Year in Review: More Poor Budgetary Stewardship

by Guest Blogger, 12/13/2005

Revenue & Spending, Government Matters

When it came to tax and budget issues, 2005 was an overwhelmingly disappointing year in the nation's capital. Facing long-term challenges and numerous obstacles, both President Bush and the U.S. Congress seemed to suffer from a severe case of disconnectedness from the fiscal and economic realities that should have moved them toward more rational, healthy tax and budget policies. The country is on an unsustainable economic path, largely due to tax cuts aimed at benefiting the wealthy and corporate elites, combined with the long-term concerns of an aging population and shamelessly exorbitant spending on defense and homeland security. The federal budget, a blueprint for our national priorities, sends the wrong message and will have the wrong results. We now have an economy that is chugging along while creating a chasm between the rich and the rest. While Congress finagles more tax cuts, people continue to suffer in the economic aftermath of Hurricane Katrina. Long-term investments in our people, environment and infrastructure go largely ignored.

Below is a summary of the year's continued misguided priorities, irresponsible and failed policies, and far-too-frequent missed opportunities. The American people should expect more from its elected officials, and those leaders should be able to deliver better ideas, more principled leadership, and more tangible results than they have this year. Let's hope 2006 brings these things and along with them a more promising future for America.

Budget/Appropriations

A Radical and Irresponsible Budget
President Bush sent his proposed Fiscal Year 2006 (FY 06) budget to Congress on Monday, Feb. 7, in a package that was one of the most special-interest-driven and fiscally bleak budgets presented in recent memory. The budget called for a large transfer of benefits to corporate special interests and the most well-off through additional tax cuts, regulatory and litigation "reforms," and other measures that weaken public safeguards and government in general. At the same time, the president proposed cutting a variety of programs serving low- and middle-income Americans. The budget called for a trade-off that would be both unfair and unwise, and many of his proposals were adopted by Congress with little informed debate, inclusion of alternative views, or compromise.

Congress' Continued Failure To Do Its Job
Congress failed to completing the Fiscal Year 2006 appropriations bills before the start of the fiscal year on Oct. 1, causing the government to be funded through a stark continuing resolution (see below) that under-funds many government programs. The consistent inability of Congress to complete its most core duties in a timely fashion points to larger problems not only with the political environment in Washington, but also to the day-to-day choices and priorities identified by the leaders of the House and Senate.

Budget Process

One-Sided PAY-GO
The administration proposed and Congress adopted one-sided Pay-As-You-Go (PAYGO) rules that would bar any legislative changes to mandatory spending that would increase the deficit or raise taxes. The only option for increasing funding for mandatory programs under this proposal would be decreases in funding for other mandatory programs, once again pitting programs serving low- and moderate-income Americans--such as unemployment insurance, Food Stamps, and Medicaid--against one another. No comparable fiscal restraints were adopted for tax cuts, and Congress continued to cut taxes primarily for the most wealthy, even after Hurricane Katrina laid bare entrenched, dehumanizing poverty that remains far-too-common in America today. The Senate voted twice to reinstate true PAYGO rules and failed both times by a single vote.


High-Jacked Reconciliation Process Expands Deficits
In its budget resolution, Congress called for a bill that would allow for special fast-track protections for $34 billion in cuts to mandatory programs and more than twice that amount in additional tax cuts. Not only would this bill increase the deficit contrary to the original purpose of the reconciliation process, but also showcase the cruel combination of program cuts for low- and middle-income Americans and tax break handouts to the wealthy.
Crafty Continuing Resolution Furthers Spending Reduction
The continuing resolution (CR) still in place for part of the government as constructed by Congress funds government programs at the lowest conscionable level. Because of its unusual structure, the CR has resulted in the dramatic under-funding of programs, setting spending levels at the lowest of three possible levels: the enacted totals for Fiscal Year 2005 (FY05), or either of the completed levels of the House or Senate FY06 spending bills. The structure also resulted in funding levels and policies being enacted that had only been debated in and passed by one chamber of Congress, thereby bypassing part of the constitutional process by which money is appropriated from the Treasury and leaving less opportunity for stakeholder input. At the time the CR was passed, only two appropriations bills had been signed into law.
Dishonest Budgeting and Deceptive Analysis
The Bush administration has continued to promote dishonest, and manipulative budget practices that have decreased the transparency of the federal budget and altered the debate about important long-term policies. This includes skewing budget analysis in order to reinforce and support political goals, omitting certain costs of proposed policies and actual war costs from budget analysis, and assuming the extension of the president's tax cuts. In doing so, the White House has mislead Congress and the American people about the fiscal health of our country and our capacity to meet current and future financial obligations.

Economy and Jobs

Congress Fails to Increase Minimum Wage For Eighth Straight Year
Despite numerous efforts to do so in the Senate this year, Congress will close out its eighth straight year without passing an increase to the federal minimum wage. Many states, tired of waiting for leadership from the federal level, have instituted their own minimum wage increases.


Economy Improves, Fails to Benefit Most Americans
Despite better job growth, stronger economic indicators, and a positive year for the stock market, most Americans families continued to see little improvement in their household financial situations and prospects. The government reported more Americans living in poverty (over 1.1 million more), more Americans lacking health insurance (over 800,000 more), still more households experiencing food insecurity (over 2 million more), and an unprecedented fifth straight year of stagnant wages. While benefiting those already well off, current economic policies have left the vast majority of American households spinning their wheels or moving backward.

Estate Tax

House Continues to Undermine Common Good
For the third time in four years the House of Representatives passed a bill to permanently repeal the estate tax. The irresponsible and dangerous bill will undermine the public sector's ability to create and sustain opportunity for generations to come.


Fate of Estate Tax Rested With Senate
Once again, the fate of the estate tax was left up to the Senate where a House-passed repeal bill had died in 2003. Despite a vigorous push by pro-repeal corporate interests, Senate GOP leaders was unable to bring the estate tax issue forward for a vote. With a vote scheduled on full repeal in September, Hurricane Katrina struck, knocking the issue off the Senate agenda for the remainder of 2005.

Government Performance

PART Enters Third Year of Futility in Rating Federal Programs
The Program Assessment Rating Tool, the White House's tool for evaluating federal programs, entered its third year of incorporation by the Office of Management and Budget. Unfortunately, PART has thus far failed as an unbiased, useful mechanism to grade programs across the federal government, instead proving itself to be but a thin veneer of accountability and good government, thrown up to deflect attention and criticism from controversial, politically biased judgments. In this sense, the PART mechanism itself, ironically, continues to fail to demonstrate results and has not garnered the amount or breadth of support necessary for it to impact the makeup of the federal government.


Results/Sunset Commissions Proposals Introduced in Congress
The White House submitted a legislative proposal to Congress that would imperil the balance between the executive and legislative branches, by concentrating power in the White House free of democratic accountability, and expose long-standing public protections to powerful special interests and industry insiders. The proposal would jeopardize future program funding and give the executive branch the power to reorganize federal offices and departments.

Federal Tax Policy

President's Tax Reform Panel Spends Year Producing Recommendations
The President's Advisory Panel on Tax Reform submitted its report to Treasury Secretary John Snow recommending ways to make the tax code simpler, fairer, and more pro-growth. The recommendations had been in the works since January, when President Bush established the panel through an executive order. Fortunately, the long-awaited recommendations turned out not to be the rubber stamp for conservative regressive tax policies many observers expected, but instead represent a mix of ideas that confront the difficulty of enacting tax reform, not only in a harshly divided political environment, but also with a deeply unhealthy federal budget. Unfortunately, however, the recommendations are unlikely to be enacted as proposed, as the administration is expected to cherry-pick the aspects of the proposals it prefers for its Treasury recommendations to be released in early 2006.


Congress and Administration Continue Obsession with Tax Cuts
From reconciliation instructions to Social Security overhaul proposals, all the way to hurricane relief and recovery efforts, the administration and Congress remain focused, to the point of mania, on budget-busting tax cuts. No matter the challenge faced, our national leadership appears to have found the answer: a tax cut. Yet most of their proposals give extraordinarily disproportionate benefits to the wealthy and will fundamentally erode what little security the government can give its citizens, by exacerbating the long-term fiscal imbalance currently in place in our federal budget.

State Fiscal Policy

Amid Misguided Efforts to Shrink State Governments, Colorado Rebels
With over 20 other states considering proposals to severely limit state spending and institute automatic tax cuts, the citizens of Colorado voted to overturn its "Taxpayers Bill of Rights" this year because of the detrimental impact the law has had on public structures and Coloradans' quality of life. This victory for common sense fiscal policies has already influenced efforts underway in other states and, with luck, will continue to stall the efforts of anti-government ideologues to institute similar laws in other states in 2006.

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