What Bush Isn’t Saying

As President Bush jets from state to state selling his budget plan, it is what he is not telling Americans that they most need to hear: The plan hides big problems ahead.

Not that Bush’s budget doesn’t have everything he promised during the campaign and more--a large tax cut, added spending on education and defense, a new program to help the elderly pay for medication and a pledge to pay down $2 trillion of the national debt. What Bush is not saying is that Medicare and Social Security may be vulnerable if we pay for all that the plan proposes.

The White House insists that the order of priorities of Bush’s budget is to finance expansion of the administration’s education and defense programs, pay down the debt and, with what’s left of the surplus, cut taxes. On close reading, the $1.6-trillion tax cut plan is the centerpiece of Bush’s budget and everything else is designed around it.

Key to Bush’s calculations is a $842-billion reserve fund that he said would cover “additional needs, debt service and contingencies” after all else was paid for. Most of the fund--an estimated $526 billion--is made up of the projected Medicare surplus that both parties in Congress agreed last year should not be touched for general spending.

Bush’s budget plan would break that agreement--spend the Medicare surplus on other things, such as payments to farmers, fixing the alternative minimum tax and extending expiring tax credits. All, including Bush, agree that though the hospital portion of Medicare is running a surplus today, it will be in trouble at the end of this decade when the baby boomer generation--accounting for about a quarter of the population--starts drawing benefits. The proposal to include some form of prescription drug coverage for the elderly would compound Medicare financial difficulties. The cost of drugs, according to the most recent projections, could eat up more than one-sixth of health care services. Bush’s budget, rather than appropriate funds for Medicare expansion, would hasten its insolvency.

Bush’s budget also does not provide for his campaign proposal to divert two percentage points of the Social Security payroll tax to individual accounts. If the plan were enacted and implemented in 2002, the revenue would be insufficient to pay full benefits in 2005, instead of 2015 as under current law. Unless the shortfall were covered by general revenue--much of which is earmarked for Bush’s tax cut--benefits would have to be reduced. Bush’s budget math does not include that either.

The surplus may be big enough to cover a cut in taxes. But Bush should make sure--and that means not counting on flimsy projections--that the government is funding the country’s more urgent needs first.