Only 9 billion dollars separates the House and the Senate Budget Committee FY 2003 discretionary spending totals, but this small divide has been widened by continuing efforts to limit spending on domestic programs. Each of the budget proposals that has been put forth calls for reductions in this year’s real per capita spending from last year’s levels. Yet a recent analysis from the Center on Budget and Policy Priorities (CBPP) argues that we are nowhere near a discretionary “spending explosion,” in either domestic or military spending.

Only 9 billion dollars separates the House and the Senate Budget Committee FY 2003 discretionary spending totals, but this small divide has been widened by continuing efforts to limit spending on domestic programs. Each of the budget proposals that has been put forth calls for reductions in this year’s real per capita spending from last year’s levels. Yet a recent analysis from the Center on Budget and Policy Priorities (CBPP) argues that we are nowhere near a discretionary “spending explosion,” in either domestic or military spending.

Under each of the current proposals, total discretionary spending (domestic, international and military) will decline over the next 10 years when represented as a percentage of GDP. It is that gauge that we should use to evaluate the potential impact of budget proposals. By comparing the level of spending with the overall size of the economy, we get a much more accurate sense of just how small domestic discretionary spending really is as a piece of the pie. There is no spending explosion. In fact, under almost all proposed spending scenarios, domestic discretionary funding, at 3.0 percent of GDP, will actually be reduced to its lowest level since 1963. While overall GDP is expected to grow at an average rate of 5.3 percent per year, even the Senate Budget Committee proposal (the most generous of the proposals) only allows domestic discretionary spending to grow at 3.9 percent per year.

Rather than the risk of a “spending explosion,” the real risk lies in failing to address the domestic catastrophes that are daily worsening across the country. This lack of sustained attention to the country’s ongoing domestic needs now and over the long-term is the real threat to our health, security, and future economic and social well-being. For instance:

• State Fiscal Crises: Congress has taken no action to provide fiscal assistance to deficit-ridden states, many of which are now making dramatic cuts in their funding of services, especially those which benefit low- and middle-income people.
  
  
  States spend a large percentage of their annual budgets on Medicaid health care assistance for their low-income residents. CBPP, the Economic Policy Institute (EPI) and others have argued that without federal assistance, states will be forced to make even more cuts in Medicaid benefits, as well as in other state-funded programs. A recent Washington Post story reports that this is already occurring: 47 million people rely on Medicaid coverage across the country, and hundreds of thousands of them are losing their health services, dental and vision coverage, even prescription drug assistance. Some states, according to the Post story, are trying to save money by cutting out their eligibility awareness campaigns. As one state Medicaid director noted, “It’s nuts to go out there and drag people in if you can’t even serve them or deal with them.”
  
  States may be forced to make additional cuts in health care for low-income children if Congress doesn’t act soon. States will lose last year’s unused funds from the State Children’s Health Insurance Program (SCHIP), which provides health insurance to children in low-income families, unless Congress votes to return these funds to the states. This will cause 600,000 children across the country to lose the ability to obtain health care.
  
  Many states are looking to hiring freezes and even large layoffs to cut costs. Last week, Virginia Governor Mark Warner announced that state layoffs could range anywhere from 1,000 to 2,500 employees to help close the state’s $2 billion budget deficit. Economists, such as EPI’s Max Sawicky, have been warning of the negative impact on the economy of these and other measures that states, without help from the federal government, will be forced into so they can meet their balanced budget requirements.
  
  
  
• TANF Reauthorization: The country’s primary program for assistance for low-income families was up for reauthorization this year. Congress has been unable to pass reauthorization legislation, and may only pass a one-year extension of the program, at current funding levels -- which were not even sufficient for last year’s needs.
  
  
• Extension of Unemployment Benefits: Many people will be reaching the state limits of their unemployment compensation before the year is over, leaving them with no safety net whatsoever, in spite of continuing bad economic conditions. Congress has failed to pass an extension of time limits to protect these workers.

These are just a few of the crises that Congress ought to address. Recent census reports show that poverty has increased, income inequality is at one of its highest levels ever, and the number of people without health insurance has climbed to 41.2 million -- a number equal to the combined populations of 23 states and the District of Columbia according to a Family USA report. States are being forced to cut health benefits to children and the very neediest, delay much needed school renovation and construction, and lay off personnel, increasing unemployment and decreasing the buying power which is necessary to a good economy.

If we continue to allow Congress and the White House to argue that there is no time and no money, we are courting disaster. It doesn’t have to be this way. A sizeable chunk of the $1.35 trillion tax cut enacted June 2001 won’t take effect until 2004. As Citizens for Tax Justice (CTJ) and the Children’s Defense Fund (CDF) have pointed out, almost all of the next phases of the tax cut will benefit only the top 20% of individuals – those making more than $73,000 each year. OMB Watch has joined CBPP, CTJ, CDF, and others in arguing that the nation’s policy makers now must seriously begin looking to a freeze of the next rounds of tax cuts. As the CBPP report observes, if some adjustments must be made to help offset the increased defense and homeland security costs, and “if sacrifice is to be broadly shared, it cannot involve scaling back programs primarily for lower- or middle-income families and individuals while placing off limits all scheduled tax cuts for the most affluent members of society.” We have many needs now, but we also have the resources. The US is still the richest country in the world. Now is the time to use these resources wisely and fairly.