If nothing else, Washington's tortured, year-long budget debate
shows that cutting federal spending may be even more difficult today
than it used to be.
Not that it's ever been easy. For at least the last quarter-
century, the federal deficit has been a perennial problem of US
politics. As defense and entitlement spending has grown, most
everything else that the US government does has been squeezed and
squeezed again in search of savings.
Many of the obvious cuts have now been made, while major
reductions in domestic entitlements have proved politically elusive.
The result: a deficit reduction bill that's far smaller than fiscal
conservatives wanted, whose cuts may be offset by the loss of
federal revenue expected from furthering the Bush tax cuts.
"It's a shadow of its former self, and it wasn't much to begin
with," says Stan Collender, a budget expert and manager of the
Washington office of Financial Dynamics.
The spending-cut bill passed by the Senate last Wednesday would
save $39.7 billion during the next five years. Total federal outlays
over the same period would top $13 trillion, according to Office of
Management and Budget estimates.
Democrats forced small changes in the bill, meaning it faces
another vote - and probable passage - in the House before it can be
sent to President Bush and signed into law.
Republican leaders hailed the measure, calling it a small step
toward controlling federal spending. They added that it marked the
first successful attempt to reduce spending on Medicare, Medicaid,
and similar entitlement programs in eight years. It "will help keep
us on track to cut the deficit in half by 2009," said Mr. Bush.
Critics said those very entitlement cuts hurt the most vulnerable
Americans. The bill "rips and tears" at Medicare and Medicaid, said
Senate minority leader Harry Reid (D) of Nevada.
The final reduction bill passed by the Senate dropped some
provisions that would have saved money at the expense of the
pharmaceutical and managed-care industries, say critics.
"Cuts to low-income programs could have been averted in large
part or entirely - and the same amount of savings still achieved -
if [lawmakers] had done more to tackle certain special interests,"
concludes an analysis by the Center on Budget and Policy Priorities.
As it stands, the biggest savings in the bill, at $12.7 billion
over five years, would come from the student loan programs. Among
other changes, the legislation would fix interest rates on student
loans at 6.8 percent, even if commercial rates are lower. Student
loan rates now stand at 5.3 percent.
Net five-year savings from the Medicare program are estimated at