Inside the Beltway
Change is Coming in More Ways than OneBy Michael S. Lubell
APS Director of Public Affairs
“Brother, Can You Spare a Dime?” Yip Harburg and Jay Gorney collaborated on the lyrics and music of the song that became a number one hit in 1932. And judging by the soaring number of layoffs around the country and the tin cups you see around Washington these days, it could make it to the top of the charts again. All we need is a modern-day Rudy Vallee to belt it out.
I don’t think Eminem could pull it off, but then again, my judgment is far from perfect. A year ago, if you had asked me whether I could imagine GM, AIG, or Citigroup on the public dole, I’d have said you were delusional. But Washington has been shoveling billions of dollars out the door so fast the last few months, propping up banks, insurance companies and automakers, that you need pretty sharp eyes to spot something the size of a dime.
When President-elect Barack Obama promised to bring change to Washington, I don’t thing he had in mind sacks of coins, but the economic woes he is inheriting from the Bush Administration will require trainloads of them. The totals are staggering.
Beyond the regular federal budget, here’s what we’ve committed in taxpayer money so far. On February 13, 2008, President Bush signed a $152 billion stimulus bill that sent tax rebate checks to most Americans. Less than five months later, on June 30, he signed a $162 billion supplemental spending bill. And on October 3, only a few hours after a badly divided Congress had finally agreed to bail out Wall Street, he put his signature on the Emergency Economic Stabilization Act of 2008 that is funding the $700 billion Troubled Asset Relief Program, also known as TARP.
If you add to the current commitments the $82.5 billion the Treasury Department gave AIG (separate from the $40 billion the TARP has handed over) and the $200 billion Treasury doled out to Fannie Mae and Freddie Mac to keep them afloat, you are talking some pretty big bucks–$1.3 trillion to be more precise. And, if all the additional stimulus plans the Obama Administration has been formulating become a reality, you’re in $2 trillion territory.
With a projected deficit of more than $0.5 trillion in the regular FY 2009 budget–excluding the Social Security trust fund surplus –the total deficit spending is approaching 20 percent of the gross domestic product. Even if you are a Keynesian, that’s a number that should keep you up at night.
It’s pretty amazing how fast Washington has recalibrated itself when it comes to money. Just a year ago, the Bush White House and the Democratic Congress were beating each other up over a major disagreement on total expenditures for fiscal year 2008. Eventually, the Democratic leadership caved in and lowered spending to meet the President’s bottom line, sacrificing science and other domestic programs in the process. The size of the disagreement that had tied the federal government up in rhetorical knots for nearly six months was a paltry $22 billion.
When President-elect Obama moves into the Oval Office later this month, he will be inheriting the worst economic mess the United States–and perhaps the world–has seen since the Great Depression. How he deals with it in the first 100 or 200 days of his presidency could ultimately determine his legacy.
Based on information from Hill sources and public statements from some of Obama’s economic advisors, my best guess is that Congress will first convert the fiscal year 2009 Continuing Resolution into an omnibus appropriations bill and send it to the White House for signature as soon as the new President is sworn in. The bill is likely to have smaller increases for science than the versions passed by last year’s Appropriations Committees but never voted on by either chamber.
Congress will likely follow the lead of the Obama Administration on stimulus and recovery spending, and the dollar figure will be large–somewhere between $500 and $700 billion. Part of it will be targeted to put people back to work within 120 days and part of it will establish a foundation for a longer term recovery, extending out to at least two years. Look to early February for congressional action.
Finally, in late March or early April the Obama Administration will present its fiscal year 2010 budget request to Congress. And that budget will be fairly austere.
I am not a prophet like Tiresias, but as I see it, the stimulus and recovery legislation offers the best near-term hope for sustaining science funding.