Budget

In what is likely to prove an academic exercise, President Bush followed through on a threat and vetoed the recently passed 2008 Farm Bill. The $307 billion bill, officially titled the "Food, Conservation, and Energy Act of 2008," extends many of the incentive and subsidy programs established in the 2002 Farm Bill in an era of rising food prices and farming incomes. The president cited both in his veto message to Congress.

At a time of high food prices and record farm income, this bill lacks program reform and fiscal discipline. It continues subsidies for the wealthy and increases farm bill spending by more than $20 billion, while using budget gimmicks to hide much of the increase. It is inconsistent with our objectives in international trade negotiations, which include securing greater market access for American farmers and ranchers. It would needlessly expand the size and scope of government. Americans sent us to Washington to achieve results and be good stewards of their hard-earned taxpayer dollars. This bill violates that fundamental commitment. [...]

At a time when net farm income is projected to increase by more than $28 billion in 1 year, the American taxpayer should not be forced to subsidize that group of farmers who have adjusted gross incomes of up to $1.5 million. When commodity prices are at record highs, it is irresponsible to increase government subsidy rates for 15 crops, subsidize additional crops, and provide payments that further distort markets.

But farm bills are politically popular, especially in election years, and this year's bill passed both Houses of Congress by veto-proof margins. Congress is expected to override the president's veto almost as soon as it receives the president's message.

The White House issued a statement late today saying that President Bush has decided to veto the 2008 Farm Bill if it makes it to his desk in its current form and recommended that Congress pass a one-year extension of current farm policy to bridge the gap until the next Congress and Administration can consider another bill. Almost at the same, the White House said that the president would withdraw his threat to veto an bill containing a provision that would stop the government from filling the nation's Strategic Petroleum Reserve in a bid to increase oil supply on the world market and lower prices. Mr. Bush had earlier said that the provision would have no impact on gas prices.

On the Farm Bill, the president said that he was "deeply disappointed" in the compromise legislation reached by the House and Senate. He cited high food prices and increasing farming incomes as his reasons for rejecting the package of incentives and subsidies for the nation's family and commercial farmers.

Today's farm economy is very strong and that is something to celebrate. It is also an appropriate time to better target subsidies and put forth real reform. Farm income is expected to exceed the 10-year average by fifty percent this year, yet Congress' bill asks American taxpayers to subsidize the incomes of married farmers who earn $1.5 million per year. I believe doing so at a time of record farm income is irresponsible and jeopardizes America's support for necessary farm programs.

But any farm bill is popular legislation in Congress, more so in an election year, and the president's veto would seem to be an exercise in futility. Congress will almost certainly vote to override the president quickly.

Senate Republicans have proposed a $1.4 trillion budget crafted to reflect every spending policy promised by Barack Obama during the campaign trail.

The political stunt was orchestrated by Sen. Wayne Allard, an apparently good-humored Republican who offered the budget as a parting gift to Obama, as he will retire from the Senate at the end of this term.

The bill aggregated the costs of such promised programs as universal health care, Army expansion and the elimination of income taxes on lower income seniors, in an effort to reveal the unsustainable cost associated with Obama's promises.

Obama, wearing a smile, voted: "No."

Congress has turned its attention to the budget this week as both houses have begun the process of crafting a spending plan for the next fiscal year. While the House Republican leadership has had some success in moving a proposed earmark moratorium, the Senate has resisted. Earmarks are requests by individual Congressmen for funding of pet projects in their home districts and are often inserted into spending bills anonymously and at the last minute. House Republicans want Congress to take a year off from including earmarks in the budget and they have largely convinced the Democratic leadership to go along.

They have also convinced Republican presidential nominee Sen. John McCain. McCain, long a foe of wasteful government spending, introduced the earmark moratorium in the Senate yesterday in hopes of getting that body to concur with the House on an earmark freeze. But his amendment failed on a 71-29 vote. It also failed to attract a majority of Senate Republicans, as most of the party's lawmakers voted to have their earmarks included in the budget. But in a sign of where the public's mood is on the issue, both Democratic presidential candidates, Sen. Hillary Clinton and Sen. Barack Obama, voted with McCain for the pork-barrel spending holiday.

Yesterday, Democrats in the Senate unveiled their budget plan. As expected, the Democrats' egregious spending would plunge the deficit to more than $350 billion by 2009. Democrats claim, however, that the plan would produce a $160 billion surplus by 2013.

The trick to this mathematical feat of magic? The Democrats anticipate a complete revocation of President Bush's tax cuts and an end of nearly all spending for the war efforts in Iraq and Afghanistan. Thus, the potential for a responsibly balanced Democratic budget depends entirely upon the most divisive political issues facing America: the economy and the war.

Democrats may be placing the cart before the horse in their budgetary hopefulness. Budget Committee Chairman Kent Conrad (D-ND) admits that the potential to off-set such huge expenditures over the next year with future revenue "depends a lot on what kind of administration you get next." If a Democrat wins the White House, the surplus is "much closer to being realistic." However, if the Democrats were to win the budgetary battle and spend their $350 billion, how would they (and the economy) react to a GOP victory in November?

When President Bush submits his $3 trillion budget request to Congress today, it will contain a provision that seeks to put the State Department on track to double its size over the next ten years. The Administration is calling for hiring close to 1,100 new Foreign Service workers, to address staffing shortages at embassies and allow for current diplomats to undergo intensive language and national security training.

Just last month, the State Department announced that it was cutting staff at foreign posts by 10%. At that time, the Department said that one in four positions at embassies around the world were vacant. But intensive lobbying by Secretary of State Condoleezza Rice appears to have won the president over and State now plans to add to the list of vacancies this year.

For the first time in history, the Federal budget will exceed three trillion dollars in fiscal year 2009, according to an official in the White House Office of Management and Budget. The president's budget proposal is expected to be made public next week but is already triggering howls of protest for the cost savings in contains, even as overall spending continues to go up.

The budget will call for savings in Medicare and Medicaid in the form of reductions of the rate of growth of these programs. Democrats call that a cut, although both programs will spend more in FY 2009 than they did the previous year. Together, the programs make up for 20% of federal spending. Discretionary spending, on items not mandated by law, an ever shrinking portion of the federal budget, will be held to an increase of less than one percent by the proposal.

The Congressional Budget Office (CBO) released figures Wednesday that predict the Federal budget deficit will increase to $250 billion in 2008 due in part to decreasing tax receipts. The CBO forecasts declining corporate tax revenues in a slowing U.S. economy will balloon the deficit close to $100 billion over last year's $163 billion shortfall. The numbers do not take into account a planned economic stimulus package that is likely to come in at over $100 billion in additional Federal spending and tax breaks. Taken together, the slowing economy and attempts to fix it will cause the Federal budget deficit to increase by over $200 billion, an amount greater than last year's deficit, to $370 billion.

Still, the CBO does not forecast the economy to go into recession this year, despite the general feeling that the country is on the precipice of one. It sees a slowed growth rate of 1.7% for the economy as a whole, more than 2% off last year's rate.

The White House is signaling that President Bush will not issue an executive order directing Federal agencies to ignore earmarks not specified by law, but will instead press Congress for greater justifications for their pet spending projects. Conservatives and Republicans in Congress have been urging the president to defund the earmarks through an executive order, pointing out that ninety percent of them are not backed by spending legislation but are dropped into conference reports without ever being voted on by either chamber.

Earmarks are spending requests by individual members of Congress for projects in their home districts. Often the requests are slipped into must-pass spending bills like the Defense appropriation. The omnibus budget bill passed by Congress at the end of last year contained some 9,800 earmarks, totaling over $16 billion.

In the wake of mounting criticism over a lack of productivity (which has resulted in approval ratings hovering in the mid to low 20's), the House of Representatives yesterday attempted to revive itself by passing or acting upon several issues.

The chamber passed two pieces of legislation. First, a $696 billion Defense Bill has been approved. Passage had been delayed due to the president's demand for Iraqi immunity to U.S. suits brought against the government for Saddam-era, state-sponsored abuses. Democrats folded without a fight - but the bill also included a 3.3% pay raise for Soldiers, and the Democrats may now publicly boast a "pro-troops" success in Congress (while, privately, celebrating that they laid to rest a lengthy and unpopular fight over the defense budget).

The second bill, motivated by last year's Crandall Canyon mine disaster in Utah, provides sweeping mine safety provisions. However, this narrowly-passed, Democrat-sponsored bill appears to be mere grandstanding and politicking - and it will likely either fail in the Senate or be swept aside by the president. The measure would supplement a recently passed mining safety act, but both the United Mine Workers of America and the National Mining Association agreed that the legislation was dangerous, burdensome and ill-conceived to achieve its intended goals.

Also, the House has committed itself to a rare, bi-partisan effort to fast-track an economic stimulus package. Congressmen on both sides of the aisle are terrified of being held responsible for ignoring signs of the looming R-word. Congressional leaders have scheduled a meeting to discuss the matter with President Bush next Thursday - the day after her returns from the Middle East. On the same day, Reserve Chairman Ben Bernanke will speak before the joint-committee on his suggestions for a stimulus package.

So, the tally is one bill on the path to becoming a law, one bill on the path to an early demise and a resolution to pass a third bill sometime in the near future. All in all, for the current Congress, that's a pretty inspiring start!