The Senate last week voted 100-0 to approve $82 billion in new “emergency” spending to cover U.S. operations in Iraq and Afghanistan. The House had earlier given overwhelming approval to the appropriation, which raises the cost of the military campaigns to more than $300 billion since 2001.
The latest spending surge proves anew that, to the Bush administration, tax cuts are priceless. For everything else, there’s the 30-year U.S. Treasury bond.
The administration last week announced it would revive those long-term bonds, which it discontinued in 2001 as the nation basked in a projected 10-year $5.6 trillion budget surplus bequeathed by Clinton-era fiscal prosperity. Experts now predict a $2.9 trillion deficit over that period. The return of the 30-year bonds is the clearest sign yet that the president has no plan to cope with this $8.5 trillion reversal of fiscal fortune. We hope Congress will step in and impose some discipline – unbridled tax cuts are a recipe for economic disaster at a time of such huge and ongoing military expenses.
The Clinton administration posted budget surpluses from 1998 to 2001 mainly by trimming military spending at the end of the Cold War, and by retaining the revenues produced by a strong economy. The surplus was used to draw down the federal debt. Bush’s tax cuts – priced at $1.85 trillion over 10 years – hacked away at the surplus. But so did sharply higher military and anti-terrorism spending, a condition exacerbated by the wars in Iraq and Afghanistan.
Federal revenue has fallen to 16.8 percent of Gross Domestic Product this year, compared to 19.8 percent in 2001. Meanwhile, federal spending has risen to 20.3 percent of GDP, up from 18.5 percent when Bush took office in 2001 and the highest since 1995, according to the libertarian Cato Institute.
The resulting budget situation evokes the “guns or butter” dilemma faced during the Vietnam War. Unwilling to cut back on his Great Society programs or raise taxes, Lyndon Johnson borrowed to absorb rising federal deficits. That triggered inflation and ultimately forced Johnson to raise taxes anyway.
Bush isn’t trying to expand domestic programs; he wants to buy tax cuts instead. Thus, Bush’s war, like Johnson’s, is being paid for by borrowed money. The Federal Reserve has responded by raising interest rates to ward off inflation. But higher rates may pinch Americans already stretched thin by mortgage and credit card debt, and struggling to pay medical expenses.
Whatever reservations Americans may have about the wisdom of the U.S. invasion of Iraq, we are united in support of our men and women now serving to secure the country, establish its democracy and rebuild its infrastructure and commercial base.
Even as Americans support the troops and the occupation, there are increasing calls for a responsible plan to reverse the budget trend. Just putting the tab on a 30-year charge card won’t cut it.
