Compared to Social Security, budget deficits are easy. The government spends x and takes in y. If x is bigger than y, you have a deficit. But as is often the case with the Bush White House, it’s not that easy.
The president has been promising America for over a year that he’s committed to slashing the deficit — which he created — in half by 2009. As campaign promises go, this is hardly ambitious. He wants to take the largest budget shortfall in American history and cut it in half, leaving a still-terribly-big deficit for his successor. Nevertheless, that’s the promise.
Part of the effort to keep this promise is to redefine what a deficit is.
The budget President Bush will present to Congress today will show the federal deficit cut in half by the time he leaves office in four years. At least technically it will….
It is the 2004 deficit that Bush is promising to cut in half, but he’s not starting with the actual 2004 deficit of $412 billion. Instead, his benchmark is the projected $521-billion deficit that his Office of Management and Budget estimated a year ago, when the fiscal year was four months old. Using half of that figure, Bush’s goal is to reach a deficit of $260.5 billion.
If Bush were to start with the actual 2004 figure, his goal would be a deficit of $206 billion — $54.5 billion more.
There are more twists. Bush proposes to cut the deficit in half not in dollars but as a share of the economy. If the economy grows, as is projected, then the deficit will decline as a share of the economy even if it does not shrink by a single dollar.
In other words, Bush believes he can cut the deficit in half by not cutting the deficit in half.
Putting that aside for the time being, you’d think that an effort to reach the deficit-in-half goal would at least make incremental progress in the new Bush budget. But as it turns out, that’s wrong too — Bush’s 2006 budget increases the deficit again.
The deficit was $412 billion in 2004, and is due to grow to $427 billion in 2005. What’s in store for 2006?
The budget projects the deficit falling from an all-time high of $427 billion this year to $390 billion next year, but does not count the warfare expenses it expects in 2006. If the administration continues to spend at current rates, it will need more than $37 billion for the conflicts in 2006, leaving the deficit undiminished.
Let’s see, $390 billion deficit plus $37 billion for Iraq equals $427 billion, which means Bush is on track to successfully cut the deficit in half … approximately never.
Of course, the $390 billion figure is ridiculous for more than just omitting the cost of our wars. It’s also predicated on wildly unrealistic cuts in government spending, at which congressional Republicans are already balking. As the New York Times explained today, this budget “assumes that all discretionary spending outside of military and domestic security – everything from paperclips to space shuttles – will be frozen for the next five years.”
More importantly, when one factors in expanded (and permanent) tax cuts, Bush’s unrealistic budget, even taken at face value, will not only fail to cut the deficit in half, it actually increases its size considerably over the next decade.
Despite cuts to scores of domestic programs, the Administration’s budget increases rather than decreases the deficit over the next five years. As shown by its own figures, the effect of the Administration’s budget is to increase total deficits over the next five years from $1.364 trillion under current law to $1.393 trillion. A main reason for this outcome is the tax-cut proposals the Administration has included in its budget.
Over the longer run, by proposing to make its tax cuts permanent, the Administration’s budget proposals would dramatically swell the deficit. In 2015 alone, the Administration’s tax proposals — including the cost of making the 2001 and 2003 tax cuts permanent — would increase the deficit by $358 billion. If relief from the Alternative Minimum Tax that is due to expire at the end of this year is extended, as is widely expected, this would add another $163 billion to the deficit in 2015. The Administration’s proposal to replace part of Social Security with private accounts also would swell deficits further. It would add $1.4 trillion to deficits in its first ten years (2019 to 2028) and another $3.5 trillion in the decade after that. In 2015 alone, it would add $177 billion.
It’s reached the comically insane point in which Bush’s budget director has trouble remaining coherent for a brief interview on the budget picture painted by the White House.
And let’s also not forget that this is the same president who once told America:
“All Republicans believe in a fiscally sound government. American families balance their budgets and pay their bills, and the federal government must do so as well. Living within our means, means better living for the families of America. Interest payments on our national debt are now our nation’s largest expenditure. What a waste of taxpayers’ hard-earned dollars.”
Looks like that commitment is no longer operative.