Kicking the Can: The U.S. Congress, the Bush Administration and the 2008 Budget

Abstract

In December 2008, the U.S. Department of the Treasury issued its annual report on the health of the federal budget. The report details the U.S. government's long-term financial outlook, including the biggest fiscal challenge, i.e., the unsustainable growth in entitlement programs. Later the same month, U.S. federal budget legislation for FY 2008 was completed, with passage of an approximately $555 billion omnibus appropriations bill for largely non-defense spending ($70 billion was included for the wars in Iraq and Afghanistan). There was considerable conflict between the Democratic Congress and the Bush Administration over funding for these two wars. Except for the Mexican War (1846-48), the U.S. has always raised taxes to pay for war, lest deficit and debt get out of hand. This article examines the FY 2008 budget and issues related to its passage, and the longer-term issue of U.S. government fiscal sustainability. It argues that Congress did little to address this problem, rejecting the few initiatives proposed by the Bush Administration. The budget views of the presidential candidates suggest that U.S. fiscal sustainability will remain in jeopardy.