The Budget Challenge

Congressman Nick Smith, May 26, 2002

The current budget deficit is the result of an explosion of spending. In 1998, we passed and executed a plan designed to balance the budget in fiscal year 2002. That budget projected FY 02 revenues of just under $1.89 trillion. Actual revenues for FY 2002 are now expected to come in over $2 trillion, or more than 5 % above the projection. Revenues have exceeded the estimates we made five years ago despite both the economic slowdown and the tax cut. This demonstrates that the real problem in Washington is the big spenders.

The growth in discretionary spending over that period has been explosive. Discretionary outlays will rise at an annual average rate of 7.4 percent between FY 1998 and FY 2003. The President’s proposal for $789 billion in discretionary spending in FY 2003 is a full $124 billion or 18% more than President Clinton projected for this year in his last budget. September 11 and the war explain some of this increase, but not all of it by any means. The $35 billion in increased defense expenditures and $6 billion in expanded homeland defense for FY 2003 are not even half of the total increases since President Clinton left office. The Senate pushed for much of the increase, but many members of Congress also believe they will benefit politically from higher spending.

We need to get serious about controlling spending and deciding how much debt we want to leave for our children and grandchildren. I’m proposing debt ceiling legislation that would do a better job of assessing the government’s true liabilities. It would include the debt held by the public and the debt held by government trust funds (as does the current limit). It would add to that all of the unfunded government liabilities coming due within ten years. This would give us a truer picture of government finances and would begin to focus our attention on the massive unfunded liabilities of Social Security and Medicare looming on the budget horizon.

The supplemental appropriations bill passed on May 24, however, is a step sideways. The bill ultimately honors the President’s request for additional funds for the war and for homeland security. It also avoids a lot of excess spending, though only after a fight with special interests and some members of the Appropriations Committee. The legislation nevertheless includes some dubious spending and a stealthy effort to increase the debt ceiling by $750 billion. Further the bill now goes to the Senate, which is poised to add substantially to spending. We will probably have to fight hard in conference to hold spending to the levels proposed by the President.

The real fight will come after that with the consideration of the thirteen appropriations bills. The Senate has failed so far to pass a budget resolution setting spending levels for these bills. I’m determined, along with the other budget hawks, to limit spending to what’s in the House budget. I have joined with dozens of other members to send a letter to the President asking him to veto appropriations bills that exceed the levels in his budget. The signers also pledged to uphold the President’s vetoes if they are challenged. It is likely to be a difficult, uphill battle in an election year, especially with a Senate acting without the discipline of a budget resolution.

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