Budget Carries Bush Stamp

Byword Is Efficiency; State Losing $97 Million

February 8, 2005
By DAVID LIGHTMAN, Washington Bureau Chief

WASHINGTON -- By cutting and combining dozens of popular government programs, President Bush's $2.57 trillion budget carries the distinct, personal imprint of a leader who can finally claim a mandate to reshape government in fundamental ways.

The budget released Monday, the White House says, will make government at all levels more efficient and responsive while boosting the economy. But critics fear it will create new crises for already overtaxed state and local governments.

"These are front-line services and preventive services that are being cut," said Hartford Mayor Eddie Perez. State congressional delegation members met with Gov. M. Jodi Rell and vowed to fight the more severe reductions.

Connecticut stands to lose about 8 percent, or $97 million, in certain key federal aid programs, according to estimates from the governor's office.

Bush and his allies insisted they were not being insensitive, just efficient. Don't just look at the money being slashed, his backers said, but consider the 377-page budget and 1,308-page appendix as a blueprint for much-needed change in the way government is run.

Critics, said House Majority Whip Roy Blunt, R-Mo., should view the fiscal 2006 budget as "a helpful starting point as Congress begins this debate and looks for real ways to rein in wasteful spending."

Beyond the vital-services-vs.-wasteful-spending debate is the fact that this budget, the first of Bush's second term, bears his personal philosophical imprint like none that came before it.

Prior Bush budgets seemed to reflect the political needs of a president elected without a popular majority, as well as one who had to deal with an almost evenly divided Senate.

"You sit back and look at some of those Bush budgets in the past and you'd think Lyndon Johnson was in charge," said David Keating, executive vice president of the conservative Club for Growth. In 2004, for instance, discretionary spending - the money that Congress and the White House have some control over - was up 8 percent, well above the rate of inflation.

Now, Bush begins his second term not only having won a popular majority, but also seeing both Houses of Congress dominated by Republican conservatives.

And so this budget boldly brims with ideas almost unseen in a presidential document since the headiest days of the Reagan administration more than 20 years ago. Twelve of the government's 23 major agencies will have their budgets reduced next year, with transportation, housing, agriculture and the Environmental Protection Agency getting the sharpest reductions. Discretionary spending lags behind inflation, growing just 2.1 percent.

Gone would be 150 programs, including 48 in the Department of Education alone. There would be sharp cutbacks in a number of programs Connecticut and its towns have come to rely on: community policing grants, dislocated worker aid, housing for people with disabilities, aid to small and mid-size manufacturers, Amtrak operating subsidies and help for emergency medical services for children.

Bush makes clear all this has a purpose. One is slashing the deficit by half from its projected 2004 peak of $521 billion while the economy continues to grow at a healthy pace. His fiscal 2006 deficit would be $390.1 billion, down from a projected $427 billion this year.

The other goal is making government more effective, which is why, for instance, he wants to put 18 community programs, including Community Development Block Grants, empowerment and enterprise zones, chemical cleanup and community services grants, under one Department of Commerce umbrella. The new consolidated program would get an estimated $3.7 billion, 34.5 percent below the total of $5.66 billion being spent on the 18 programs this year.

States and cities would compete for the grants, instead of getting money now largely guaranteed to them, and could use the funds for a variety of purposes, including business financing, infrastructure development and housing.

Currently, the Bush budget says, only 38 percent of community money goes to states and cities with poverty rates below the national average. By making such grants competitive, the funds can be sent where they are needed, the argument goes.

Hartford officials disputed that notion. "This money doesn't come automatically now," said Rep. John B. Larson, D-1st District, one of those meeting with Rell Monday. "You already have to demonstrate a need."

Standing behind him were state and local officials, already strapped for money, who see themselves having to pick up the pieces.

Perez, for instance, noted that the community grants are often relatively small sums that supplement money from private sources. The federal money goes to a wide variety of services, including help for first-time homeowners, senior meals and after-school programs.

"I don't think anyone would challenge the need for the work we do," he said. Cutting the federal dollars won't simply mean a sudden end to these services, because "there are things we have to do to keep this community viable."

To some local officials, the Bush budget could compound a problem that has been growing for years. They have been complaining for some time that Bush's No Child Left Behind school reforms saddle them with mandates but not enough funds.

Monday's budget offered a lengthy defense of the program, and pledged a 4.7 percent increase in funding for Title I grants, the primary form of federal assistance to communities with low-income students. And it provides stable or increased funding for a number of other initiatives, such as programs to help preschool and elementary school students improve their reading skills.

But education takes a big hit in other ways. A total of 48 programs would end, including the Even Start literacy program, parental information resource grants and the Safe and Drug-Free Schools Grants.

Some of the savings would be directed to Title I and other programs, notably a $1.2 billion effort to help states improve graduation rates and academic achievement in high schools.

It's not enough, said Kevin Maloney, Connecticut Conference of Municipalities spokesman.

"The total cost of complying with No Child Left Behind will go well beyond that," he said, "and it will impact the property tax, particularly in poorer towns." Inner-city schools are seen as more likely to have difficulty complying with federal requirements under the 2002 law that students make adequate annual progress in meeting state academic standards.

Mayors and governors are unlikely to end - or are forbidden by law to end - many of these programs, and are shuddering to think how they will make up the money. The National Governors Association's 2004 Fiscal Survey of the States found Medicaid and education costs each consume an average of about 21 percent of state budgets.

The more Washington relies on states to fund schools and health care for the poor, the more dire the state budget situation gets. A state is considered healthy if it has a year-end balance of about 5 percent of its budget left; there were 16 states at the end of last year, including Connecticut, that fell below that standard.

The White House and its backers countered Monday with an argument that has gained currency among conservatives since the Reagan presidency: that smaller government means more money in taxpayers' pockets. That, in turn, means they spend, invest and pay more taxes and everyone prospers.

"American families understand the importance of establishing a blueprint for spending decisions," said Blunt. Added Keating, "The best way to get a healthy, growing economy is to keep spending in check."

There is some new and increased spending on Republican favorites designed to prod the economy. Bush wants to create Lifetime Savings Accounts, which would provide tax breaks for accounts designed to help taxpayers with emergencies, and Individual Development Accounts for low-income families. Such accounts could be used for "major purchases," such as a first home.

The president would also make $100 million available to states to "develop innovative approaches to promote healthy marriages," as well as provide more funding for hydrogen fuel, clean coal and nuclear energy research and tax credits for lower-income people who buy health insurance.

There are also some omissions, notably the specific cost of the war in Iraq or details for funding the Social Security reforms Bush has been pushing. These costs will be added in as the budget process moves along.

The scrutiny officially begins today at the House and Senate Budget committees, where Office of Management and Budget Director Josh Bolten will defend the document before the House Budget Committee.

Congress has until mid-April to approve spending guidelines, and until Oct. 1 to enact specific details. It rarely meets those deadlines, and few on Monday expected them to be met this year.

Not when Sen. Christopher J. Dodd, D-Conn., complained the budget "guts critically important investments that make a real difference in the lives of working Americans while ladling out goodies for those at the top of the economic ladder," or House Minority Leader Nancy D. Pelosi, D-Calif., labeled it "a hoax on the American people."

And more significantly, instead of warm praise, House Speaker Dennis Hastert, R-Ill., was mild and restrained in his assessment of the budget's prospects.

"A good starting point," he said.