Budget Update -- July 2005

Being a budget watchdog generally involves a healthy degree of pessimism and the last few weeks have provided plenty of reminders why. It was encouraging to see the appropriations process moving forward within the tight spending limits set by the budget resolution. That is, until a political firestorm over veterans benefits erupted, leading to pressure for increased spending. While efforts to achieve the modest savings in mandatory spending programs are moving forward slowly, momentum is growing for further tax cuts beyond those contemplated in the budget resolution, which already increases the deficit above current law.

Discussion about restoring Social Security solvency has been replaced by a debate about whether to save Social Security surpluses in government trust funds or individual accounts, which, for whatever their merits, would not improve solvency.

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