THE BLOG
07/12/2007 03:40 pm ET | Updated May 25, 2011

Deficit Reduction Blowback and Balancing the Budget on the Backs of Seniors

Yesterday, President Bush addressed a small supporting crowd in the White House for his mid-year budget review. During the speech, he declared that "America's economy is growing, government revenues keep going up, budget deficit keeps going down, and we have done it all without raising taxes."

He then continued by saying that "a growing economy has led to growing tax revenues because people who are making more money are also paying more taxes. These growing tax revenues, combined with spending restraint, are driving down the federal deficit."

It is true that the budget deficit has gone down since 2005, which means the government's revenue intakes have exceeded its spending over the past year. First, it is important to note that while the people who are rich are paying "more" money than the less well-off, this has always been the case even before this country instituted the progressive tax system. It does not take an economics degree to understand that if you are making more money, you are naturally paying more income taxes. So this seems too obvious for Bush to have meant by that statement. But he can't have meant the rich are paying more in taxes than what they used to during the Clinton administration, because that would be untrue! Bush inherited sizable budget surpluses when he took office in 2001, and the government revenues now are just starting to resemble those from six years ago after taking inflation into account.

The fact is that the deficit picture remains much worse than it did when he took office six years ago because Bush and his congressional allies implemented a series of tax-cuts, one set of which amounted to $1.35 trillion dollars, 50 percent of which went to those whose wealth places them in the top 1 percent of the population. So let me be very clear: People who are making above $300,000 a year are paying significantly less taxes than they did under the Clinton administration while everyone else is paying the same or higher amount than they did six years ago.

So how has the deficit been going down despite so many tax-cuts? Well, it's ideology stupid! President Bush belongs to a school of thought - and I am using the words "school" and "thought" very loosely - that defines economic vitality as a condition where the rich are paying little taxes and the government assistance programs are kept to a minimum. It was based on this principle that he signed the Deficit Reduction Act of 2005 shortly before many of his Republican friends were sent back home from Washington. The short-term end effect of this bill has been successful in that it did implement cuts in federal spending that helped bring down the deficit. But once again, the flaw with this legislation is the fact that the government took money from the people who had the least amount of it.

I believe this is wrong for two reasons. First, we have an obligation to give our citizens a hand up and deserve a government that serves our people as well as our people serve this country through their service and labor. But more importantly, the policy was flawed because some of the DRA cuts were made in programs that are likely to require higher government spending further down the road than if those programs were left untouched. A perfect example is the cuts that the Bush Administration made to Medicare for medical imaging services -- such as MRIs, x-rays, CT/PET scans and ultrasounds -- that go to small and independent facilities. Through these cuts, reimbursements were cut by 19-20 percent.

It is true that these cuts in Medicare have done their share of helping to reduce federal spending. But they have also had serious ramifications for seniors. I have recently been speaking with hundreds of seniors, physicians, independent imaging facilities and community leaders about this issue. Lack of adequate reimbursements have forced many of these imaging facilities to stop serving Medicare beneficiaries because they are having growing difficulties to meet the costs of these services. This has left seniors with three options: travel long distances to a hospital -- which are better funded by Medicare -- to get imaging, pay for x-rays and necessary $2,300 MRIs out of their own pockets or forgo services altogether. Millions of seniors in rural areas who have limited mobility and finances and are hundreds of miles from any hospital have been forgoing medical imaging.

The problem with this policy is that while it is saving Medicare money now, it is likely going to have a serious blowback over the next 10 to 15 years. Many seniors' medical conditions are going undetected because of lack of access to imaging. This means that soon, there will be a higher number of seniors who will be dealing with illnesses and medical abnormalities that can be diagnosed and treated now and before those conditions reach costly and irreversible stages. These medical conditions are most likely to result in more total Medicare spending later than if they were to be diagnosed and treated while it is still not too late.

This is a perfect example of what I refer to as "budget blowbacks." Cuts to Medicare and other public assistance programs without considering their repercussions is a perfect example of this administration's general philosophy of "ends justify the means," which we also saw when they stretched and cherry-picked the facts to justify the invasion of a country that posed no significant threat to the interest of the United States.

So next time when President Bush says that he has asked the American people to sacrifice, remember that the only people who are asked to sacrifice for this administration are the middle-class families, seniors and our troops.