"I think some adjustments need to be made," said Don Nickles, the recently retired Republican chairman of the Senate Budget Committee. Nickles said the drug law will need to be reopened to address problems of skyrocketing costs. He also said that Congress will have to be selective in extending the tax cuts, dropping some of the cuts and perhaps modifying the estate tax repeal to keep some of the revenue.
The looming problems were easily foreseeable, said Joyce, the public policy professor. The White House and Congress vowed last year to keep the 10-year cost of a prescription drug bill to $400 billion. But to do it, the 2004 law did not come fully into effect until 2006. Hence, legislation once priced below $400 billion over 10 years now will cost at least $724 billion over a decade, simply because the law would then be fully in effect.
Tax cuts approved in 2001 and 2003 were held to $1.7 trillion through an array of slow phase-ins, phase-outs and a Dec. 31, 2010, end date when all of the tax cuts would vanish. Now, Bush wants them made permanent, but according to White House numbers, a five-year extension beyond 2010 would cost nearly $1.1 trillion.
Likewise, Bush is proposing a Social Security restructuring that would cost $754 billion through 2015, including added interest costs for the government. But like the tax cuts and drug benefit, the proposal would begin slowly, with initial borrowing in 2009. The plan would be fully effective in 2011. Rep. John M. Spratt Jr. (S.C.), the ranking Democrat on the House Budget Committee, told Treasury Secretary John W. Snow on Wednesday that the first full 10 years of the program would cost $1.4 trillion, rising to $3.5 trillion in the second decade.
One tax proposal alone underscores the problem. A Bush plan to establish broad new tax-free savings accounts would actually raise $17 billion in the first five years, as savers cash out other tax-free accounts, pay taxes on their withdrawals and roll the money into the new accounts. But in the second five years, the proposal would cost $15 billion, according to Treasury figures. And the cost would rise sharply from there, as the accounts began shielding virtually all American savers from capital-gains, dividend and interest taxation.
"That's a time bomb," said James Horney, a budget analyst at the Center on Budget and Policy Priorities.
Congress has long gamed the budget system to make its legislation look less expensive in the short run, Joyce said. But the scale of the drug benefit, the tax cuts, the new tax proposals and the Social Security plan are unprecedented.
Their coming convergence would be a "budgetary perfect storm," Joyce said. "You can't hide from it forever."