary spending figures for 2003 also raise questions about the government's long-term fiscal health. Bush administration officials have said fiscal restraint and "pro-growth" tax cuts should put the government on a path to a balanced budget. Bush has demanded that spending that is subject to Congress's annual discretion be capped at 4 percent.

But the Republican-led Congress has not obliged. The federal government spent nearly $826 billion in fiscal 2003, an increase of $91.5 billion over 2002, said G. William Hoagland, a senior budget and economic aide to Senate Majority Leader Bill Frist (R-Tenn.). Military spending shot up nearly 17 percent, to $407.3 billion, but nonmilitary discretionary spending also far outpaced Bush's limit, rising 8.7 percent, to $418.6 billion.

Much of the increase was driven by war in Afghanistan and Iraq, as well as homeland security spending after the attacks of Sept. 11, 2001. But spending has risen on domestic programs such as transportation and agriculture, as well. Total federal spending -- including non-discretionary entitlement programs such as Social Security, Medicare and Medicaid -- reached $2.16 trillion in 2003, a 7.3 percent boost, according to the Congressional Budget Office.

White House officials have said the president's 4 percent annual growth cap was never supposed to curtail "one-time" spending requests, such as natural disaster aid or wars. But even if such emergency spending measures are removed, spending jumped last year by 7.9 percent, Hoagland said.

"Getting growth down to 4 percent? We're still not there, not by any stretch of the imagination," he said.

Administration officials say spending is being brought under control. White House spokeswoman Jeanie Mamo said the president cut spending growth, excluding the Pentagon and homeland security, to 6 percent in 2002 and 5 percent in 2003, and has proposed to hold all discretionary spending to 4 percent growth this year.

"The president has said that he would spend what's necessary to win the war on terrorism and protect Americans at home," she said, "but outside these items, he has put a serious brake on other spending, which is key to halving these deficits over five years."

Even some Republicans have trouble squaring such comments with the evidence. "It's still more than it ought to be," Hazen Marshall, Senate Budget Committee staff director, said of spending that excludes the military and homeland security.

Official spending figures for fiscal 2003 will not be released until January, when the nonpartisan Congressional Budget Office unveils its next 10-year federal deficit forecast. But the latest figures track closely with the CBO estimates released in August.

"I don't expect the official numbers to be any different than those, or not much different," Marshall said.

Regardless of the final numbers, there can be little doubt that government growth has been accelerating, said Richard Kogan, a federal budget analyst at the Center on Budget and Policy Priorities. And although Congress ultimately controls the purse strings, Bush is not immune from criticism, said Rudolph G. Penner, a Republican and former CBO director.

"The most interesting thing is Bush has not vetoed anything, let alone a spending program," Penner said. "One wonders how serious the White House is about holding the line."

Stan Collender, a federal budget analyst at Fleishman-Hillard Inc., said: "This is an administration that cannot possibly take up the mantle of fiscal conservatism. It's probably the least fiscally conservative in history."

Penner said the lapse in spending restraint occurred in two stages. First came large, projected budget surpluses at the end of the Clinton administration. Discretionary spending rose 0.9 percent in 1998, then 3.6 percent in 1999 and 7.5 percent in 2000. The projected surpluses have disappeared into a flood of red ink, but the 2001 terrorist attacks, coupled with a recession that year, eliminated any sense of restraint beyond rhetoric, Penner said.

"After September 11, it was 'We have to do anything we can to pull ourselves out of recession and protect ourselves,' " he said, adding that the surge in deficits and spending have so far had few political ramifications. "I don't remember a time when there's been so little commentary on it, and I can't really explain it."

Marshall said the surge in military spending was inevitable, once the nation mobilized for war, first in Afghanistan and then in Iraq. The nonmilitary discretionary spending increases have been driven by increases in homeland security spending, he said.

But even after factoring those out, some Republicans say spending is rising too quickly. Marshall noted that after Republicans took control of Congress in the 1994 elections, discretionary spending actually fell, by 1.6 percent between 1994 and 1996.

Budget experts said taxpayers should not anticipate a return to austerity anytime soon. The military bill that passed Congress yesterday would mandate $40 billion in additional spending over the next decade, Marshall said. Nearly half of that would be for veterans' benefits, but $18 billion would finance a controversial program to buy and lease military tanker planes from Boeing Co.

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