Where's the Budget Outrage?" is a question asked by columnist E.J. Dionne, Jr. in an op-ed in today's Washington Post. In it he discusses the "cut-the-poor, help-the-big-interests federal budget," and the vote on the budget reconciliation bill that is taking place in the House tomorrow. This op-ed is a good read, especially as we prepare to hear President Bush outline his agenda on budget, tax, and health care issues in tonight's State of the Union.

As the House gears up for tomorrow’s vote on cutting $40 billion in entitlement spending from the budget, the House leadership is less and less confident they will have enough votes to ram these cuts through. Following in the footsteps of Rep. Simmons (R-CT), who recently changed his position on the bill, a number of moderate GOP Representatives are considering voting against the bill as well. These include Reps. Sherwood Boehlert (R-NY), Mike Fitzpatrick (R-PA), John Sweeney (R-NY), and Chris Shays (R-CT).

You can help put pressure on these lawmakers! If you are a constituent of one of the above-mentioned Representatives, it is crucial that you contact them today (if you are unsure, find your Representative here). You can call toll-free, 1-800-426-8073, and be connected to the Capitol switchboard. Tell these House members you want them to vote NO against a budget cuts bill that will achieve a majority of its savings by cutting Medicaid, Medicare, and student loan programs.

The long-awaited House vote on the Senate-passed budget reconciliation bill is taking place this Wednesday, February 1. The vote is expected to be extremely close, as a handful of moderate Republicans who previously voted for the bill are expected to vote against it this time around. In preparation for the vote the Emergency Campaign for America's Priorities is holding a number of events across the country in order to inform people of the budget cuts and hopefully pressure additional House members to vote against the bill.

You can take action and contact your representative by calling toll-free 1-800-426-8073. Tell them to vote NO on the budget cuts bill.

The conference agreement the House will be voting on (S 1932) would, according to this Congressional Budget Office report, "reduce direct spending by about $39 billion over the 2006-2010 period and by approximately $99 billion over the 2006-2015 period." Passed in tandem with the tax reconciliation bill, however, the savings achieved in this bill become somewhat meaningless, as the bills together would add tens of billions on to the budget deficit. Not to mention, passing harmful budget cuts in order to partially offset tax cuts does not reflect compassionate or responsible priorities on the part of Congress.

Despite any amount of savings the bill may achieve, this "deficit reduction act" is harmful. As Robert Pear points out in an excellent article in today's NY Times, this bill would reduce Medicaid coverage for poor people significantly, as well as increase the number of uninsured individuals. The bill would also significantly cut student loans and crop subsidies, among other priorities. The health care cuts make up half of the savings over ten years.

The Fair Taxes for All Coalition has released new talking points on Congress' plan to cut the budget and pass new tax cuts. The talking points cover the new deficit projections, the possibility of extending capital gains and dividends cuts, and this year's new tax cuts.

Additionally, OMB Watch is happy to welcome on to the scene a new blog devoted to budget, tax, and economic issues. The blog is being run by the Center for American Progress economic team, and unlike this blog, it is interactive (which means you can post comments). We hope you continue to read OMB Watch's budget blog, and check out our competition once in a while, too.

Today the Congressional Budget Office projected a $337 billion deficit for 2006. The increase over last year's $318 billion recorded deficit is largely attributed to hurricane costs and the introduction of the Medicare prescription drug benefit this month. $337 billion is far less than the Office of Management and Budget's estimate stating that the deficit will exceed $400 billion this year.

A problem with these projections is that by law, the CBO cannot factor in the costs of policies which have not yet been enacted. Therefore, new spending on the Iraq war, tax-cut extensions, and new Gulf Coast reconstruction spending -- all huge costs -- are not included in this figure. The agency noted that a more realistic deficit projection, taking into account some of these costs, would be more like $360 billion. Without the costs however, the report is able to show declining deficits beginning with $270 billion in FY07 and small surpluses beginning in FY12. They put the total 10-year deficit projection of $832 billion. Ranking member on the House Budget Committee John Spratt (D-SC) said,

CBO's projections show the deficit making a decided improvement after 2010, but this results from expiration of the tax cuts passed in 2001, 2002 and 2003, a policy the Bush administration clearly does not support."

Sen. Kent Conrad (D-ND) of the Senate Budget Committee added,

The thing that really alarms me is the growth of the debt. Remember, while we see a deficit this year in the $360 billion range when you put in the need to fix the alternative minimum tax and you put in the additional war cost, what is being lost, I believe, in terms of helping the American people understand our fiscal condition, is the debt is growing much more rapidly than the deficit.

With the President's FY 2007 budget soon to be released, the House must still take one more vote on the FY 2006 budget cuts bill it struggled with for almost all of last year, and some moderate Republicans are starting to break out of the stranglehold of party loyalty. Rep. Rob Simmons (R-CT), who initially voted against the cuts, then voted for them in December, has announced today that he has re-evaluated his position again and will vote against the bill on Feburary 1.

Simmons' office released the following Kerry-esque statement:

I opposed the original House budget in November because I knew it could be, and should be, improved. The budget that was drafted in the House-Senate Conference was a better budget and I voted for it in December.

Since then I have met with and listened to a wide range of constituents - including AARP, American Federation of Teachers, Connecticut Voices for Children, labor unions and radiologists-regarding the details of the proposed changes. The consensus is that the bill, despite the improvements, remains unsatisfactory. Consequently, I have decided to vote against the budget on February 1.

Representation is only effective if the elected official listens to the people. In a democracy the government must serve the people, not reign over them. I have listened and concluded that the budget, as it stands, falls short.

It's encouraging to know that citizen participation in the legislative process actually can make a difference. Kudos to Rep. Simmons for keeping his ears open to the cries of the public interest and not towing the party line.

Due to the GOP push for a 1 percent across-the-board cut on FY 2006 discretionary spending, funding for LIHEAP - the Low-Income Home Energy Assistance Program - is down to $2.16 billion, a significant decrease from last year's $2.18 billion funding level. This figure falls far short of the $5.1 billion authorized by the comprehensive energy law enacted last year, and also far short of the need that exists, particularly in northeastern states. State LIHEAP directors are estimating that applications for home heating aid in 2005 were up, on average, 10 percent -- to roughly 5.6 million applicants. As it is, LIHEAP only serves one in five families who are eligible for the assistance.

David Fox, the executive director of the Campaign for Home Energy Assistance, noted that the situation means "there are more people competing in essence for the same pool of money." The budget reconciliation bill, which is pending in the House, does contain an extra $1 billion in LIHEAP funding, yet includes a number of other contentious cuts. That funding, however, would not be available until October 1, leaving many families literally out in the cold this winter.

As this excellent column from Bloomberg.com highlights, there is a gap between the administration's rhetoric and reality when it comes to tackling the long-term budget implications of the rising costs of entitlement spending. Bush spent a lot of time last year making a big deal about the unfunded Social Security liability, and the liability for Medicare is expected to be even greater, with the administration estimating an $11 trillion shortfall.

Despite this stark reality, Bush has no fiscally responsible plan to deal with rising entitlement costs. The Social Security shortfall could be shored up by repealing some of the 2001 and 2003 tax cuts to the wealthy, yet Bush has no interest in doing this. Instead, he continues to push for extending expiring tax breaks, and for eliminating the estate tax, which taxes less than 2 percent of the wealthiest estates in America. The result promises to be a shift in the burden of these costs from the wealthiest in our society onto to everyone else.

The federal government posted a budget surplus for December, 2005 for the first time since 2002, according to the Treasury Department. A surge in corporate tax revenues pushed total federal revenues for the month to $241.88 billion, while government spending rose at half the rate of revenues to $230.9 billion.

Despite this positive sign, budget forecasters are still expecting the annual deficit to rise for FY 2006 by anywhere from $50 billion to possibly over $100 billion by the end of the fiscal year. This is mostly due to increased federal spending after Hurricane Katrina, but also because of a continuation of tax cuts, mostly benefiting the wealthy.

The release of the President's budget is less than a month away, and Treasury Secretary John Snow has made it clear the budget will "call for sacrifices, no doubt about it." Like last year's "tough budget," this year's slicing and dicing is an attempt by the administration both to appear tough on spending, as well as help them pare the down the deficit -- a whopping $318 billion last year -- even further.

While reducing the deficit is something this administration should focus on, it's important not to forget the major cause of the huge deficits we have seen the over last few years: Bush's 2001 and 2003 tax cuts. Through FY 2005, the Bush tax cuts enacted since 2001 have cost $819 billion. And extending these tax cuts, a move Bush plans to fight for this coming year, would cost $2.1 trillion through 2015. If this administration were truly dedicated to paring down spending and truly willing to ask people to "make sacrifices," they would be less focused on slashing already-meager funding for government programs, and more focused on reducing the hundreds of billions of dollars spent being spent on tax cuts per year ($225 billion last year alone). By focusing on the budget for sacrifices, as opposed to the tax cuts, the administration makes it quite clear that they are more comfortable with taking from low- and moderate-income families than they are with taking from the super-wealthy.

While talking to reporters about the budget yesterday, Snow also mentioned that other priorities for 2006 include passing a pension reform bill, tougher regulatory standards for government-sponsored enterprises such as Fannie Mae or Freddie Mac, and increasing the debt ceiling.

Last April Congress called for an increase in the debt limit -- the national debt is expected to hit $8,184 billion in mid-February -- however they have yet to act. Lawmakers are expected to take up the issue in February after voting on final tax and budget reconciliation bills, marking the fourth time during President Bush's presidency the debt limit has needed to be raised. In a recent letter to Congress, Secretary of the Treasury John Snow said that unless the debt ceiling is raised by mid-March, "we will be unable to continue to finance government operations."

Raising the debt ceiling has no immediate economic consequences, but instead indicates the instability of Bush and Congress' long-term fiscal policy. In 2010 the national debt is forecasted to be 70 percent of GDP. And pressure for the government to spend will only grow more as baby boomers retire and place new demands on both Social Security and Medicare. As Douglas Holtz-Eakin, former head of the Congressional Budget Office stated,"It's not where we are. It's the trajectory we're on." Lawmakers need to put an end to their reckless spending -- Bush's 2001 and 2003 tax cuts alone are costing the country hundreds of billions of dollars every year -- so that we can put an end to this downward spiral of fiscal irresponsibility.

Here is how the debt limit has been increased during the Bush presidency:

• June 2002: ceiling raised from $5.95 trillion to $6.4 trillion
  
  
• May 2003: ceiling raised to $7.4 trillion
  
  
• November 2004: ceiling raised to $8.184 trillion

Over the past fifty years lawmakers have raised the ceiling over seventy times, however never by the amounts quite like we have seen over the past four years.

The Congressional Budget Office released the Monthly Budget Review on Friday, in which they reported the federal budget deficit for the first quarter of 2006 as being $119 billion. This figure is fairly close to the shortfall seen in the first quarter last year.

Increased spending in the wake of the hurricanes was responsible for some of the deficit, however those outlays were countered by somewhat high corporate tax receipts. Most corporations make their quarterly corporate income tax payments in December, which makes it a good month for the federal budget.