News Release

February 7, 2005

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Cato experts respond to president's budget proposal

WASHINGTON--President Bush today sent his fiscal year 2006 budget proposal of more than $2.5 trillion to Congress. The proposal includes cuts to 150 government programs. Cato experts William Niskanen, Stephen Slivinski, and Chris Edwards offer their comments on the budget below.

William Niskanen, Cato chairman and former member of the Council of Economic Advisers (1981-1985):

"The proposed budget is tight only for domestic discretionary programs other than homeland security -- less than 19 percent of total outlays in fiscal year 2005."

"President Bush also proposed to reduce the deficit by half last year. In the meantime, the deficit increased by an estimated $15 billion."

"Interest payments on the federal debt increase at a 12 percent annual rate. This is the most rapidly increasing component of the federal budget and provides no current government services."

"The defense budget includes a lot of money for high-tech weapons that would make no contribution to combatting terrorists or insurgents. At the same time, the budget does not propose any increase in Army or Marine Corps personnel."

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Stephen Slivinski, director of budget studies:

"Some cheers are in order for the president's new budget. But there are also plenty of reasons to believe the death of budget profligacy in Washington, D.C. is greatly exaggerated. The president has at least proposed a budget that actually cuts non-defense discretionary spending. Indeed, proposed 2006 spending levels are about $3 billion lower than last year's enacted budget--that's about a 1 percent cut. Ending subsidies to Amtrak, cutting some housing programs, and eliminating some corporate welfare programs such as the Advanced Technology Program are just some of the more prominent examples of the 150 programs that were the targets for cuts.

"However, these cuts are not deep enough to reverse the spending binge the president and Congress have embarked on the past four years. The only Cabinet-level agencies in this budget that have smaller proposed budgets than when Bush took office are the departments of Labor and Transportation and the Environmental Protection Agency. And the cuts that Bush makes in domestic spending are not enough to compensate for the increases in other areas of the budget. Overall spending, including defense, will rise by 3.6 percent.

"Congress is likely to see the president's budget as a place to start the bidding, not a hard budget ceiling. During the upcoming budget battle, the president needs to signal to Congress that he is serious about maintaining even these small spending cuts by threatening to veto any budget bill that is bigger than what he proposed."

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Chris Edwards, director of tax policy studies:

"The budget proposes to cut 150 programs, but the fine print shows that these cuts will only reduce 2006 spending by 0.8 percent."

"The administration is still not serious about cutting spending: 2 of the 5 pages of the budget overview tout 37 new spending initiatives."

"The Bush budget underscores how out-of-control federal spending is. The budget is being billed as the tighest yet, but overall spending is projected to rise 3.6 percent in 2006 even without further money for Iraq."

"Despite his promises, Bush's budget does not realistically cut the deficit in half by 2009."