THE BROADER VIEW : Budgetary myths and realities
Posted on Sunday, February 11, 2007
After submitting his $ 2. 9
trillion budget to
Congress this week, President Bush said his plan will lead to a balanced budget in five years. He described it as a “ realistic” and “ achievable” budget plan.
That description sounds remarkably similar to claims made on behalf of the president’s troop buildup plan, intended to salvage the tragic situation in Iraq. The administration is trying to convince the public that its assessment of conditions in Iraq is realistic and its goals achievable.
However, the most recent National Intelligence Estimate (NIE ), released earlier this month, provides a very different assessment, as does almost every analysis except those from deep within the Bush administration. The NIE represents the collective judgment of the official U. S. intelligence community. It offers a highly pessimistic assessment, and warns that even if conditions improve in Iraq sectarian divisions “ have the potential to convulse severely Iraq’s security environment. ”
Just as the administration’s more optimistic assessment on Iraq is open to serious question, so is the proposed budget for fiscal year 2008, with its projected deficit of $ 240 billion. There’s not much in the proposal that is realistic or achievable, and balancing the budget in the coming years is not likely to be attained based on the realities of this plan.
Realities overshadow what is called “ realistic, ” but realism has been in short supply in Washington. The budget proposal is based on a number of dubious assumptions and questionable projections. Let’s begin with some of the more obvious omissions and underestimations.
It is true that for the first time, really, the Bush administration has included costs for Iraq and Afghanistan in a budget proposal rather than after the expenditures have already occurred and / or in a supplemental budget package. That is commendable, although it may well owe something to the changed political realities in Washington and what Congress might demand.
Bush’s budget would allocate $ 245 billion for operations in Iraq and Afghanistan over the next year, which would bring the acknowledged Pentagon funding for those two wars to $ 662 billion. The overall Pentagon budget for the year would be $ 625 billion. There are substantial increases for weapons procurement, including several weapons systems of questionable utility, along with space weapons and missile defense. Congress needs to assure that the U. S. military has the weapons, equipment and support it needs but must take a hard look at some of the items in the Bush budget. Rep. Ike Skelton (DMo. ), a strong Pentagon ally who now chairs the House Armed Services Committee, said the defense request is “ staggering. ”
There is reason to doubt, however, that the proposed figures are adequate to cover the almost inevitable costs related to Iraq and Afghanistan. But it’s what is proposed afterwards — or what isn’t proposed — that is especially dubious. For the following year, the budget projects only $ 50 billion, and then zero for the next year and thereafter. Those figures simply can’t be taken seriously. Anyone who falls for that budgetary sleight-of-hand is either asleep or needs a quick visit to the optometrist.
Nonetheless, those unrealistically low numbers are a key part of what the “ realistic” Bush plan relies on in its projection of a balanced budget by fiscal 2012. If even minimal figures for Iraq and Afghanistan were included, that would increase the projected deficit and make a balanced budget clearly out of reach, even on paper.
That is but one, if an especially important and sensitive example, of the unrealistic elements in the budget proposal. It is particularly significant in view of the current deliberations, or lack of deliberations, in Congress about Bush’s Iraq policy.
Another key aspect of the budget plan involves the alternative minimum tax (AMT ). Almost everyone agrees that a change in the AMT is needed and likely to be enacted. This is because what was originally intended as a means of assuring that even the wealthiest taxpayers would pay some taxes has increasingly become a tax on millions of additional families in the upper-middle-income bracket. Currently, the AMT is not indexed for inflation and has other serious inequities. Regardless, the Bush revenue projections assume that the AMT will remain in effect at the same level. In the background of all this is Bush’s strong commitment to make his earlier tax cuts permanent. Arkansas Democratic Sen. Blanche Lincoln said there has to be “ balance” between extending tax cuts and adequately funding needed government programs. “ I don’t feel like there is balance in this budget, ” she said.
The president’s proposals would cut or limit funding for some programs that have strong congressional support and the cuts are unlikely to be approved on Capitol Hill. There are proposed increases in some popular education programs, including Pell Grants for low-income college students and math and science programs. But other education programs would be cut in the Bush proposal.
Congressional and presidential priorities will inevitably come into conflict on such programs as urban housing assistance, veterans’ health care, heating-cost assistance for the poor, environmental protection, job training, Meals on Wheels, Head Start and agricultural subsidies. Funds to state and local governments would also be trimmed under Bush’s plan, putting more of the burden on states and localities for some human services, including the children’s health insurance program for lower-income working families, and public safety programs. There’s also likely to be conflict over how to proceed in controlling Medicare expenditures. We also can’t overlook the reality of the pork barrel inclinations in Congress, though Democrats promise that they will exercise some restraint. We’ll see.
Proposing cutbacks in popular programs that Congress is unlikely to slash is something that many of Bush’s predecessors have done. Lyndon Johnson was a master of such tactics. For example, in the fiscal year 1967 budget, Johnson proposed cuts in agricultural conservation, aid for depressed-area schools, the school milk program, and emergency disaster relief. He fully understood that Congress wouldn’t tolerate such cuts, but he was determined to present budgets that would not project deficits and he used just about every trick imaginable to make it appear that way. There’s no way Bush can emulate his fellow Texan in proposing a balanced budget for the year, but he is using similar techniques to suggest that a balanced budget is attainable in the coming years.
It was Johnson who was a central figure in changing federal budgetary practices so as to consistently give a less realistic picture of the actual fiscal situation. Until 1968, the government kept trust funds, such as Social Security, in a separate budget category. However, the Johnson administration introduced the “ unified budget, ” which counted the surplus from the trust funds into the budget, thus reducing the deficit figure. LBJ wanted to mask the costs of the war in Vietnam, a major drain on the budget, and to protect the social programs he had championed.
Factoring the trust fund income into the budget has been continued by subsequent administrations. Last year, for example, the $ 185 billion more that the government collected in Social Security taxes than it paid out made it appear that the deficit was much lower than it would have been otherwise. This device may become less useful in the future, considering expected future costs of Social Security, which, along with Medicare, could present a major budgetary challenge.
For now, David M. Walker, comptroller general of the Government Accountability Office, says, “ Our fiscal and financial condition is worse than advertised. ” As Rep. John Spratt (D-SC ), chairman of the House Budget Committee, commented, although President Bush talks of a goal of balancing the budget, “ under realistic assumptions his budget remains in deficit every year. ”
What we need is less gimmickry and more realism in Washington.
Hoyt Purvis is a journalism and international relations professor and served as press secretary to Sen. J. William Fulbright, foreign / defense policy adviser to Senate Majority Leader Robert Byrd, and chairman of the Fulbright Foreign Scholarship Board. His column appears on Sundays.
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