Spending actually will rise Only the rate will be reduced

November 06, 1990|By Knight-Ridder

WASHINGTON -- The big budget deal President Bush just signed, the one that's supposed to cut the deficit by nearly $500 billion over five years, won't cut federal spending at all this fiscal year.

In fact, total federal spending will rise by about 10 percent. And that's without an additional $75 billion more for the savings and loan bailout and the Persian Gulf military expedition.

The deal -- which Bush and Congress struggled for six months to produce, promoting widespread public disgust in the process -- promises that one-third of future deficit reduction will come from tax increases and two-thirds from spending cuts.

But in fact, overall federal spending will still grow the whole time; only the pace of spending growth will be cut.

The president signed it yesterday, at the last possible moment before today's elections. However, the stopgap spending measure which has kept the government running expired at midnight.

The government spent $1.255 trillion in fiscal 1990, which ended Sept. 30. The new budget will spend $1.372 trillion in fiscal 1991, an increase of $117 billion, or 9.3 percent, according to the House Budget Committee.

Indeed, this "deficit-cutting deal" increases federal spending on lots of popular programs. A new child-care program will cost $22.5 billion over five years. Spending authority will rise this year by $6.7 billion to renew expiring public housing subsidies, by $2.3 billion for highway construction and by $1.65 billion for NASA.

A subsidy to the working poor, the Earned Income Tax Credit, was expanded by $13.1 billion over five years.

Taxpayers will also pick up costs for the first time of mammography screening for 18.7 million elderly women and home-care service costs for frail and older poor people under an expansion of Medicare.

And Medicaid coverage was extended to cover all poor children up to age 18. Costs of all expanded medical benefits: $22 billion over five years.

Military spending was cut, supposedly by $180 billion over five years. But this year's outlays will be only $2.3 billion less than last year's, according to House Budget Committee documents.

"It's a fairly big fraud," said Scott A. Hodge, a federal budget analyst for the Heritage Foundation, a conservative Washington think tank.

"The tax increases are real, but the spending restraint may be ephemeral," said Bruce Steinberg, managing economist for Merrill Lynch.

"In any case, spending restraint does not, for the most part, mean cuts," he said.

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