The real state of the Union

Monday, February 17, 2003

KENNETT, Mo. -- The chances are that when President George W. Bush delivered his State of the Union address the other evening, your home TV set provided clear images of the assembled members of Congress, the assorted Cabinet members, the U.S. Supreme Court and an abundance of generals and admirals, not to mention foreign diplomats and special guests of the White House.

As always, the constitutionally mandated address provided an impressive show of pomp and circumstance, nearly continuous applause implying universal acceptance, and the comic efforts of assembled politicians to have their moment of glory as the cameras pick up a hearty handshake with the evening speaker.

Every moment of these annual scenes is designed to assure the American public that the state of the union is sound, that the nation's treasury is well-guarded and that the entire federal system is destined for great success and accomplishment in the 12 months ahead. And surely not only the most casual observer heard the president say, as his predecessors had said for more than two centuries, "As we gather tonight, our nation is at war, our economy is in recession, and the civilized world faced unprecedented dangers, yet the state of our union has never been stronger."

I must confess when I heard this assurance from Franklin Roosevelt at the start of World War II, when I heard Lyndon Johnson swear that victory was in sight in Vietnam and heard Ronald Reagan promise the downfall of the Soviet Union, I was more than a little skeptical. Looking back on these moments I believe I was placing more faith in the office of the presidency than in the ability of the speakers to carry out their pledges of national resolve.

State of the Union addresses in recent years have increasingly focused on declarations of increased federal support and financing of needed reforms and programs than on carrying out the dictates of armed conflict, as was the case last month as President Bush announced more and more federal allocations for popular White House initiatives. When a chief executive promises expanded programs to boost public education, increase assistance for the poor and senior citizens pursuit of the nation's interests abroad, his words are almost drowned out by the enthusiastic shouts of his supporters.

From all of this, it is hoped that Americans will provide added support for new administration initiatives, even if there is no mention of how they might be funded and what budgetary manslaughter might have to be committed even to provide the required appropriations.

But from all of these proposed expansions of popular programs one underlying fact always remains even while hidden among the statistics being bandied about: America's greatest budget commitment is seldom, if ever, identified, and John Q. Public has no idea that the largest percentage of real-budget federal spending is not national defense or welfare assistance but for retirement programs for individuals and governmental employees.

This retirement pension expenditure, which includes Social Security as well as employer-sponsored plans, amounts to 24 percent of the real spending total of $2.8 trillion. Think of it: only 74 cents of every dollar spent in all areas of the economy remain for every other activity in the United States.

Ranking just behind retirement expenditures is health care, which takes 20 percent of the real budget, while national defense takes up 12 percent, welfare assistance to low-income families takes up another 12 percent, and education throughout the nation receives only 2 percent.

Putting this fact another way: the ratio of dollars spent per senior to the dollars spent per child is 8 to 1.

Anyone conversant with budget details that make up virtually all State of the Union addresses realizes that the roughly one-third of Washington's spending goes to pay for discretionary programs (such as military equipment or health-care research) and the other two-thirds goes to pay for entitlement programs, such as Social Security and Medicare, and interest on the national debt.

Most of us are unaware of a different federal budget that is never mentioned in presidential outlines: a "hidden budget," which includes subsidies that run through the tax code and which Washington pays for in effect through foregone tax revenue.

These include exclusions for pension contributions and earnings for employer-sponsored plans, employer-paid contributions for health care, deductions for home-mortgage interest, lower tax rates for capital gains which is a category that will grow even larger under the latest Bush "economic stimulus" initiative, and deductions for state and local income and personal-property taxes. The share of tax expenditures going directly to corporations is 11 percent, a figure also scheduled to be increased under the recovery plans now being written by Congress.

It's never noted in State of the Unions how this hidden budget is spent. Taxpayers have a right to know that of the money included in the five largest tax expenditures, more than 50 percent is spent on households making above $100,000 a year -- and only 15 percent is spent on those with incomes below $50,000 a year. In other words, most of the hidden money in the budget benefits upper-middle-class Americans, but somehow this fact never gets mentioned in annual presidential addresses to Congress.

President after president has declared in his State of the Union speech that the country has never been stronger, and in some instances the statement has been correct. Many Americans are waiting, however, for the day when their president identifies every component of proposed federal expenditures -- and pledges to equalize and install equity in the distribution of the total.

Jack Stapleton is the editor of Missouri News & Editorial Service.

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