Domestic Spending and the Deficit

Over the past three years, the U.S. has gone from running a large surplus to running a large deficit. Much of the blame surely has to go to the fall in tax revenue due to the recession of 2001. Although a lot of the fall in tax revenue was caused by the recession of 2001, the Bush tax cuts of 2001, 2002 and 2003 created a large drop in tax revenues, and will for at least the next decade. The rest is accounted for by large spending increases, both for international and national programs. The bulk of these categories are accounted for by defense, international spending and spending on homeland security. While these programs have needed increases since 9/11, the increases have been largely a result of higher spending to wage the wars in Afghanistan and Iraq, which, even had they been necessary, need not have cost what they did had Mr. Bush been more compromising on his conditions for international assistance. However, despite what many Republicans and Libertarians cliam, the growth in spending on domestic programs excluding homeland security has not increased since 2002, and over the past three years has been much lower than the growth in defense, international and homeland security spending growth. According to a recent Center on Budget and Policy Priorities (CBPP) report, defense, international and homeland security spending grew 22.8 percent in 2002 and 17 percent in 2003. If the omnibus appropriations bill for 2004 passes, this spending will grow by 1.9 percent in 2004. (All figures are adjusted for inflation). Domestic (non-homeland security) spending grew 11.5 percent in 2002, shrank by 1.5 percent in 2003 and is projected to remain at 2003 levels if the appropriations bill for 2004 is passed in mid-January. If the U.S. had not taken a unilateralist approach to the war in Iraq and the tax cuts had not been as large (and as heavily tilted towards the rich, which delayed the economic recovery and held tax revenues lower), there could have been money to fund valuable social programs as well as keeping the deficit within reasonable bounds. Instead, the Bush Administration has decided that an unnecessary war in Iraq and tax cuts favoring the rich were a better idea and have hurt the country's future growth and burdened future Americans with a much higher national debt.

The Omnibus Appropriations Bill: Are Appropriations for Domestic Programs Exploding?, CBPP 12/16/03

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