February 14, 2005, 10:39 a.m.
Budget Bunk
Some predictable demagogic squawking from Paul Krugman.

We accuse Paul Krugman of a lot of things, but we can’t accuse him of originality. In his New York Times column Friday, Krugman announces proudly that President Bush’s tough new budget offers “the Democrats an opportunity, if they’re willing to take it.” Huh? Have the Democrats never dared to demagogue a Republican budget before? Have they ever not dared?

Krugman’s spin is that Democrats should “describe President Bush as someone who takes food from the mouths of babes” — as opposed to, I guess, the mouths of “children,” the more standard image nowadays. Democrats should also say that Bush “gives the proceeds to his millionaire friends” — as opposed to his millionaire enemies like George Soros or John Kerry or Paul Krugman?

Krugman backs up this sloganeering with a demagogic list of particulars, relying as always on the “Dopeler effect” — the illusion of truth that occurs when half-truths are spoken extremely loudly and extremely rapidly.

Krugman writes,

One of the proposed spending cuts would make it harder for working families with children to receive food stamps, terminating aid for about 300,000 people.

Of course, the White House sees it very differently. The budget’s proposed change to the Food Stamp program is a reform that would return the program’s rules to the historical intent. Specifically, households with incomes less than a third above the poverty level, households with income net of basic expenditures less than 100 percent of the poverty level, or households with less than $2,000 in assets would be eligible to receive food stamps. According to the White House, 8.9 million people would be eligible for food stamps even with the proposed reforms.

Krugman doesn't mention this, but funding for other programs that serve low-income Americans — such as the Women, Infants, and Children (WIC) program — are increased in the latest Bush budget. The Bush budget calls for a 5.3 percent increase (for a total of a 30 percent increase since Bush took office) in WIC’s Special Supplemental Nutrition Program, which serves the nutritional needs of low-income pregnant and post-partum women, infants, and children up to their fifth birthday. In other words, the Bush budget puts more food in the mouths of babes.

Krugman writes,

Another [proposed cut] would deny child care assistance to about 300,000 children, again in low-income working families.

He’s talking about the proposed cut of the ACF Early Learning Opportunities Program. But that program duplicates two other programs — Early Reading First and the Early Childhood Education Professional Development Grant — that have shown better results and have more accountability.

Krugman writes,

look what’s on the chopping block: the CDC, health insurance for children, and aid to law enforcement.

The CDC block grant — which is being cut — was created over 20 years ago to consolidate funding for various programs. The block grant has come to overlap with funding for separate initiatives such as cancer prevention and children’s immunizations. Funding the separate programs promises greater accountability.

Bush’s budget proposes a Cover the Kids campaign that provides $1 billion in grants over 2 years to enroll as many children as possible into Medicaid and the State Children’s Health Insurance Program. SCHIIP enrollment, by the way, has grown by over 1 million children since Bush took office.

As for law enforcement, the budget addresses the fact that COPS grants have already exceeded that program’s goal of hiring 100,000 officers and have in fact already provided funding to hire more than 118,000. The White House simply thinks funding should be directed to higher-priority programs such as counterterrorism.

Krugman says that the budget

calls for making tax cuts for the wealthy permanent …

Yes, it does. But what Krugman fails to mention is that Bush’s tax cuts lowered the tax burden for all Americans who pay income tax. The budget calls for making the tax cuts permanent for everyone, not just the wealthy. The truth is that Bush’s tax cuts make it possible for a family of four with an income of $40,000 to save $900 this year. According to the White House, thanks to those tax cuts, 94 million Americans will have a lower tax bill this year, including 70 million women and 38 million families with children.

The Bush administration has overcome a lot worse criticism than this in bringing democracy to Iraq. Something tells me this budget will overcome demagogic squawking like Krugman’s and make at least a down payment on slowing the growth of government spending that occurred during Bush’s first term.

— Donald Luskin is chief investment officer of Trend Macrolytics LLC, an independent economics and investment-research firm. He welcomes your visit to his blog and your comments at don@trendmacro.com.