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February 08, 2004Medicare, Tax Cuts, and The Era of BS BudgetingPresident Clinton declared the "era of big government" was over. President Bush says that the era of endless tax cuts is upon us. We know one thing -- we're definitely in an era of BS budgeting. The latest? Conservatives are outraged, just madder 'n hell about the cost of the Medicare drug benefit. They feel tricked, and rightly so. The Congressional Budget Office (CBO) told them it would cost $395 billion over ten years. But all the time, the White House had estimates of over $500 billion for similar plans. Now the conservatives know how liberals felt about the tax cuts in 2001 and 2003. Both times, the cost of the tax cuts was understated. Congressional leaders used two blatant gimmicks to disguise the cost: (1) dubious "sunset" provisions that would supposedly end the tax cuts all of a sudden, and (2) sneaky use of the Alternative Minimum Tax (AMT) to negate the income tax cuts for "scoring" purposes. But the issue isn't payback. There are two larger questions here, which go beyond tax cuts and Medicare costs: 1. When will the budget committees, the Joint Committee on Taxation, CBO, and the Administration's honest analysts start reasserting themselves, so that all members of Congress can get up-front, full-disclosure answers about the cost of spending and tax proposals? 2. When will the executive branch stop lying about the budget and taxes? The first question is a tough one. Political leaders want favorable estimates for their proposals. And when favorable numbers can't be had, they want the estimators to keep the bad numbers quiet. To maintain control of the process, Congressional leaders and White House officials take control of the estimates. Not the numbers themselves, but the timing and method of their distribution. Committees sometimes don't show the estimators the final specifications of a bill until just hours before final votes. Sometimes they discourage any explanation of the results, so that rank and file members don't understand the context. Even now, on February 8th, the Administration hasn't published its detailed Medicare estimates. CBO put out a perfunctory memo last week, which doesn't explain much. The official cost and revenue estimators must do better. That may mean publishing estimates and discussions of the workability of proposals regardless of what White House political strategists and Congressional leaders think. It's a very hard, thankless effort. There can be political consequences for telling the truth. Good people might lose their jobs. Nevertheless, someone in the Congressional estimating community will have to make some sacrifices, and soon, to prevent an irresponsible Congress and a reckless President from destroying the nation's finances. The second question should be an easy one. Hasn't President Bush gotten in enough trouble with exaggerations about Iraq's weapons? Why compound the problem by lying about the budget? OK, "lying" is a terribly strong word -- "a deliberate misstatement with intent to deceive." On an individual basis, all of the little budgetary gimmicks and tricks and omissions used by the Administration over the last 3 years probably fall short of that definition. But the list of deceptive or misleading budget practices used by the Bush Administration is long: 1. Deliberately shortening the 10-year budget period to 5 years to hide the future cost of spending proposals and tax cuts. 2. Deliberately using the AMT and "sunset" provisions to understate the cost of tax cuts. 3. Deliberately withholding the Medicare Actuary's estimates of the cost of the Medicare drug benefit. 4. Deliberately ceasing to print discretionary spending details beyond 2005 (so analysts have to use computer files to figure out the President's suggested program cuts). 5. Deliberately leaving military and reconstruction spending for Iraq and Afghanistan out of the budget for 2005. After a while, you start to wonder if all the particular falsehoods and fudges don't amount to one big lie. Here is how President Bush's projections of the budget for 2004 stacked up over the years. President's Budget Projections for 2004 (by date of projection) (Feb. 28, 2001): $3.4 trillion surplus for all years 2002-2011 (Feb. 4, 2002): Revenues: 18.9% of GDP -- Spending: 19.0% of GDP Every year the budget picture gets worse. Granted, the February 2001 projection (before 9/11 and before the extent of the 2001 recession was known) was a complete error. But since then, we've known about war and corporate scandals and the shaky economic recovery. After a while, the pattern starts to get obvious. The Administration is using unrealistic or misleading budget projections to push its real legislative agenda: permanent tax cuts, all the time, regardless of the long-run budgetary consequences. We're all but sure the Bush Administration has finally hit rock bottom on its deficit projections for 2004 -- things almost certainly won't be worse than the President expects this year. But let's look ahead to 2007. President's Budget Projections for 2007 (by date of projection) (Feb. 4, 2002): Revenues: 19.1% of GDP -- Spending: 18.3% of GDP Anyone want to bet revenues don't magically rise back up to 17.8 percent of GDP by 2007 without some tax increases? Or that spending falls to 19.4 percent without some serious pain? The Bush Administration didn't invent lying about the budget. (Remember President Clinton's pledge to "Save Social Security First?") But we're not running surpluses now. We have significant ongoing military requirements overseas. The baby boom generation will begin to retire and expect entitlement benefits in 6 short years. Isn't it time we declared an end to the era of BS budgeting? Links: |
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Centrist Policy Network, Inc. |
