Senate Democrats

The Bush Budget Fails to Address the Needs of the Middle Class

President Bush’s final budget continues down the path of his first seven years in office – it fails to address the real needs of America’s middle class, and produces red ink as far as the eye can see.  Even as more Americans are feeling the effects of an economic downturn, President Bush would make their problems worse.  His budget would reduce access to quality health care, and make it harder for many to afford a college education or just pay their heating bills.  At the same time, by insisting on large, fiscally-irresponsible handouts for multi-millionaires and special interests, President Bush would leave our grandchildren with an enormous bill.  Democrats will continue to insist on a fiscally-responsible budget that strengthens the middle class.

The Bush budget is fiscally irresponsible and deceptive, adding trillions to the national debt while hiding major costs, such as the full cost of the war in Iraq.  President Bush’s fiscal record is the worst in our nation’s history, and this budget is more of the same.  It will increase the federal debt, which has already exploded, and will further increase our reliance on foreign creditors to finance that debt.  Once again, the budget also is highly deceptive – most notably, it hides the full costs of the war in Iraq. 

The Bush budget:

·        Creates more debt.  President Bush has turned record surpluses into record deficits (with the all-time record of $413 billion occurring under his watch, in 2004).  His new budget is more of the same.  Under the Bush budget, even using its own misleading numbers, the budget deficit would reach $407 billion in Fiscal Year 2009 – with $51 billion dedicated to extending tax breaks for those fortunate few Americans earning over $1 million dollars.

This means a substantial increase in debt that would force taxpayers to spend billions more on interest to foreign creditors.  In 2001, the national debt stood at $5.8 trillion.  Under the Bush Budget, the gross debt is projected to increase to $12.3 trillion by 2013.

·        Is based on deception.  President Bush’s budget, once again, is based on phony numbers.  It hides huge costs, like fixing the alternative minimum tax beyond 2008 and the full costs of the Iraq war beyond 2009  (In his budget, President Bush requested only $70 billion for a “bridge fund” to fund the war.  Three days later, his Secretary of Defense admitted that Fiscal Year 2009 costs of war could exceed $170 billion).  It also uses gimmicks that assume large savings without explaining their impact, like assuming deep future cuts in domestic priorities, without providing details as to where these cuts are to occur beyond the first year.

In the face of a slowing economy, President Bush’s budget fails to respond to the real needs of the middle class.  For seven years, President Bush’s budgets have weakened our economic security.  Bush’s eighth and last budget is no different – he fails to address the real priorities of middle-class families and the needs of those who are feeling the effects of the current economic downturn. 

The Bush budget:

·        Makes deep and unacceptable cuts to Medicare and Medicaid. Approximately 44 million senior citizens and people with disabilities depend upon Medicare for their health care, and the great majority of them participate in the traditional Medicare fee-for-service program.  Instead of setting forth a plan to address the underlying reasons for rising costs in the Medicare program, the President’s budget proposes $186 billion in legislative and regulatory Medicare cuts over the next five years -  slashing payments to hospitals, nursing homes, hospices and other health care providers participating in the traditional Medicare program.  These drastic, across-the-board cuts could prompt some health care providers to limit the number of Medicare patients they see, or to drop out of the program altogether.  As a result, significant numbers of the elderly and disabled could lose access to their health care providers.

President Bush also proposes to increase the number of Medicare beneficiaries who are subject to higher premiums.  Specifically, the President’s budget would prevent the current income threshold for higher premiums in Part B ($82,000 for singles and $164,000 for couples) from increasing to reflect inflation, and establish in Part D the same income-related premiums he proposes for Part B.  Accordingly, under the Bush budget, more middle class beneficiaries will pay higher premiums, and one of the greatest strengths of the Medicare program – its universality – will erode.

Meanwhile, more than 50 million low-income people – about one out of six Americans – depend on Medicaid for their health care.  Since President Bush’s last budget, the Administration has proposed regulatory changes to Medicaid that, in effect, cut $13.9 billion in federal Medicaid funding over the next five years.  Now, on top of these cuts, the President’s budget, through legislative proposals and regulatory changes, calls for an additional $18.5 billion in net cuts over five years.  These cuts, touted by the Administration as “savings,” would be primarily achieved not by lowering health care costs, but by shifting costs to states.  This means that states – already facing tough economic times, strained budgets and increased demand for services like Medicaid – will have to make up for lost federal dollars, or be forced to cut services to our nation’s most vulnerable.

·        Fails to address the rising costs of health care.  More than 46 million Americans – one in every six Americans under the age of 65 – are uninsured, and an additional 16 million have health coverage that does not adequately protect them from catastrophic health care expenses.  But instead of offering a real solution, the President’s budget proposal would jeopardize existing employer-based coverage and push people into the individual insurance market where insurers can discriminate based on pre-existing conditions and drop coverage when people get sick.  By capping the tax deduction for health insurance, and driving healthier individuals out of comprehensive health insurance plans into health savings accounts (HSAs), the President’s plan will raise costs for millions of Americans while failing to address the problems of the uninsured.

·        Fails to address the rising costs of college.  In spite of the dramatically rising costs of college, the President’s budget fails to address adequately this serious problem.  While the President’s budget does contain enough discretionary funds to support a maximum Pell Grant award of $4,800 for the 2009-2010 school year – the level envisioned by Congress last year in the College Cost Reduction and Access Act – the budget deeply cuts and other programs, hurting students.  For example, the President proposes to eliminate Federal Supplemental Educational Opportunity Grants, and Leveraging Education Assistance Partnerships, which help lower-income students afford a college education.

In addition to raising the maximum Pell Grant, the College Cost Reduction and Access Act made student debt more manageable by capping monthly federal student loan payments, and forgiving student loan debt for those who commit to public service.  Only a few months after President Bush signed this landmark legislation into law, his budget proposes to limit the benefits it provides to student borrowers.  The Bush budget cuts $457 million over five years in interest rate subsidies for individuals in low-paying jobs, and dramatically reduces eligibility for the new loan forgiveness program, costing student borrowers $1.5 billion over five years.  Finally, the budget once again recalls capital for the Perkins Loan revolving program, cutting benefits to low-income students by $4.2 billion. 

·        Rejects bipartisan support for career and technical education.Approximately 17 million students are served through the Perkins career and technical education programs.  In 2006, Congress passed and the President signed a bill to reauthorize and strengthen these programs.  Despite overwhelming bipartisan support for these programs, the President’s budget proposes to eliminate the entire federal contribution for career and technical education.  The Administration argues that the proposed $400 million increase in Title I would somehow offset the loss of federal funding for these programs, but the net result of the President’s budget would be that states would see their funding eliminated. 

·        Slashes job training. The Bush budget would cut employment and job training programs by $484 million, or 14 percent, and cut Job Corps by $34 million, or 2.8 percent, from Fiscal Year 2008 levels.  These cuts could not come at a worse time when the nation is experiencing the weakest rate of economic growth in five years and more than 7.6 million Americans are unemployed and more than 6 million are marginally employed or working part-time for economic reasons.  

·        Fails to address the rising costs of energy.  The Bush budget proposes to eliminate the weatherization assistance program.  The elimination of this program would ignore the ever-increasing electricity and natural gas costs that our American families are facing.  The President also proposes to cut Energy Star, a program administered jointly by the U.S. Environmental Protection Agency and the U.S. Department of Energy.  The budget would be cut by $4 million from the Fiscal Year 2008 enacted level of $48.2 million.  The proposed funding cut comes despite the fact that in 2006 alone, the Energy Star program saved enough energy to avoid greenhouse gas emissions equivalent to those from 25 million cars — all while saving $14 billion on utility bills.

·        Underfunds critical housing and community development programs.  The Bush budget would gut funding for the Community Development Block Grant (CDBG) program by $659 million below Fiscal Year 2008 enacted level.  The CDBG program provides eligible areas with annual direct grants that can be used to revitalize neighborhoods, expand affordable housing and economic opportunities, improve community facilities and services, and provide foreclosures avoidance assistance.  The program is of particular importance as families from all walks of life (and their neighbors) struggle with the subprime mortgage and housing crises.  In addition to ensuing decent affordable housing to the nation’s most vulnerable communities, the CDBG can also be used by local governments for the purchase and rehabilitation of foreclosed properties

The Bush budget would provide no funding for Fiscal Year 2009 for the Revitalization of Severely Distressed Public Housing Projects program (HOPE VI), a program that pays for the rehabilitation or replacement of run down public housing projects and is the only significant source of federal money for capital improvements of public housing.

The President also proposes to eliminate funding for Rural Housing and Economic Development programs.  The Administration argues that the needs of rural communities are addressed by CDBG – a program it proposes to cut by more than 18 percent.

The Bush budget would eliminate funding for the Brownfields Economic Development Initiative, which promotes economic development in abandoned and under-used industrial and commercial facilities where redevelopment is burdened by environmental contamination. 

Democrats are working to reverse course.  Senate Democrats will seek to work with their Republican colleagues to produce a bipartisan budget that is fiscally responsible and that puts the middle class first.

·        Return to the tough pay-as-you-go budget discipline of the 1990′s;

·        Balance the budget with real numbers;

·        Put interests of the middle class over those of lobbyists for powerful special interests;

·        Invest in high priorities like health care, education, and terrorism prevention; and

·        Work with members of both parties in an effort to craft a bipartisan approach.

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