2006 Budget

On Monday the White House issued the budget for 2006. After being hammered by fiscal conservatives over the past few years for letting the federal deficit balloon, the Bush administration offered an olive branch to this key constituency by planning a reduction in “overall discretionary spending” that will, according to the administration, cut the federal deficit in half by 2009. For an overview of the 2006 budget click (here). The White House contends that the economy will continue to grow at a rapid rate leading to increased tax receipts, and there will be no need to rescind the tax cuts passed during the President’s first term.

One major news story out of the budget was the proposed reduction in farmer’s subsidies. As the New York Times Robert Pear points out in his article, “the proposal puts Mr. Bush at odds with some of his most ardent supporters in the rural south” namely cotton and rice growers. Mr. Pears piece can be found (here). As the article goes on to say, most of the subsidies payments go to large farms and not “family farms.” The support for this move has come from a strange partnership of fiscal conservatives and environmental groups. Groups like the Heritage Foundation and environmental groups have been in pursuit of the same goal: more stringent caps on agricultural subsidies. Such strange partnerships are not unique when their interests coincide on a particular issue.

According to the Environmental Working Group website (here) farming subsidies have tallied over $103 billion dollars from 1995-2003, with most of these subsidies going to, as mentioned before, cotton and rice growers. The opposition to the proposed cuts is already forming from large and small farm organizations. The new chairman of Senate Appropriations Committee, Thad Cochran from Mississippi (a state that is a major beneficiary of the subsidies) is promising to fight the proposal. The President said after his slim 3% popular vote win that he had “political capital” to spend, he may have to use more of that capital than he intended to spend on passing the caps on the farmers subsidy program.

I guess a general question I would like to propose, just for fun, is whether any of you think that President Bush is spreading himself to thin with all these proposed reforms (social security, tax code, etc.) and is perhaps overreaching?