TOPICS > Politics

Spending Priorities

November 10, 2005 at 12:00 AM EDT


JEFFREY BROWN: At the Capitol this morning, it was clear that the difficult business of sorting out government spending priorities would prove even more difficult than usual. House members acknowledged that several controversial provisions in the Republican-written budget bill had put its approval in jeopardy.

CONGRESSMAN: I am not all together confident that we will succeed yet.

JEFFREY BROWN: House Republican leaders are pushing a $51 billion deficit reduction package and spent today counting votes among their rank and file. Their decision to pull the arctic oil drilling provision from the bill helped gain the backing of party moderates, New Hampshire Republican Charles Bass was one.

REP. CHARLES BASS: We’re happy to report that at this point the budget package will not contain provisions to drill in the arctic refuge.

JEFFREY BROWN: But the move also cost Republicans some support from conservatives who demand the inclusion of the Alaska drilling measure. Republican leaders can afford to lose only a handful of party members because Democrats are solidly opposed to the budget bill.

REP. JAMES McGOVERN: If this passes today, the Republicans will have succeeded in creating a government without a conscience.

JEFFREY BROWN: Democrats argue the proposed savings in the next five years come at the expense of several desperately needed social programs. The measure allows states to impose new costs on Medicaid recipients, cuts funds for student loans, restricts access to food stamps and trims farm supports. Minority Leader Nancy Pelosi expressed her concerns.

REP. NANCY PELOSI: Raises the cost of student loans; cuts health care for the poorest children in America. It’s really a disaster; it is an embarrassment.

JEFFREY BROWN: Republican Marsha Blackburn countered that charge on the House floor.

REP. MARSHA BLACKBURN: The left is out in full force telling Americans that we are about to cut Medicaid. Mr. Speaker, shame on them. Next year, under this bill, Medicaid will grow 7 percent — grow 7 percent. That’s not a cut. We’re taking the rate of growth from 7.3 to 7 percent.

If the left wants to lie about it, that’s not a lot that we’re going to be will be able to do to stop them.

JEFFREY BROWN: But late this afternoon, Republican leaders announced they would postpone a vote on the bill, acknowledging they were short of the votes necessary for passage.

We look at the debate over spending priorities now with Brian Riedl, lead budget analyst at the Heritage Foundation, a conservative public policy institute, and Deborah Weinstein, executive director of the Coalition on Human Needs, a consortium of advocacy groups working on issues affecting the poor. Welcome to both of you.

Starting with you, Mr. Riedl, help people understand what’s going on in this battle. Define for us the underlying debate over government spending and programs for the poor.

BRIAN RIEDL: The government has been expanding at a rapid rate. Total federal spending is up 33 percent just in the last four years. That means right now, the federal government spends $22,000 per household for the first time since World War II and it’s going to get a lot worse.

Federal spending is projected to increase so fast we would have to raise taxes by $7,000 per household, within a decade, just to balance the budget. To address that, these reforms do not actually cut entitlement spending, they merely reduce the five-year growth rate from 39 percent down to 38 percent. Clearly, that is not too much to ask.

Furthermore, only a quarter of the reforms come out of anti-poverty programs. So the reforms are spread across a lot of different programs. These are reforms that are needed as a first step to get spending under control; otherwise we are facing a $7,000 per household tax increase within a decade.

JEFFREY BROWN: Deborah Weinstein, how do you define the underlying debate?

DEBORAH WEINSTEIN: This is all about priorities. Are we going to have an America in which children can have enough to eat and grow up healthy and be able to afford college and everyone can afford health coverage, or are we going to go in the opposite direction because the House budget that had to be pulled today did not do the priorities that Americans believe in.

Instead, it is absolutely made cuts in health coverage. There would be fewer children and families struggling families getting health coverage, fewer getting food stamps. People with disabilities would have to wait longer for their benefits. Even foster care and child support would be cut. That’s not the priorities that Americans want.

JEFFREY BROWN: Let me give you both a chance to look at a specific thing. So what would be a good example of what you think would be a good cut that makes some sense?

BRIAN RIEDL: The reconciliation bill contains a small reduction in the growth rate of corporate farm subsidies. Farm subsidies are America’s largest corporate welfare program; despite talk about helping small struggling family farmers, two-thirds of all farm subsidies go to the richest 10 percent of farmers with an average income of $135,000 a year.

Farm subsidies go to members of Congress, Fortune 500 companies — even people like David Rockefeller, Ted Turner, Scottie Pippen.

The House bill poses a slight reduction in the growth rate of subsidies and help undue this corporate welfare program to make sure that spending is better targeted. I think that’s something the American people should see as a common sense solution.

JEFFREY BROWN: What about in a social program that we think of as aimed at the poor, Medicaid, food stamps?

BRIAN RIEDL: There are some programs aimed at low-income families. One, in food stamps, all they are really doing is fixing a quirk in the law on food stamps that says that some people who are too rich to qualify for other welfare programs can currently qualify for food stamps.

That seems to be something that’s probably not necessarily needed if these people are making too much already to qualify for other welfare programs. So it closes that loophole.

Keep in mind food stamp spending is up 78 percent since 2000 and under this bill would still continue to grow. But some of these families that already make too much to qualify for other welfare programs may no longer qualify for food stamps. I don’t think that in our budget environment that’s a draconian terrible cut.

JEFFREY BROWN: What do you think specifically on the food stamp issue?

DEBORAH WEINSTEIN: It boggles the mind — too rich. What has happened here is that people have moved from welfare to work. That’s exactly what we wanted. They are slightly above the poverty line.

And what has happened in some places, they have been able to have food stamps. That’s the kind of work support that enables a family to make ends meet, get by, stay in the workforce; 225,000 people will be cut. Their children, and the working adults will be cut because of this proposal. That’s wrong.

And why? Why are we doing those kinds of things? Really, what we haven’t talked about so far, it’s all so that we can pay for tax cuts for very wealthy people. That’s the hidden thing that’s coming up next week or whenever they can get to it — more tax cuts so that rich people can do well, far better, while vulnerable people like families who need help with food stamps or medical care, they are the ones who have to bear the burden.

JEFFREY BROWN: You wanted to jump in?

BRIAN RIEDL: Yes. The tax policies are not actually new tax cuts. The $70 billion refers the cost to extend current tax cuts such as the alternative minimum tax, which is hitting a lot of middle income families, and the other tax cut policies enacted in 2003 that have helped jumpstart the economy, create jobs and, something a lot of people may not have expected, actually helped revenues increase by 15 percent last year.

If these tax cuts are helping revenues increase, are helping create jobs and helping grow the economy, we wouldn’t want to reverse them and raise taxes. And the $70 billion number we keep hearing for tax cuts are really just the cost to extend expiring tax cuts. They are not actually new policies.

JEFFREY BROWN: Isn’t there an argument that in an era of the budget deficit you have to make some cuts somewhere? Is your argument that it’s in the wrong place — on the wrong people?

DEBORAH WEINSTEIN: The cuts that were before the House today, and were polled, certainly are in the wrong place if you are talking about having fewer families, fewer children, fewer older people being able to have Medicaid. We learned from the Congressional Budget office today that the cuts they propose will come out of people not being able to afford care. And, in fact, the Congressional Budget Office said that some of these people will find their way into emergency rooms because they won’t be able to go to doctors. That’s wrong.

JEFFREY BROWN: I’m sorry. Let me ask you both about the politics of what happened today. A lot of it looks like now it is among Republicans: Moderates versus the more conservative Republicans. Is that a fair reading of what happened today when the leadership had to pull the bill?

BRIAN RIEDL: Well, unfortunately, although we’re facing run away spending that could induce massive tax increases, zero Democrats in the House and Senate have endorsed any of these common sense reforms for reining in spending.

So for the Republicans to pass it, they need to get 94 percent of the House Republicans to agree. That can be very difficult.

And I think it is a sad commentary on the Republican Party right now that with spending growing 33 percent since 2001 they can’t enact reforms to merely reduce one half of 1 percent of the entitlement spending over the next five years.

If we don’t reduce the growth rate of spending — and again this is merely from growing 39 percent to 38 percent, if we don’t reduce the growth rate of spending, we are going to have to raise taxes substantially so we can either make the difficult decisions now or make even more difficult decisions later because the deficit will induce such large tax hikes.

JEFFREY BROWN: Do you, Ms. Weinstein, see a shifting in politics reflecting changes in the way people and Congress thinks about budget priorities?

DEBORAH WEINSTEIN: I think there is a shift. I think more light is shining on the decisions that they are making. Thousands of people around the country are making their views known that these priorities are wrong — that we need to be investing in our children and our elders, and that we ought not to be handing billions upon billions in additional tax cuts to wealthy people.

I think those are the voices that are starting to be heard in Congress today and they had to pull the bill and that’s good.

JEFFREY BROWN: We just have a short time now but all this moves to next week now. What do we look for? What’s the key?

BRIAN RIEDL: The key is to see if the House can finally come to 218 to get this bill into conference. Even if the House gets the majority next week, that doesn’t actually enact it. It moves them into the Conference Committee with the Senate.

Hopefully, the taxpayers will see a bill that does not have to cut more. They have already cut ANWR out of the bill; they’ve already cut other spending. Hopefully the taxpayers will not see more removed from the reconciliation bill, because otherwise that means bigger tax hikes.

JEFFREY BROWN: Is there a key thing that you’re watching for?

DEBORAH WEINSTEIN: I’m not sure they can do it. And we will certainly continue to be watching. We will be watching to make sure that the lowest income people don’t pay the brunt for the poor choices that they have been making so far.

JEFFREY BROWN: All right. Deborah Weinstein and Brian Riedl. Thank you both very much.

BRIAN RIEDL: Thank you.