More news that this year's budget underfunds important programs. This time, it's the Millenium Challenge program, which provides funding to foster the development of poor countries.

WASHINGTON -- President Bush's signature foreign-assistance program is likely to run out of money this year, leaving in the lurch several poor countries that have labored to meet its strict eligibility standards, according to aid officials.

Mr. Bush introduced the Millennium Challenge program in 2002 as a new approach to fix the perceived failures of overseas-development assistance.

The grants would be large enough to transform the recipient nations' economic fortunes, he said then, and the money would go only to countries that met quantitative standards for honest government, free-market policies and generous social spending.

Now the program's budget is expected to fall short of its projected needs by $400 million to $1 billion, depending on the outcome of congressional negotiations over the coming weeks. The crunch comes at a time when Morocco, Tanzania, Mozambique and several other developing nations are nearing agreements on huge aid packages.

The newly-empowered Democrats are now reaping a grim reward for winning the November election. They have to clean up the Republican's appropriations mess, and reports show that so far, they're having a rough time doing it.

Regular readers might recall that the Republican Congress did not pass nine of the eleven required appropriations bills that provide funding for discretionary programs. Instead, the last Congress passed a draconian "continuing resolution" (CR) that the Democrats have little choice but to extend for the entire year. Congress Daily ($) reports on the Democrats' plans for the extension:

Drafting a bill to cover nine unfinished spending bills for the fiscal year ending Sept. 30 is proving no easy task, as demands for additional spending pile up while Democrats try to live within the tight budget constraints still in place on the new Congress. "There is absolutely no way to meet all the needs of the country. But we're going to do our absolute best to meet the priority needs," said a spokesman for Senate Appropriations Chairman Byrd.

Making matters more urgent, funding shortfalls in the CR are cutting operations at some agencies. For instance, the Small Business Administration's disaster relief program, which assists Katrina victims, is about to run out of money. And the CR is underfunding the Justice Department, forcing the FBI, DEA, and ATF to furlough staffing and cut back on recruitment efforts.

These agencies could just be the tip of the iceberg. The CR covers nearly half of all discretionary programs. It should provide roughly $500 billion in funding- about a fifth of the entire federal budget. More news about underfunded agencies is pretty likely.

The upshot is that this bare-bones budget does not meet public needs. The new Congress has a chance to define itself by crafting a FY '08 budget that properly invests in our priorities. And to avoid an embarrassing mess like this, they need to put in enough work to pass it on time.

The last leg of the 100 hours legislative marathon- the Creating Long-Term Energy Alternatives for the Nation Act of 2007- will come up for a vote Thursday. The LA Times has a good summary of the bill here.

The bill addresses a bunch of shameful things that have been in the news recently. It corrects some mistakes in leases to oil companies that have cost the federal government billions. It rescinds a few tax subsidies to Big Oil, and ends a royalty incentive program that has failed to encourage more energy production. And it directs Congress to put the money that these measures bring in- about $14 billion over 10 years- in a fund to promote the development of alternative energy.

All worthy goals. But Congress should be aware that this bill doesn't- and, to my knowledge, couldn't- do anything about the fact that Interior Department auditors have let oil and gas companies get away with not paying royalties on energy recovered on federal property.

Oil and gas on federal property are common assets. When energy companies profit off of these assets, they owe the public some money. Congress needs to hold the Interior Department's feet to the fire until it gets what the public deserves. Bring on the hearings, investigations, and appropriations fights!

Via TAPPED, the Washington Post reports today on budget choices at NASA. Money is being shifted out of programs that monitor climate change and hurricanes and into space exploration.

The government's ability to understand and predict hurricanes, drought and climate changes of all kinds is in danger because of deep cuts facing many Earth satellite programs and major delays in launching some of its most important new instruments, a panel of experts has concluded.

The two-year study by the National Academy of Sciences, released yesterday, determined that NASA's earth science budget has declined 30 percent since 2000. It stands to fall further as funding shifts to plans for a manned mission to the moon and Mars.

And more on budget trade-offs from Christian Science Monitor, which had an article today about the cost of the Iraq war and budget trade-offs. Key quotes:

The US can certainly afford the war, says budget analyst Stan Collender, a managing director of Qorvis Communications in Washington. But the spending is taking resources from other areas, he notes. Because the US is borrowing to finance the war, the cost will be borne by future generations. "And it's still going to be one of the most expensive wars we have ever fought," he says.

Unlike in previous major wars, the United States has cut taxes at the same time it has increased military spending. "It's fair to say all of the money spent on the war has been borrowed," says Richard Kogan, a senior fellow at the Center on Budget and Policy Priorities, a think tank in Washington. "But eventually everything has to be paid for."

Where's Gil Scott-Heron and the Last Poets when you need them?

Today, the NYT reminds us that the tax cuts of 2001 and 2003 disproportionately benefited the wealthy over the middle class, the super wealthy over the wealthy, and the wealthy-beyond-your-imagination over the super wealthy.

Tax cuts were much deeper, and affected far more money, for families in the highest income categories. Households in the top 1 percent of earnings, which had an average income of $1.25 million, saw their effective individual tax rates drop to 19.6 percent in 2004 from 24.2 percent in 2000. The rate cut was twice as deep as for middle-income families, and it translated to an average tax cut of almost $58,000.

That means that wealthier people didn't just get more of a tax break because they pay more in taxes. Their rates were cut more than everyone else's.

Which reminds me, why are taxes on the rich still so low?

Why are taxes on the rich still so low when only the rich have seen their wages and salaries grow in this recovery? When the rich have been getting richer, the middle class has been getting nowhere, and the poor have been getting poorer? When workers are more productive, but don't earn more?

Why are taxes on the rich still so low when we're fighting a war where the few are paying the price for the many? When the President is thinking about expanding that war and asking for another $100 billion to fund it?

Why are taxes on the rich still so low when, in the long run, it doesn't really increase economic growth?

Why are taxes on the rich still so low when Congress and the President say we don't have enough revenue for things like Medicaid, Head Start, and student loans?

Why are taxes on the rich still so low when we keep running high deficits? When we'll face even larger deficits when the baby boomers retire?

And so on...

Yesterday in the Wall Street Journal, ($) President Bush sketched out some broad themes and a few bold claims for the final two years of his presidency. Many in the media have commented on Bush's call to cut earmarks in half this year, but I wanted to highlight a small part of the op-ed that has been overlooked. Bush wrote:

Because revenues have grown and we've done a better job of holding the line on domestic spending, we met our goal of cutting the deficit in half three years ahead of schedule. By continuing these policies, we can balance the federal budget by 2012 while funding our priorities and making the tax cuts permanent. (emphasis added)

I'll ignore for the moment Bush's continued misleading claims about cutting the deficit in half and how really insignificant that will be in the long run. I'm more concerned that Bush believes we have funded and will continued to be able to fully fund our most crucial priorities. The president is still under the false impression we can tackle difficult challenges without anyone having to sacrifice.

Yesterday’s Wall Street Journal article ($) detailing the expected supplemental spending request for the wars in Iraq and Afghanistan is a perfect illustration of the problems that emergency funding bills present and why Congressional oversight of such spending is badly needed.

Lockheed Martin Corp.'s new Joint Strike Fighter [(JSF)] plane won't be ready to see action for years. But that didn't stop the Air Force from inserting two of the jets into the coming emergency-funding request for operations in Iraq.

The Pentagon's supplemental budgets traditionally pay for war costs such as personnel, equipment repairs and ammunition. But as the Joint Strike Fighter request shows, the coming supplemental is being used by the military services for more than replacing what has been lost in Iraq and Afghanistan. It is being used to acquire future weapons that normally would be funded through the regular Pentagon budget.

[...]

An October directive from Deputy Defense Secretary Gordon England opened the floodgates by allowing the services to request emergency funds to replace equipment and upgrade to newer models for the "overall efforts related to the global war on terror," not just operations in Iraq and Afghanistan.

"It's a feeding frenzy," says an army official involved in budget planning. "Using the supplemental budget, we're now buying the military we wish we had,"

In addition to the JSF, spending requests for the following equipment not currently being used in Iraq and Afghanistand are tucked inside the Pentagon's shopping list:

• $3.67 billion for the Army to reconfigure ground forces into smaller units
• $3.04 billion for the Navy to repair and acquire aircraft - an amount beyond what has been lost in combat
• $62 million for ballistic missiles
• V-22 tilt-rotor aircraft, which has never been deployed in a combat zone

President Bush has fired the opening shot of the 2007 budget battle, writing an op-ed in today's WSJ. The piece is mostly PR, which is an encouraging sign that the President is more interested in repairing his image than pursuing harmful policy. Substance-wise, the President is not asking for much more than the continuation of the status quo.

Some notable budgetary policies and goals mentioned in the op-ed:

• No new taxes:
  "Now is not the time to raise taxes on the American people."
• A balanced budget by 2012:
  "By continuing these policies, we can balance the federal budget by 2012 while funding our priorities and making the tax cuts permanent. In early February, I will submit a budget that does exactly that."
• An vague reference to entitlement cuts as a way to balance the budget:
  "By balancing the budget through pro-growth economic policies and spending restraint, we are better positioned to tackle the longer term fiscal challenge facing our country: reforming entitlements -- Social Security, Medicare and Medicaid -- so future generations can benefit from these vital programs without bankrupting our country."
• Legislative process changes and a line-item veto:
  "It's time Congress give the president a line-item veto. And today I will announce my own proposal to end this dead-of-the-night process and substantially cut the earmarks passed each year."