President Bush’s $2.9 trillion 2008 federal budget proposal makes his signature tax cuts permanent, funds the war on terrorism in Iraq and elsewhere, and envisions a tiny bit of restraint on out-of-control domestic spending. Put otherwise, the Bush budget will keep the economy growing and America safe from terrorists, but it falls short of directly confronting the approaching entitlement crisis and dares no progress in cutting Big Government back down to a more reasonable size.
A recent econometric analysis by The Heritage Foundation’s Center for Data Analysis demonstrates the importance of making the 2001 and 2003 Bush tax cuts permanent. The benefits for everybody include:
» More than 1 million new jobs created per year on average.
» After-tax household income will increase on average $274 billion annually, about $2,500 per family.
» Personal savings will increase on average $163 billion annually.
If instead Congress decides to buck the president and allow his tax cuts to expire, those benefits will be lost. The business and investing communities — anybody who works for a private company or has an IRA-type retirement plan — will be watching closely to see if Congress lets the Bush cuts on capital gain and dividend taxes expire. Doing so will mean higher prices and taxes, and lower standards of living for millions of working and retired Americans.
With the imminent retirement of 77million baby boomers, everybody in government ought to be working together to prepare for the coming $39 trillion tsunami of Social Security and Medicare costs that as of today cannot be paid for without major tax increases and/or benefit reforms.
Bush’s budget proposal envisions modest Medicare reforms — charging wealthier seniors more for Medicare Part D prescription drug premiums and lowering selected Medicare reimbursements to doctors and hospitals — that would reduce the $39 trillion by a fourth. Experts of various ideological hues dispute whether that $8 billion in cost savings is progress. It looks to us like a politically faint-hearted attempt to look like Bush is “doing something.”
Finally, Bush proposes to eliminate a short list of failed programs scattered throughout the federal leviathan. For the 61 percent of Americans who told Gallup in January that Big Government is the biggest threat to the nation’s future, Bush’s paltry terminations probably look like a man trying to put out a raging forest fire with a water pistol.
