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State of the Union Figures

I've decided not to write a lengthy analysis of President Bush's State of the Union Address. It wasn't a particularly gripping or important-seeming speech. But there were a few things that I can't let pass without comment.

Keeping America competitive requires us to be good stewards of tax dollars. Every year of my presidency, we've reduced the growth of non-security discretionary spending, and last year you passed bills that cut this spending. This year my budget will cut it again, and reduce or eliminate more than 140 programs that are performing poorly or not fulfilling essential priorities. By passing these reforms, we will save the American taxpayer another $14 billion next year, and stay on track to cut the deficit in half by 2009. (Applause.)

The man who signed into law the largest entitlement expansion in decades — the Medicare prescription drug benefit — does not deserve any credit for restrained spending. Period. The language here is very misleading. Bush is taking credit for "reduc[ing] the growth of" (not "cutting") "non-security discretionary" spending. That pile of adjectives means he's talking about a very small piece of the pie. If you look at Table S-10 from the Fiscal Year 2006 budget you'll find these interesting figures:

Budget Summary by Category (2006)
CategoryUS$ (billions)
Total Outlays$2,568
Proposed Supplemental$25
MandatorySocial Security$540
Net Interest$211

Non-defense discretionary spending is only 19.35% of the budget! President Bush has cut slowed the growth of spending on only a fifth of the budget. What's the other 80% doing?

I watched the speech with a group of friends. After we laughed about the "non-security discretionary" bit for a little while, one said "that really sounded good at first!" Yes it did. Perhaps the White House was hoping that people wouldn't be paying close attention to what was said.

The retirement of the baby boom generation will put unprecedented strains on the federal government. By 2030, spending for Social Security, Medicare and Medicaid alone will be almost 60 percent of the entire federal budget. And that will present future Congresses with impossible choices — staggering tax increases, immense deficits, or deep cuts in every category of spending.

They're 42% of the budget already, George. The future is sooner than you think. Incidentally, what fraction of that predicted 60% is due to your beloved Medicare prescription drug benefit?

Breakthroughs on this and other new technologies will help us reach another great goal: to replace more than 75 percent of our oil imports from the Middle East by 2025. (Applause.)

In 2004, the United States produced almost 2 billion barrels of crude oil and imported roughly 4.8 billion barrels of crude oil. Only about 900 million barrels were imported from the Persian Gulf region — 13.5% of our total crude oil usage. For scale, domestic production covered 29.2% of our total crude oil usage.

President Bush's goal of replacing 75% of our mideast imports means sourcing only 3.36% of our crude oil from the mideast, down from 13.5%. That's right, this goal only affects about 10% of our oil sourcing. Now it sounds rather small, doesn't it?

But all this is beside the point. Oil trades on a global market and oil sources are more-or-less easily substitutable. Our oil sourcing has more to do with transportation costs than geopolitics. And it will remain that way unless the government starts to forbid purchases from certain suppliers. Which would go over very badly with the industry.

Tiny Island