Senate Democrats


Washington, DC – Senate Democratic Leader Harry Reid released the following statement on the president’s signing of the erroneously named Deficit Reduction Act. Attached is a fact sheet released today by the Senate Democratic Policy Committee on President Bush’s special interest laden FY2007 budget:

“President Bush may want to call the bill he signed today the Deficit Reduction Act but the truth is his budget will increase the deficit. While cutting student aid, health care and other benefits for ordinary Americans, the President wants to spend billions more on tax breaks for special interests and multi-millionaires. This is just another in his long history of Orwellian bill signings.

“While the president signs this bad budget bill today, we also begin to debate an even worse budget that he sent to Congress this week. While American families are facing higher prices this president’s budget continues to hand out costly, budget busting favors for special interests like the drug, oil, and HMO industries. After creating record deficits and debt, the president is forcing our seniors, students, and families to clean up his fiscal mess with painful cuts in health care and student aid.

“The American people know that together we can do better than the immoral and irresponsible budget policies of Washington Republicans. I hope that in the weeks ahead a bipartisan group of sensible Senators will come together to pass a budget that reflects the values of American families.”


The Bush Special Interest Budget Reflects Misplaced Republican Priorities

On February 6, 2006, President Bush submitted his budget for Fiscal Year 2007. Like all budgets, the President’s plan reflects his priorities and values. Unfortunately, as this analysis demonstrates, the budget also reflects the Republican culture of corruption that currently dominates Washington, which consistently favors powerful special interests at the expense of ordinary Americans.

If adopted, the budget would provide a wide variety of benefits to the politically connected, including oil, pharmaceutical and HMO companies, and individuals earning more than $1 million a year. Meanwhile, working families already struggling in the face of rising costs for health care, gas, and college tuition would be forced to bear the brunt of most of the President’s painful spending cuts. This report summarizes just a few ways in which the President’s budget puts special interests over the interests of working families.

In addition to being based on the wrong priorities and values, the President’s budget would increase the federal deficit and shift even more of the burden of our national debt onto future generations. The President’s budget anticipates that the budget deficit in the current fiscal year will be the largest in history: $423 billion, and proposes to increase government debt from about $8.2 trillion today to $11.5 trillion by the end of Fiscal Year 2011.

Bush Budget Protects Wealthy Special Interests

Protected in the Bush budget: tax breaks for multi-millionaires. In 2007 alone, the Bush budget proposes to spend $43 billion for tax breaks for those earning more than $1 million. This is nearly three times the $14.5 billion in savings from the President’s proposal to eliminate or cut 141 programs. Over ten years, tax breaks for those with income over $1 million would total $648 billion. (Center on Budget and Policy Priorities)

Protected in the Bush budget: tax breaks for companies that move American jobs overseas. The U.S. tax code rewards companies that move production overseas by allowing taxes owed on foreign earnings to be deferred. Companies that manufacture here in the United States must pay immediate taxes. President Bush’s budget continues this tax subsidy for companies that move American jobs overseas.

Protected in the Bush budget: high drug prices that preserve drug company profits. The Bush budget fails to reduce costs by leaving in place the prohibition on allowing Medicare to use its bargaining power to negotiate lower drug prices for 43 million beneficiaries. Instead of reducing costs to taxpayers and Medicare beneficiaries, the Bush budget protects the profits of big drug companies.

Protected in the Bush budget: HMO slush fund and overpayments. The Bush budget proposes $105 billion in Medicare cuts over the next 10 years from hospitals, nursing homes, and other providers participating in the traditional Medicare program, but proposes no cuts to private Medicare HMOs and PPOs. President Bush ignored recommendations by the Medicare Payment Advisory Commission (MedPAC), the independent advisory body on Medicare payment policy, to eliminate a $10 billion slush fund and other excessive Medicare payments to PPOs.

Protected in the Bush budget: big oil companies. Even though the price for a barrel of oil has more than doubled since President Bush took office in 2001, increasing the cost of filling up at the gas pump and heating a family home, the President has ignored a Democratic proposal to crack down on price gouging and market manipulation (S. 1735) and reduced funding for energy conservation programs by $119 million in his Fiscal Year 2007 budget.

Protected in the Bush budget: ANWR drilling. The President’s budget includes funding for environmental assessments as a first step toward authorizing oil drilling in the Arctic National Wildlife Refuge (ANWR). The budget presumes that Congress will open up the Arctic Refuge for oil and gas drilling, and that lease sales in 2008 and 2010 will raise $8 billion in revenue. For the last six years, Congress has rejected this request. Allowing oil and gas drilling on the Arctic Refuge would ruin one of the last pristine wilderness areas in the nation and, according to the Administration’s own estimates, have a negligible effect on both oil supply and prices.

Working Families Asked to Sacrifice to Fund President Bush’s Special Interest Priorities

Bush budget cuts Medicare, jeopardizing care for America’s senior citizens. The biggest cuts in President Bush’s budget–$105 billion over ten years–come from Medicare, which provides health care coverage for 43 million senior citizens and people with disabilities. The President’s budget cuts reimbursement to the very providers Medicare beneficiaries depend on every day, while protecting the Administration’s special interest friends. In contrast, President Bush’s budget would require more and more Medicare beneficiaries to pay higher Part B premiums to achieve additional savings.

Bush budget cuts funding for education. Despite President Bush’s claims that he is increasing funding for education as part of his American Competitiveness Initiative (ACI), those modest increases are more than offset by cuts to proven education programs. President Bush’s Fiscal Year 2007 budget reflects the largest cut to federal education funding in the 26-year history of the Education Department – a $2.1 billion reduction, or 3.8 percent below the Fiscal Year 2006 level. Nearly one-third of the 141 programs the President proposes to cut or eliminate are education programs.

Bush budget cuts funding for biomedical and cancer research. The National Institutes of Health (NIH) are the leading source of basic biomedical research funding and have played an essential role in improving health and extending lives. Just one month ago, President Bush signed into law the first cut to NIH funding since 1970. Now, he is proposing to cut funding for 18 of the 19 institutes in Fiscal Year 2007, including the institutes conducting research on two of America’s leading causes of death: cancer and heart disease. Funding for the National Cancer Institute at the National Institute of Health would be cut from $4.79 billion to $4.75 billion in Fiscal Year 2007.

Bush budget cuts Medicaid funding. More than 50 million low-income people depend on Medicaid for their health care. The Republican-controlled Congress just enacted $6.9 billion in Medicaid cuts over five years. Now the President is looking for more. The President’s budget, through legislative proposals and regulatory changes, proposes an additional $17 billion in Medicaid cuts over five years.

Bush budget cuts funding for veterans’ health care. “For the fourth year in a row, Mr. Bush will ask Congress to require some veterans to pay more for medical care. Middle-income veterans with no service-connected disability would face higher co-payments for prescription drugs and a new fee for the privilege of using government health care.” (New York Times, 2/5/06)

Bush budget cuts food program for senior citizens, pregnant women, and children. “Another program new to Bush’s hit list is the Agriculture Department’s commodity supplemental food program, which provides food packages to low-income elderly people, pregnant women and infants.” (Los Angeles Times, 2/6/06)

Bush budget cuts funding for children. From health care to child care, President Bush’s budget underserves America’s children:

Cuts funding for children’s health care. “Mr. Bush will propose eliminating programs to treat people with traumatic brain injuries and to improve emergency medical services for children.” (New York Times, 2/5/06) Cuts to children’s hospitals. Free-standing children’s hospitals depend upon the federal government to support the training of health professionals. But the President has proposed to cut the Children’s Hospitals Graduate Medical Education (GME) program by $198 million – from $297 million in Fiscal Year 2006 to $99 million in Fiscal Year 2007.

Cuts to child care assistance. The Bush budget also calls for $1.03 billion in child care funding cuts over the next five years, denying more than 400,000 children from receiving child care in 2011 as compared to 2005 levels. (Center on Budget and Policy Priorities)

Bush budget cuts funding to prevent crime. The Bush budget proposes to cut community policing funding by $371 million in Fiscal Year 2007. This important program helps communities hire police officers, enhance crime fighting technology, and support crime prevention initiatives.

Bush budget eliminates Social Security death benefits. The Bush budget would eliminate the $255 death benefit provided by Social Security to the families of those who die. While modest, this benefit is important to many families who need assistance in order to bury their loved ones with dignity.

Bush Budget Fails to Address Rising Costs Facing Working Families

Bush budget increases health care costs. Almost 46 million Americans 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 solution, the President’s budget proposal focuses on expanding the use of high-deductible health plans that are associated with savings accounts (Health Savings Accounts, or HSAs) that essentially serve as tax shelters for those wealthy enough to contribute funds. These plans do little or nothing to help those struggling to afford health coverage. In fact, if the use of HSAs becomes widespread, people who want to keep comprehensive health coverage could see their premiums escalate or their employers drop their comprehensive coverage.

Bush budget increases costs of higher education. Tuition and fees have increased 57 percent for a public four-year college and 32 percent for a private four-year college since 2000. Despite this growing concern for students and families, the President’s budget freezes the maximum Pell Grant award at $4,050 for the fourth consecutive year. Failure to increase Pell Grants is weakening the value of these grants: in 1975, a Pell Grant covered 80 percent of the cost of a public four-year college education while today it covers only about 40 percent. The President’s budget also proposes to eliminate the Perkins loan program, which provides low-interest, fixed-rate loans for students with financial need, and plans to recall the federal portion of revolving funds collected by participating institutions. Furthermore, the President’s budget would eliminate the Leveraging Educational Assistance Partnership (LEAP) program, which provides a federal match to states for need-based grant and work-study assistance.

Bush budget denies help for families struggling with soaring energy costs. Even though home heating costs have increased by 78 percent since President Bush took office in 2001, his Fiscal Year 2007 budget cuts funding for the Low Income Home Energy Assistance Program (LIHEAP) by $379 million.