One of President Bush’s many lowlights in his first term was his signing the 10-year $190 billion farm bill, helping cement his reputation as a big government preservative. So it’s welcome news that the second term president is promoting a cut in the growth of agricultural subsidies. It’s about time we see some more fiscal restraint. Since most of the subsidies have been "concentrated among the larger firms", the farm bill was essentially just another brand of corporate welfare which distorted the functioning of the free market. If the Heritage Foundation and the Environmental Working Group are bedfellows on this, then it can’t be a bad thing.
Update: The 2006 budget was released. First, some historical perspective. In 2004, non-military discretionary spending increased 4.85%, the slowest rate of increase since 1998, and a welcome relief from the profligate spending of 2002 and 2003. The 2005 budget shows a 4.97% decrease from the 2004 outlay, but the CBO estimates the 2005 outlay to be a 5.69% increase. In the latest rendition:
In the budget for 2006, discretionary spending — meaning other than entitlement programs such as Social Security, Medicaid and Medicare — would rise just 2.1 percent, lower than the expected rate of inflation. Within that category, extra money would go to defense and homeland security, leaving most other discretionary programs frozen or falling.
There have been some, shall we say, interesting, remarks in the comments section, ranging from extreme skepticism to "I don’t believe it". But the budget sets a marker for which Bush will be measured. The actual budget will of course fall short of the proposal in terms of restraint, but the measure of success and of spending discipline will be how close Bush can ultimately get.
I look forward to basking in farm subsidy savings while voyaging to Mars.
What JDC said (well put).
Some wise words here from Mark Schmitt.
Be careful, they might be aiming for farms on Mars.
They will all be run by Eagle Scouts. (Farmer in the Sky, Robert Heinlein. Not bad apart from the crummy last couple of chapters…)
Charles: you might be wondering, why all this skepticism? Brad DeLong explains here.
Funny you should mention that. Heinlein always had the trope in his fiction of population pressure, but it looks like he had that wrong. Any number of interesting points there that are bloggable, methinks.
So this post is essentially an attack on the Republican Congress as fiscally irresponsible and in thrall to corporate interests, an acknowledgement that Bush sacrificed principle to political expediency, and a request that we believe that these same people, for no particular reason(not as if they have ever been scared of deficits before), have completely changed?
A longer version of the previos comments.
Never mind. Bird must be saving up a humdinger of a post about Gonzales.
I’m sure.
A bit more charitably, I would like to believe that things like this signal a turning point. But there is an important question to be answered: if the GOP, controlling all three branches of government for the last four years, had no will or desire to stop the party’s out of control spending habits–what makes you think that it will do so now, no longer restrained by concerns of Bush’s re-election?
There are plenty of variables that could point to a true end to this drunken spending binge. There are many other Congressional elections next year; that could be driving concerns. There are signs that the American people are starting to get very unhappy with the deficit, and certainly many conservatives are outraged about the damage the administration has done to the party’s reputation for fiscal responsibility. And of course, it really could be a general, collective realization that spending did get out of control and that responsible governance demands they rein it in.
Really, this is why I prefer that Congress and the presidency be controlled by different parties.
I look forward to basking in farm subsidy savings while voyaging to Mars.
Don’t forget the luscious new savings from raising the price of healthcare for veterans.
“It’s about time we see some more fiscal restraint.”
A republican president with a republican Congress; what stopped them the last four years?
I will believe it when I see it, not before.
And anyway, Farmer in the Sky was set on Ganymede, not Mars. Mars was Red Planet.
Catsy asks:
Well for one thing, the Republicans didn’t control the Senate when Tom Harkin (D-IA) was Chair of the Senate Ag committee and wrote the Farm Bill.
Come to think of it, the explosion in spending also coincided with “divided government” and a Democrat-controlled Senate that pushed for higher levels of spending than either the POTUS or GOP-controlled House. Prior to Jeffords defection, all discretionary spending was increasing at about 4 percent a year and it wasn’t until Democrats gained control of the Senate that we saw double-digit increases in even just the non-defense/homeland security discretionary spending*.
Since the GOP regained control of the Senate in 2002, they’ve slowed the rate of growth of discretionary spending (not enough to suit my tastes) and since the 2004 elections which gave us increased GOP majorities in both the House and Senate, they seem determined to hold it below the rate of inflation. Which is a damn site better than the Kerry proposal to add another 2.3 Trillion of new spending on top of the already existing level of spending that he voted for.
* Which negates the claim that this was because of 9/11 and the need to spend money on homeland security or the military.
Oh come off it, Thorley. Even lots of Republicans are getting antsy about the Bush Administration’s spending habits.
I’m from Iowa and my mom worked for Tom Harkin many years ago. I don’t think he invented the Farm Bill or the idea of subsidies for farms. Haven’t there been various types of farm subsidy for decades, back to the twenties and thirties?
I’m not defending farm subsidies. I’m an urban Iowan. But as long as there are farmers who vote as a bloc for whoever delivers the gooies, the goodies will keep on coming.
Ahhh, Iowa Senators, like Tweedle Dee and Tweedle Dummer.
When the Democrats recommend cuts in programs the complaints, so far expressed, will have some substance. Until then, just a lot of hot air.
Lily’s question got me curious about the history of the Farm Subsidies in the US and googled up this
Also, this
link was interesting. Here in Japan, subsidies to rice farmers are a huge political problem, and I’m not sure what is correct, especially since my father in law is a rice farmer.
“but the measure of success and of spending discipline will be how close Bush can ultimately get.”
And, umm, so what? What consequences will he and his party face if he fails? Overseas bond traders may help the deficit hawks, but are you or any other Republican promising to help install a Democratic Congress in 2006?
There are no consequences, so there is no responsibility.
Timmy wrote:
Well put.
Lily wrote:
Yep and I’m one of them. However now that the administration is trying to exercise some long overdue fiscal restraint (although not restrained enough for my tastes) by proposing to hold discretionary spending below the rate of inflation and slow the rate of growth of entitlement programs while both the House and Senate are talking about fixing the Medicare prescription drug benefit; I’m inclined to give them my encouragement and push them to go even further in restraining spending.
I would like to reintroduce my interest in strongly supporting the reversal of the Bush tax cuts if someone here proposed an equal amount of non-military spending cuts to be implemented as part of a deal. We can do it as part of a the Student Congress project (ahem).
I’d be happy to see cuts in farm subsidies – to more or less 0. I’d also be happy to target cuts at the Pentagon to incentivize them to deal with their waste (according to a recent report most of the most wasteful programs in the govt are there). I’d also cut NMD funds to 10% of their current levels, ditto bomb development. I’d probably also cut a lot of pork from Republican districts. Oh, and kill NCLB. And probably export subsidies if those count.
However, we’re at war, and it makes no sense to me to claim that pre-war spending levels should be reduced without absolute tax increases.
“I would like to reintroduce my interest in strongly supporting the reversal of the Bush tax cuts if someone here proposed an equal amount of non-military spending cuts to be implemented as part of a deal. We can do it as part of a the Student Congress project (ahem).”
Since the tax cuts were in the range of 2% of annual GDP, and the entire discretionary budget, once defense, interest on the debt and entitlements are removed, is only in the range of 4% of annual GDP, you are asking for discretionary spending to be reduced about 50%. Are you surprised there are no takers?
Also, it seems we are (intentionally or not) segregating into a budget thread where only liberals comment (hilzoy’s) and one where primarily conservatives comment (this one).
I’m kind of wondering how Agriculture got a $23 billion (+32%) bump in 2005. Plus there’s this $35 billion in “allowances”. And was it really necessary to double the outlays for Education from 2001?
Probably Defense could use a haircut, but I’m thinking that the tax cuts have to go. They’re not causing receipts to grow faster than outlays, and that’s hardly a recipe for balancing the budget…ever.
“I would like to reintroduce my interest in strongly supporting the reversal of the Bush tax cuts if someone here proposed an equal amount of non-military spending cuts to be implemented as part of a deal.”
I will top out in radicalism. I would have to look at the details, but I would go back to the late fifties. Trade you elimination of most of the Great Society and Nixon years in exchange for a 98% tax on income over ten million, a universal draft without exemptions, and massive military/aerospace/energy expenditures.
Amusingly enough, the budget contains $1,000,000,000 in revenues from … you’ll never guess in a million years … ANWAR!
Bob,
“I will top out in radicalism. I would have to look at the details, but I would go back to the late fifties. Trade you elimination of most of the Great Society and Nixon years in exchange for a 98% tax on income over ten million, a universal draft without exemptions, and massive military/aerospace/energy expenditures.”
I don’t accept that deal. The total percentage of GDP received as taxes stays the same, while spending goes down. In other words, the budget is balanced by reducing spending only.
“the entire discretionary budget, once defense, interest on the debt and entitlements are removed, is only in the range of 4% of annual GDP, you are asking for discretionary spending to be reduced about 50%. Are you surprised there are no takers?”
Actually I’m willing to allow for military cutbacks that don’t involve overall manpower reductions–I think we probably need to increase manpower. The problem with your response is found in “once… entitlements are removed”. ‘Entitlements’ covers a lot of ground that shouldn’t necessarily be thought of as untouchable in the long run.
“‘Entitlements’ covers a lot of ground that shouldn’t necessarily be thought of as untouchable in the long run.”
No doubt. However, unless you were proposing the tax cut reversal to be equally long run in implementation (which I would quickly oppose), entitlement reform is just not comparable in concept.
Yup, this is the problem. For one side the spending is non-negotiable for the other the tax-cuts are non-negotiable. The American people support both sides of that argument, and therefore we are a budget disaster-area anytime economic growth isn’t huge.
“The total percentage of GDP received as taxes stays the same, while spending goes down. In other words, the budget is balanced by reducing spending only.”
My plan says nothing about reducing spending, only about where it is spent. Tho I would like major debt reduction in there. I said “massive” military/energy/aerospace expenditures. I would have added communications, like fiber-optics, but wasn’t sure how to phrase it. The 98% of course implies a steeply graduated income tax, with many brackets.
There are a lot of ideas in there, but basically I think that is how a healthy “liberal” society as in Democrat, as in the people who passed the Great Society and Civil Rights Bills, was built. Those are the conditions that created the 60’s and 70’s.
We’re willing to make cuts, SH – see above. Get rid of farm supports and the Commerce Dept if you want (esp if I get a nominal NMD). If you can balance the budget with discretionary spending cuts, I’d be interested in seeing what you have in mind.
“Get rid of farm supports and the Commerce Dept if you want (esp if I get a nominal NMD).”
Great! Not nearly as much money as the tax cuts, but a great start.
It ought to go without saying that as I draw 100% of my income from the military-industrial complex, anything I might have to say regarding military budget cutting might be tainted by concerns like keeping my job, etc. I really ought to have a standard disclaimer for this, but that’s way too much work & forethought.
I think there are probably some programs that deserve to be back-burnered, certainly. But cutting across the board is probably a bad idea, in that doing so will increase the cost of acquisition (in general, assuming you’re just stretching out the program over time and will eventually accomplish the same end). Long and short: anything you want to keep, keep intact. Anything you think might be better off studied or even cut loose, relegate to the appropriate (read: much lower) level of effort. Believe it or not, there are some programs intended to (and actually in low rate production) drastically reduce the lifetime cost of existing systems by replacing them with something less maintenance-intensive and more reliable.
Take that for whatever you think it’s worth. I’m an engineer, but not one of those systems engineers that do little other than cost tradeoffs.
Slart: fair enough.
Anyway, this all seems to be getting pretty clear to me. To quote Krugman from the NYT:
“In spite of the expense of the Iraq war, federal spending as a share of G.D.P. isn’t high by historical standards – in fact, it’s slightly below its average over the past 20 years. But federal revenue as a share of G.D.P. has plunged to levels not seen since the 1950’s.
Almost all of this plunge came from a sharp decline in receipts from the personal income tax and the corporate profits tax. These are the taxes that fall primarily on people with high incomes – and in 2003 and 2004, their combined take as a share of G.D.P. was at its lowest level since 1942. On the other hand, the payroll tax, which is the main federal tax paid by middle-class and working-class Americans, remains at near-record levels.”
Are you proposing a cut in payroll taxes, rilkefan? Wonder what’d happen then?
Seriously, time for bed. See you in the morning.
Sure, raise the cap, get the estate tax back, increase the retirement age, cut back benefits to the wealthy and even the not-so-wealthy, and institute sane health care policies (starting with Kerry’s emergency benefit), and you could trim the payroll tax a bit. After all, the reason it’s so high is that Greenspan and Ronnie found it easier to push a regressive tax while promising that the wealthy would pay when the bonds came due than to set up a responsible system, and I’m happy to aim for something responsible.
“is that Greenspan and Ronnie found it easier to push a regressive tax while promising that the wealthy would pay when the bonds”
At some point yesterday the Democrats’ complicity in this popped into my head, in the form of wondering if an attempt to save some spending programs generated a compromise that all could use to avoid responsibility.