Bush budget: All guns, no butter

Bush budget: All guns, no butter
Labor Research Association
March 2005

Feb. 15, 2005--Bush's $2.57 trillion budget for 2006 increases military spending by 4.8 percent - not including the war in Iraq - and cuts all other federal government programs by 0.5 percent, with the deepest cuts aimed at services for working Americans and the poor.

The primary purpose of the budget, released on February 7, is to fund the war machine that Bush needs to push forward his foreign policy objectives in the Middle East and guarantee a position of military dominance in the world. The 2006 budget represents a 41 percent increase in military spending since 2001.

For fiscal year 2006, which begins in October of this year, military spending will rise to $419.3 billion, not including the $100 billion that Bush will request for the wars in Iraq and Afghanistan and billions more for the military hidden in other agency budgets.

U.S. military spending is now larger than military spending in the rest of the world combined. The second largest military spender is China, at approximately $51.0 billion a year, followed by Russia at $50.8 billion, Japan at $41.4 billion and the United Kingdom at $41.3 billion. Iran and North Korea - the two countries that Bush most often cites as military threats - spend about $5 billion each.

The Bush budgets no longer represent simple adjustments or new priorities in federal spending, but a set of fundamental changes. The changes include redirecting all federal resources to the military, channeling huge amounts of federal spending to the private sector, shifting the tax burden away from the corporations and the wealthy and onto the working class, and relying on deficit spending to finance the military buildup without raising taxes.

The federal deficit for this year will top $427 billion and bring outstanding government debt to nearly $5 trillion. Bush projects a 2006 deficit of $390 billion, but this projection is based on estimates of economic growth and tax revenues that are out of line with expert forecasts.

Interest payments on the debt will continue to consume ten percent of total federal spending. Almost half of the borrowing for this year and next will be financed by foreign government banks.

The 2006 budget does not include any allowance for the $2 trillion in transition costs that will occur if Bush's Social Security privatization plan makes it through Congress.

Bush has also changed federal procurement policies. Procurement spending now stands at $275 billion a year, with huge increases in outsourced services from private companies. Private contractors working for the U.S. government now outnumber federal employees by two to one.

Some of the deepest budget cuts for 2006 will hit the Education Department, where federal grants for vocational education, anti-drug efforts and literacy programs will end. The 2006 budget for health and human services is $67.2 billion, down 1.0 percent from 2005. The 2006 budget also slashes spending for housing and urban development by 11.2 percent and cuts funding for food stamps by $1.1 billion. Funding for the Labor Department in 2006 is set at $11.5 billion, down 4.0 percent from 2005.

The most damaging long-term aspects of the 2006 budget are provisions for making the Bush tax cuts permanent, which will guarantee huge ongoing annual deficits, add $10 trillion to the national debt over the next 20 years, and shift more of the tax burden onto workers.

Under the Bush plan, corporate income taxes will represent just 10.1 percent of total federal receipts in 2006, falling to 9.1 percent by 2010, while individual income taxes will contribute 44.4 percent of revenues in 2006, rising to 48.0 percent by 2010. The portion of federal revenues paid by corporations during Bush's tenure is the lowest ever recorded. As a percentage of GDP, corporate taxes under Bush are at their lowest point since the Great Depression of the 1930s.

The 2006 Bush budget is not a done deal. In March and April, the House and Senate must construct budget resolutions. From May through July, Congressional appropriations committees work on budgets for discretionary programs and additional committees work on funding for mandatory programs. Theoretically, all the budget work must be complete by October 1, but Congress often misses this deadline and passes bills for temporary funding.

Bush and the Republican majority in Congress argue that the domestic spending cuts are necessary to restrain spending, but this claim is a thin guise for the militarization of federal spending and permanent deficits created by tax cuts.

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