Today’s must-read article comes from the Washington Post’s incomparable Dana Milbank, who noted in a front-page piece today that the Bush administration “has repeatedly and significantly overstated the government’s fiscal health and the number of jobs the economy would create.”
Sure, we all knew that already, but it’s really encouraging to see it on the front page of the Post.
President Bush last week caused a stir when he declined to endorse a projection, made by his own Council of Economic Advisers, that the economy would add 2.6 million jobs this year. But that forecast, derided as wildly optimistic, was one of the more modest predictions the administration has made about the economy over the past three years.
Two years ago, the administration forecast that there would be 3.4 million more jobs in 2003 than there were in 2000. And it predicted a budget deficit for fiscal 2004 of $14 billion. The economy ended up losing 1.7 million jobs over that period, and the budget deficit for this year is on course to be $521 billion.
These are not isolated cases.
No, they’re not. This White House has developed a consistent modus operandi for years — make wildly unrealistic projections, and when they don’t come true, make new wildly unrealistic projections. Milbank focuses specifically on mistakes regarding tax revenue, job growth, and budget deficits.
In June 2001, the Treasury Department announced a sharper-than-expected drop in tax revenue. In January 2002, the Congressional Budget Office observed that tax receipts were lower “for reasons that are not entirely understood,” and it warned that part of the phenomenon “will remain.” The White House Office of Management and Budget, in July 2002, acknowledged that “the precise causes of this year’s income tax drop-off will not be known for some time.”
The administration could be forgiven for being so terribly wrong about expected revenue, but the real problem is that the White House kept hyping the false numbers to promote more tax cuts for the wealthy, which the country definitely couldn’t afford. Tax revenue kept dropping, but the administration kept insisting that its mistaken forecasts justified even less revenue. As Bill Clinton likes to say, the first rule when you fall in a hole is stop digging — and Bush kept looking for a bigger shovel.
The projections on job creation were just as bad.
On employment, the administration continued to make optimistic forecasts even after it became clear that historical patterns were not holding. A year ago, for example, the Council of Economic Advisers predicted that the tax cut package alone that Bush was promoting would generate 510,000 jobs in 2003 and 891,000 in 2004. Even without the tax cut, the council was predicting that average employment would grow by 1.7 million jobs from 2002 to 2003, and 2.7 million jobs between 2003 and 2004.
“They ought to be held accountable for not taking seriously what happened to the jobs numbers,” said Lee Price, research director for the Economic Policy Institute, a liberal think tank. Although Bush’s jobs forecasts were plausible in 2002, before the extent of productivity gains were known, he said, the continually optimistic jobs forecasts “start to seem outlandish.”
The administration used job-creation predictions to justify its 2001 and 2002 tax cuts, as well. In 2002, the economic advisers argued that failure to enact the stimulus package Bush proposed would cost the economy “about 300,000 jobs.” The president’s economists said that Bush’s 2001 tax cuts would create an additional 800,000 jobs by the end of 2002.
In reality, the United States went from an average of 131.9 million jobs in 2001 to 130.4 million in 2002, and to an estimated 130.1 million in 2003. And it will need an extraordinary change to reach the 132.7 million jobs for 2004 that the economic advisers predicted — the figure Bush declined to endorse.
And if mistaken expectations on tax revenue and unemployment don’t grab you, consider the Bush administration’s costly and devastatingly wrong deficit projections.
The administration’s budget forecasts have followed a similar pattern. A confident president proclaimed in March 2001: “We can proceed with tax relief without fear of budget deficits, even if the economy softens.” About that same time, the administration projected a budget surplus of $281 billion for 2001, $231 billion for 2002, $246 billion for 2003, $268 billion for 2004 and $273 billion for 2005.
Bush has since said that his optimism about budget deficits was based on the assumption that the economy would not hit a “trifecta” of trouble: recession, national emergency and war. But in February 2002 — after the recession was declared, the terrorist attacks had occurred and war had begun in Afghanistan — the administration continued to have upbeat predictions. Although it forecast a $106 billion deficit in 2002, it saw the deficit shrinking to $80 billion in 2003, $14 billion in 2004, and becoming a surplus of $61 billion in 2005. Those figures, too, quickly became seen as overly optimistic, as tax receipts continued to come in lower than expected. A year later, in 2003, the administration predicted a deficit of $304 billion for 2003 and $307 billion for 2004. In reality, the 2003 deficit was $375 billion, and the White House now expects a deficit of $521 billion for 2004.
What I’ll never understand is why anyone would consider the administration a credible source for economic forecasts again. As Bush himself once said, “Fool me once, shame on, shame on…you…We won’t get fooled again.”
No, we won’t.