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CQ WEEKLY
March 6, 2006 – Page 590

States & Localities: Imaginary Numbers

The federal budget increasingly is a political document that is at best misleading and at worst cynically dishonest. It’s little wonder that the press doesn’t pay as much attention to it anymore. It’s not worth it. The latest version, released last month, assumes we can lock in two rounds of tax cuts, add in a few more, cut domestic spending by 7 percent during the next five years — despite population growth and inflation — and cut the deficit more than half by 2009.

Congress didn’t even approve 60 percent of the spending cuts proposed in the last budget, which barely squeaked through the House by two votes and the Senate in a tie. And this is an election year, which probably is why the Bush administration didn’t release the details of projected spending for the next five years, but only for fiscal 2007. The Washington Post got its hands on a copy of those projections, though, showing big cuts in K-12 and higher education, health care research, environmental protection and other domestic programs.

The real point that everyone who plays this increasingly tedious game knows is that few of these proposed cuts will occur. It’s a charade. The numbers are filled in to drive the projection to an imaginary end point so the White House can say it has some kind of long-term fiscal plan. It doesn’t, and Congress isn’t going to tolerate anything like a projected cut of almost 30 percent in student financial assistance in the next four years.

But if you’re a governor or a mayor, that doesn’t mean you have nothing to worry about. A year ago, following the release of the fiscal 2006 budget, I reported that “the concern among governors of both parties is that the Bush administration and Congress, facing annual deficits that are almost as large as spending on all discretionary domestic programs, are preparing, in effect, to export their own fiscal problems down to the states.”

That may have been an understatement. Aside from phony projections and absurd assumptions, another way the feds maneuver around simple truths and hard choices is to cut grant money to the states, then order them to pay for new mandated responsibilities.

Some of it makes sense. The administration wants to cut the federal-state Medicaid program for 53 million indigent recipients by $13.6 billion in the next five years. Given its overall size — it’s the largest health care program in the country — that isn’t a big cut, except when you consider that demographics are driving costs in what is the nation’s only public long-term care program. Health and Human Services Secretary Michael O. Leavitt has some credibility with governors, both because he was one of them (in Utah for a decade), and because he’s been consistent and forthright, saying in effect, “The present course is not sustainable. Governors have to be the innovators that tame this complicated, amorphous program, and make it affordable.” At least this is an above-board, honest attempt to control a runaway entitlement program.

States of Disarray

But many of the other proposals are either unrealistic or just plain foolish. The budget calls for cutting community development block grants by nearly one-third, even though a similar proposal went nowhere this past year. It zeros out a small program to demolish and redevelop public housing, an area where cities have experienced significant success in recent years. It eliminates reimbursements for states and localities for jailing illegal immigrants, even though the problem is the result of federal policies most everyone agrees are cockeyed.

On top of that, it provides no funding for federal mandates such as the national ID program, under which the states must come up with a uniform driver’s license, and it insists that the states must now match a portion of federal funding for a nutritional program for 7.5 million pregnant women and their small children.

This is an ongoing process. Last month, Congress finally cleared last year’s budget reconciliation package, cutting state programs such as child support enforcement and the new welfare system that are considered some of the most successful in the social services arena, leaving governors to worry over how to pick up the slack. The payback on these programs has been significant, so I suspect many of them will.

It’s a convenient time to export the deficit, for sure, because most states are returning to fiscal health after three years of pain that led to spending cuts and tax increases. Ironically, as the feds continue pulling back, their revenues as a share of the domestic economy are at as low a level as we’ve seen since the Eisenhower administration. Meanwhile, the Census Bureau reports that state tax burdens increased by an average of 41 percent between 1994 and 2004. When adjusted for inflation, the tax burden went up in 43 states.

So with this new budget, proposed only days after Congress cleaned up work on the last one, we can look forward to another year of posturing and press releases and testifying and turmoil that has become the daily routine in Washington, as various groups rally to protect programs of varying value.

In the end, it won’t mean much. And serious choices will be put off for yet another year.

Peter Harkness is editor and publisher of Governing magazine, published by Congressional Quarterly Inc.

Source: CQ Weekly
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© 2006 Congressional Quarterly Inc. All Rights Reserved.

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