by John M. Curtis
(310) 204-8700

Copyright February 5, 2007
All Rights Reserved.

ubmitting his $2.9 trillion 2008 budget, President George W. Bush left no doubts about his priorities, proposing a staggering increase in defense spending to $624.6 billion, with defense and energy industries cashing in. “The winners are still going to be the industrials, because of a strong economy, high profits and the war on terror in which there's no end in sight,” said Michael Darda, chief economist at MKM Partners in Greenwich, CT. “The budget reflects the priorities of our country at this moment in its history, protecting the homeland and fighting terrorism,” said Bush in yet another colossal Orwellian back flip, turning reality on its head. On Nov. 7, 2006, the American electorate sent Republicans packing and Bush a loud message that his priorities were upside down. Bush's budget clearly reflects his priorities in the first of his last two lame duck years.

      If congress approves his budget as is, the government would spend $661.9 billion on Iraq and Afghanistan, since the war began March 20, 2003. To deal with looming budget deficits, Bush proposed $12 billion in cuts of Medicare and Medicaid, primarily reducing eligibility to the children and the poor. "We've been able to manage our budget after five years of war behind us and we manage our budget in the out-years,” said Bush, convinced that his current budget plan would result in a balanced budget by 2012, based imaginary assumptions. Bush's balanced budget plan assumes making his tax cuts permanent, a gross domestic product of 14.711 trillion, economic growth of 3.0%, consumer price inflation of 2.6 % and unemployment rate of 4.8%. As most economists know, all bets are off when the Federal Reserve Board changes its inflation bias, monetary policy and hikes interest rates.

      Bush's policy reflects the belief that corporations, not individuals, deserve the lion's share of government largesse. Pro-growth policies favor major economic sectors like defense and energy and punish individuals dependent on government help. Bush's balanced budget counts heavily on cutting government programs outside defense. Bush '08 budget makes 100% clear that he intends to meet commitments to publicly traded defense and energy companies and pull the rug out from Medicare, Medicaid and Social Security, programs that eventually benefit workers and retirees. Bush offers no apologies for giving unprecedented windfalls to Lockheed Martin Corp., Northrop Grumman Corp, Textron Inc., Boeing and European Aeronautic, Defense & Space Co., all gaining under his new plan. Commitments to corporations remain rock-solid but taxpayers and retirees get shafted.

      Keeping the economy strong involves more than paying off publicly traded defense contractors. Obligations must be kept hardworking taxpayers and retirees, no longer able to count on Social Security and Medicare. Hospitals and drug companies get hurt by cuts in reimbursements under Medicare and Medicaid. While the defense budget goes up 11%, largely due to Iraq, Bush cuts Medicare 10%—government healthcare to 43 million seniors and 8.5 million disabled persons—or $66.04 billion over five years. Bush plans to raise premiums for higher-income beneficiaries, change purchasing for medical equipment and require competitive bids for laboratory services. Not mentioned are across-board-cuts to Medicare providers, shredding already grossly discounted fees. Bush has no plan to scale back subsidies or fees to publicly traded defense or energy companies.

      No one discounts the need to help subsidize the alternative energy industry. Bush plans $9 billion in federal loan guarantees to achieve the mandate of using 35 billion gallons of ethanol over the next 10 years. Washington plans to spend more on “cellulosic ethanol,” converting corn stalks, switch grass and agricultural waste to clean-burning fuel. Cellulosic ethanol producers “are ready to move out of the laboratory and onto the streets,” said James Lucier, a senior political analyst at Prudential Equity Group in Washington. Ottowa-based Iogen Corp., a leader in cellulosic ethanol, Deactur, Ill.-based Archer Daniels Midland Co., the world's biggest corn-based ethanol producer, Brookings, South Dakota-based VeraSun, the second largest corn-based ethanol maker, and Madera, California-based Pacific Ethanol Inc., stand to benefit from Bush's new budget plan.

      Looking at the big picture, the country can't afford Bush's blank check in Iraq or an unfocused war on terror. Spending over $600 billion on military operations in Iraq goes down as the costliest boondoggle in U.S. history. Handing a blank check to the defense department makes publicly traded corporations more secure at the expense of everyone else. Instead of shafting hardworking taxpayers and the nations' retirees, the congress must put the country's priorities back on track. No one wants another terrorist attack but Bush's defense budget threatens the economy, security of the nation's labor force and growing numbers of retirees. “The president's budget is filled with debt and deception, disconnected with reality, and continues to move America in the wrong direction,” said Senate Budget Committee Chairman Kent Conrad (D-N.D.), serving notice that it's a new ballgame.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

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