It’s The Spending, Stupid

(Washington, D.C.) – Less than one week after Citizens Against Government Waste (CAGW) blasted the Senate for stripping out billions of dollars in budget savings, a survey of 172 members of the National Association for Business Economics (NABE) revealed today that the budget deficit is the greatest short-term risk to the U.S. economy.  Four months ago, terrorism was their greatest concern.

According to the survey, 27 percent of respondents felt that government spending presents the largest short-term threat to the economy, up from 23 percent in August; U.S. businesses were also concerned about the longer-term risks of the massive federal deficit.  Of those concerned about the deficit, concerns over U.S. trade with other nations rose from 5 to 15 percent.

“Members of Congress, especially senators, continue to demonstrate a reckless disregard for fiscal responsibility,” said CAGW President Tom Schatz.  “From a business owner’s perspective, rampant spending becomes even more audacious considering the negative impact it is having on the dollar’s power and America’s role in the global economy.”
NABE is an association of more than 1,500 businesses that follows the latest economic information and trends to
facilitate business decisions.  Among the members that were surveyed between February 28 and March 8, only 17 percent felt fiscal policy is “about right,” and 31 percent expected deficits to continue to increase. 

“Anyone watching the Senate’s fiscal monkey business has good cause to expect deficits to continue to swell,” said Schatz.  “The budget deficit for fiscal 2005 is projected at a record $427 billion.  The President’s proposed reforms to Medicaid and Community Development Block Grants would take us one step closer to reducing that figure.  Unfortunately, the Senate chose to spend, not save.”
The Senate last week voted 55-45 to remove $14 billion in cost savings to Medicaid.  Senators also rejected by a vote of 66-32 the President’s proposal to combine Community Development Block Grants (CDBG) with other economic development programs and to reduce CDBG growth by roughly $2 billion.
Since 1995, Medicaid spending has grown by 211 percent.  This year, federal spending on Medicaid will reach $183 billion and in the next five years it will total more than $1 trillion, according to the Congressional Budget Office.    

As for the CDBG program, the President’s budget would require cities to submit proposals and compete for funds.  A lack of accountability has allowed CDBGs to become a budgetary channel for pork.  In fiscal 2005, there is a total of 1,087 such grants costing more than $303 million.  Past pork-barrel projects have included $25,000 for a music conservatory and $500,000 for “streetscape improvements” in Westchester, N.Y. – one of the wealthiest counties in the nation. 

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.