Will Texas Budget Shortfall Come to Washington?, New Republic Asks

While President Bush promotes his proposed 10-year, $1.6 trillion tax cut package, The New Republic reports that as governor of Texas, Bush enacted a similar plan -- and left the state with a potential $700 million shortfall (Zengerle, New Republic, 3/22). Democrats in Congress have warned that Bush's proposal would hurt Medicare and prevent lawmakers from adding a prescription drug benefit to the program (Kaiser Daily Health Policy Report, 3/5). In Texas, Bush cut taxes by $3 billion in 1997 and 1999, and now state lawmakers, facing a "budget mess" that includes rising Medicaid costs, have "expressed some buyer's remorse." State Sen. Eddie Lucio (D) said, "We are having to scrounge around for some very necessary funding" for social service programs. However, the New Republic reports that the "scrounging wouldn't be nearly so dire" without "Bush's tax cut fever," which, according to an analysis by the Center for Public Policy Priorities, has reduced Texas' next two-year budget by $2.6 billion. Lucio said, "Given what we know today, taking it back two years, I think most of us, Democrats and Republicans alike, would not have voted for the tax relief package."

'Spiraling' Medicaid Costs
The state has "stuggl[ed] to cope" with "spiraling" Medicaid expenses resulting from increased enrollment and rising prescription drug costs. The New Republic reports that Bush "could have taken all this into account," adding that his Medicaid budget projections were "more than shortsighted; [they were] deceitful." According to the New Republic, Bush anticipated some of Texas' Medicaid costs, but "concealed them under cost projections that were optimistic to the point of dishonesty." In addition, "just like the Bush budget plan now being debated in Washington," Bush's Texas budgets included "gimmicks" to "hide future liabilities." For example, in the state's 2000-01 budget, Bush provided Medicaid funds to nursing homes for only 23 of 24 months -- a move that saved $110 million -- to fund his tax cuts. The New Republic reports that Bush "didn't mention that little accounting trick two years ago; it was hidden in the fine print," leaving even some Republicans "chagrined." State Senate Pro Tempore Chris Harris (R) said, "I might have voted a little differently on all those tax cuts had I realized that we were only funding 23 months of these programs." Bush presented the tax cuts as "entirely responsible" and "boasted" that they would "serve as a model for the nation," but the New Republic questions "whether we want to bring it to Washington" (Zengerle, New Republic, 3/22).