President Bush has said his administration “will do what it takes” to pay for damage caused by Hurricane Katrina and Hurricane Rita.
So far, it appears he will do whatever it takes as long as it doesn’t involve raising taxes or cutting military spending. The day after his Sept. 15 speech in response to Katrina, he ruled out increasing taxes and said costs could be handled by cutting “unnecessary spending.”
It turns out that at least part of that “unnecessary spending” will come out of social programs like Medicaid. Congress is working to determine how it can cut those programs by more than $35 billion over five years – a great idea with hundreds of thousands of citizens in financial ruin.
Obviously, these cuts will not pay for reconstructing the Gulf States, which is projected to cost as much as $150 billion. So how is Bush planning to pay for the necessary repair? Easy: He’ll borrow it.
He has borrowed from central banks in China and Japan to pay for the war and cut taxes simultaneously. In fact, 46 percent of the national debt (about $2.1 trillion) is owed to foreign nations.
Moreover, taxpayers will shell out roughly $208 billion this fiscal year to cover interest on this debt at an average annual interest rate of about 4.5 percent, assuming a simple fixed rate.
At those rates, a loan of $150 billion to cover reconstruction would cost about $6.75 billion per year, or $34 billion over the next five years.
So the $35 billion of “unnecessary spending” on social programs will barely pay the interest. Add that to the interest the United States racked up this year, without Katrina, and the billions it’ll pay next year, and it equals a big mess for the next person to clean up.
There’s also the fact, as reported by The Washington Post, that nearly $300 billion in emergency spending on the war in Iraq has “never been offset by cuts in other areas or tax increases.”
This may appear to be surprising behavior coming from a “conservative” administration, but a quick look at Bush’s fiscal history shows that it’s par for the course.
Bush has never vetoed a spending bill. He passed the biggest highway bill ever, even though the $286 billion total was $36 billion higher than what he said he would accept. The prescription drug plan he passed will cost about $700 billion over 10 years.Congress also deserves a share of the blame. Although Republicans have traditionally aimed to reduce the government’s size, Congress has allowed discretionary spending to rise more under Bush than under Lyndon B. Johnson, according to the conservative American Enterprise Institute’s Veronique de Rugy.
New York Times columnist David Brooks aptly described the spending crisis on a Sept. 23 episode of PBS’ “The NewsHour”:”So instead of having a governing philosophy that will tell them, ‘I’m going to spend it here but not there,’ [Republicans] have a governing philosophy that is irrelevant to actually governing,” Brooks said. “So they take that anti-governing philosophy and they just toss it out the window and when they get here they just spend like sailors.”
Now is the time to resuscitate the small-government ideal. Making responsible cuts will be difficult, but the Gulf States need to be reconstructed without driving up debt or cutting social programs that will benefit hurricane victims. Congress’ proposals for cuts are unacceptable.
Bottom line: Bush needs to stop borrowing money. He needs to find some brainpower (preferably someone else’s), look to old Republican ideals and find a solution that won’t dig this country into a hole it can’t get out of.