National Priorities in the Federal Budget Plan for FY 2003

A Summary of the April 14 Forum at the Chapel Hill Meeting

The budget plan passed by the House in March [which generally follows the President's proposal except for a smaller tax cut] would lead the US toward military overkill, threats to human and civil rights and the environment, and would move government services into the market. It is important to note which programs grow and shrink within the overall increase of 13%, or $394 Bil, over the current FY 2002 budget. The House total is $2.1 Tril. The Senate has yet to pass its version; then a Joint Committee of both houses will reconcile differences, followed by votes in both chambers on a final resolution. This is likely to occur in late summer under pressure of the Fall election campaigns and the imminent anniversary of September 11.

The House budget funds, and locks in place, worrisome priorities not seen since times of hot and cold wars. This time, the impact may be greater: US power and technology dominate the world and US corporate giants dominate the information-finance-military marketplace.

Priorities

New monies and funding shifts reveal political priorities:

• Military solutions to address terrorism over prevention;
• Unilateral decision making over international collaboration and capacity building;
• Military over economic and nation-building aid;
• Privatization and marketization of public programs over open and directly accountable government in the US and elsewhere;
• Homeland security control over collective cohesion and support in US;
• Elevation of narrow national security interests over human and civil rights and environmental protections at home and abroad.

The new budget map, never a pacific or generous pact in recent times, takes us down the road to empire rather than a more equable and civilized 21st Century. The major changes follow. Details are available from sources listed at the end.

What is Not Included

The total $2.1Tril, laid out in over 1100 pages, obscures some unpalatable facts and omits costs that will have to be paid. The budget shows a 40-80 Bil deficit [depending on the analytic source]; but without relying on Social Security and Medicare Trust Funds surpluses, the gap would be over $290 Bil. It omits costs to correct to the Alternative Minimum Income Tax in the 1.3 Tril tax cut of last year, and portions of homeland security and the economic stimulus package that were approved earlier. Finally, it does not include a new Bush Supplemental Appropriation request for more war and anti-terrorism spending submitted after the House passed its budget proposal. A final burst of smoke is in the pace of spending in this plan: more payout in the 1st year, i.e., this election year, and more cuts in the later 4 years, specifically $82 Bil in unnamed cuts in non-defense, non-homeland security programs, i.e., in "social spending".

Budget Boxes & Budget Shares

As is usual, the budget is in 3 parts: Mandatory spending [54% of the total, mainly for Social Security, Medicare, Medicaid, and military-federal worker retirement, all required by law]; over a third of the total goes to Discretionary spending: defense [17%] and non-military [19%], further divided for the first time into the almost untouchable Homeland Security portion, and all the rest?namely the panoply of social and environmental programs. The third part is interest on the debt [9%].

Because military and homeland security are virtually sacrosanct, defense grows by almost 14%, homeland security by over 12%, and the remaining programs help pay the price, losing 2-12%. Here are some examples that do not get much press coverage.

Non-military Spending

Although the Dept of Health and Human Services grows, most of the new funds go to anti-terrorism, like NIH research, laboratory upgrades, vaccine stockpiling, emergency facilities. Other programs are cut or "level-funded" [a drop in spending power after inflation adjustment], including chronic and infectious disease prevention, child immunizations, maternal-child health, environmental and workplace safety and health, AIDS control, toxics enforcement, and hazardous waste management. This, despite a new federal report showing that air quality in minority communities is increasing compared with white areas and persistent or growing gaps between minorities and whites in infant deaths, tuberculosis, auto deaths, suicide, and workplace deaths.

A welcome although small increase [$114 mil] will go to the nation's 600 community health centers that serve several million poor persons. The small tax credit that is allowed to help the uninsured buy health insurance is known to be the least effect way to increase health insurance coverage unfortunately. Worse is a large [28%] cut in the Children's Health Insurance Program compared with the Clinton 2001 level; this is a breakthrough program that has covered millions of uninsured children in families not quite poor enough to qualify for Medicaid. Medicaid itself, a mandated payout, will rise by $15 Bil, in effect helping the poorest at the expense of the slightly less poor.

Housing is set to increase, a rise that should be seen in light of the long term decline in funding by $39 Bil since 1976. The increase will go for rental housing vouchers, which also assists landlords, but only in communities where rentals are available; there will be a modest increase in HOME funds for rehabilitation and home ownership aid, and an increase in the Bush add-on to the Clinton youth corps, now called Americorps?labeled as a way for volunteers to fight local poverty. Much of this growth is paid for by cuts in low income home energy assistance, community development block grants, rural housing, and economic development zones.

An increase in Education goes for tax credits for parents to opt out of failed public schools and into the private religious or commercial sector, plus new funds for demonstration schools to develop alternatives to public schools. There are cuts that may not help schools succeed, such as in teacher quality improvement, money for reduction of classroom size, capital funds for schools, many of which need serious repairs.

The Department of Justice, granted new surveillance, intelligence-gathering, and abbreviated due process powers under the post-911 Patriot Act, gets an added $2 Bil for counter terrorism under a broad definition of terror, with over $400 mil for FBI intelligence efforts, but no increase for civil right enforcement.

Labor has the largest Departmental cuts, apart from cuts in the Environmental Protection Agency, in discretionary spending, including job safety enforcement, training for laid off workers, and a cut in unemployment insurance, i.e., in taxes paid into the fund by employers.

Making the Grade for Future Allocations

A new unnoted point of policy, arcane perhaps, but critical, is the Administration's decision to no longer fund individual programs as prescribed in law, but rather by Prospective Program Funding. Funding will depend on performance criteria, including a program's track record on "creating a market based government with market based competition" and tracking overpayments and errors in benefit and assistance payments.

Military Spending

Military spending, the other large piece of Discretionary funds, goes beyond the chunk for the Department of Defense [$379 Bil]. It includes funds for the Energy Dept of $15 Bil to build new nuclear power plants to supply Navy vessels; military-related monies for other departments, and foreign military aid. These amounts rise to a total $399 Bil; if military retiree health care and benefits are added, the total reaches $432 Bil., or one fifth of federal spending.

DoD funds contain only $27 Bil for the war on terrorism. More difficult to understand are new procurement funds for two new kinds of dog fight aircraft, tools of little obvious use in guerrilla and/or mini-nuke warfare that the Administration envisions.

The military overkill becomes clearer when it is compared with the Administration's named adversaries, including Russia and China: total US defense spending is 3 times more than all these together, or more than the next 25 military powers combined.

Foreign Aid

Another way to see this military approach to addressing international problems is by comparison with foreign aid. Although the budget shows a rise of over $225 mil in non-military aid [e.g., to promote democracy, address poverty, improve education], less than a third of this is new spending?most is a shift from other State Department funds. For every new $1 in such non-defense aid [even including subsidies to buy US weapons and to support foreign military training and peacekeepers], there are $34 more for military aid. At the same time, there are large reductions for international peacekeeping [a 14% drop] and for economic and development aid for Russia, sub-Saharan Africa, and Latin America [by 20-50%].

The President recently proposed a Millenium Fund, a large increase in aid to begin in 2004, reaching full force in 2006. This would be a 38% increase over foreign aid funding in the 2003 budget proposal. But there is less here than meets the eye. At best this increase would bring aid up to 0.013% of our GDP [now it is 0.11% GDP, the lowest of all developed countries]. Rich countries pledged 0.7% for untied aid 40-plus years ago, when the US reached 0.57% GDP in 1962. Even so, the new amount of $5 Bil would be encouraging, except that, first, it would require continuing high and visible support by the President to ensure Congressional approval; secondly, its allocation would be based on special criteria, such as making recipient countries open their markets. Aid agencies also question what would happen to regular foreign aid, which is intended to be based on need and is often allocated through international agencies. Would these funds shrink?

State Impacts

One final major impact of the budget plan is the pressure it puts on states' budgets, many of which are facing deficits. Although the net amount going to states appears to increase, this rise is due mainly to the mandated federal funds for Medicaid and to the new homeland security program for First Responders, which supports emergency workers, managed by the Federal Emergency Management Agency [FEMA]. Much of this increase would be paid for, in effect, by major cuts in highway, environmental, community services, education, and other programs, and level funding [less inflation-adjusted spending] for welfare cash assistance, and over 40 more programs. In North Carolina, for example, facing up to a $2 Bil deficit, cuts in just five programs, such as water pollution control and worker training, would cost the state $800 mil.

Conclusion

The priorities set out in this budget present to the nation and the world a picture of an armed giant, guided by super hi-tech systems, but deficient in understanding that true security requires engagement with the institutions and peoples of the world, consistent adherence to rights and protections, and addressing the needs of populations at home and abroad.

It is clear that huge amounts of money can be found when political will exists. The task is to set a broader agenda for "security", to redirect the funds toward international resolution of the causes of insecurity abroad, and enhance the civil and economic security of those at home through open and accountable institutions.

Sources: see websites for Office of Management and Budget; Congressional Budget Office; OMBwatch; Center on Budget and Policy Priorities; National Priorities Project; Friends Committee on National Legislation; National Governors Assn; Centers for Disease Control (Jan,2002. Stat Notes); New York Times, Jan, 2002; Wash Post, Wright, 3-10-02.