Just a few weeks ago, the White House announced its projections for this year’s budget deficit. With an expected shortfall of $445 billion, Bush will break his own record from last year, when the deficit reached $375 billion.
But, according to Bush’s gang, there was a silver lining to this cloud. In February, the administration projected a $521 billion shortfall for 2004, so when the $445 billion figure came out, it seemed like a positive step in the right direction. Sure, it’s the biggest deficit in the history of the world, but look how much worse it could have been!
Was the lower estimate the result of a growing economy or improved economic management? Of course not. The Bush administration inflated its earlier estimate intentionally so that the real number would look better by comparison. As Goldman-Sachs said last week:
“The Office of Management and Budget has perfected the art of underpromising and outperforming in terms of its near-term budget deficit forecasts. For example, in its semiannual review, the OMB lowered its deficit forecast for fiscal 2004 to $445 billion from $521 billion. This creates the impression that the deficit is narrowing when, in fact, it will be up sharply from the $375-billion imbalance of a year earlier. This process is likely to continue in October, when the fiscal 2004 deficit turns out to be lower than the current OMB forecast.” (emphasis added)
It’s quite a little shell game they have going. In fact, it’s probably going to happen again, for the second time this year.
The Center on Budget and Policy Priorities’ Richard Kagan wrote a terrific report this week on how the White House fraudulently runs up enormous deficits, but manipulates expectations to make it appear like Bush is making progress when, in fact, his policies are failing miserably.
The good news is the nation’s deficit will be slightly smaller than the administration has led us to believe. The bad news is this is yet another example of the Bush administration’s breathtaking mendacity.
These facts strongly suggest that the final deficit figure for 2004 will be in the $420 billion range, below the OMB estimate of $445 billion. This somewhat lower deficit figure will not be due to a brightening deficit picture over the next two months but rather to OMB’s forecast being too high in the first place. In fact, at $420 billion, the 2004 deficit would be $45 billion higher than the 2003 deficit and would also constitute a larger share of the Gross Domestic Product (3.6 percent, up from 3.5 percent in 2003).
Keep a close eye out for this in October, when the administration will release the official deficit totals, right around the time of the last presidential debate. You will no doubt hear Bush say something like, “This year’s deficit was going to be $521 billion. Thanks to my leadership, it’s $100 billion lower than that.” None of this will be even remotely true. (Consider this post my pre-emptive debunking)
And for goodness sakes, don’t let anyone tell you that a $420 billion deficit is a sign of progress. As Kagan put it:
An increase in the deficit from $375 billion last year to about $420 billion this year, in the face of a recovering economy, should not be considered an improvement. A $420 billion deficit for 2004 would mark four straight years of fiscal deterioration, following eight straight years of fiscal improvement.