Friday, November 04, 2005

Senate Budget Bill Faces Veto

The US Senate passed a sweeping budget reform bill that would cut some $35 billion over the course of the next 5 years. (Washington Post: Senate Passes Plan to Cut $35 Billion From Deficit). The bill would reduce federal funding to pharmaceutical companies, tap into agricultural support measures, squeeze student loan providers, and attempt to clamp down on Medicare fraud. President Bush has already threatened to veto the measure since it tampers with his recently implemented Medicare drug plans.

Before anyone gets overly excited about the numbers, let me point out that the savings is over a 5-year period. Averaging only $7 billion per year in cuts, the bill barely covers the amount proposed this week to address Avian flu concerns. Senator Tom DeLay (R-TX), while praising the tax reduction measures over the past 5-years also acknowledged congress' lackluster spending constraints in prior budgets: "Our record on spending has not been as consistent, unfortunately."

DeLay's comments are an understatement. Imelda Marcos showed more restraint in a shoe store than Congress does with federal spending. A $35 billion reduction over 5 years is a non-event. Unfortunately, there is little chance Congress will do anything substantial with the 2006 budget given that it is an election year. Neither side of the aisle is going to risk angering key constituents by clamping down on pet pork projects that only benefit a limited number of people for the simple reason that those pork projects benefit voters in key districts.

This particular measure may never get to the President's desk anyway. There is sufficient opposition to many aspects of the measure in the House, leading budget committee member Rep. Adam Putnam (R-FL) to comment, "There are a dozen issues, any one of which could break this deal. This is going to be a heavy lift."

Expect the usual from Congress when it comes to the 2006 budget. Don't look to an election year congress to make any sweeping spending reforms. Also don't look to this budget reduction bill to have any impact whatsoever, even assuming its unlikely passage in the House.


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