HAPPY TALK IN BUSH'S BUDGET
Experience has taught us that the Bush administration's budget cannot be judged by its cover -- or by the cover letter the president puts at the start of each year's volume.
The message he released last week was headlined by the Page 1 declaration that "the Budget I am presenting achieves balance by 2012."
It would be wonderful were deficits to disappear -- if only it were true. But on the final page of the document, in Table S-10 on Page 172, one learns the disturbing truth. In fiscal 2012, the president's target year, the gross federal debt will -- by his own estimate -- grow by $372 billion.
How can this be? Well, the Page 1 claim is achieved by ignoring or minimizing a bunch of real-world challenges. For example, the president proposes just a one-year patch for the growing problem of the alternative minimum tax, which is whacking more and more middle-class families who thought they were beneficiaries of the Bush tax cuts. The one-year fix would cost the Treasury $47.9 billion, but no revenue is lost in the next four years -- because Bush just ignores the problem.
Similarly, he assumes that the cost of the Iraq and Afghanistan wars will drop dramatically from $142 billion next year to $50 billion the following year.
And he takes advantage of all the arcane bookkeeping rules that exclude major costs and embrace more helpful numbers.
Rep. Jim Cooper of Tennessee, a Democratic crusader for honestly balanced budgets, pointed me to another back-of-the-book table that illustrates the point.
As he noted, Table S-7 shows that the $61 billion surplus Bush claims for 2012 -- using all the gimmicks he can find -- is achieved only by counting on the $248 billion in anticipated Social Security surpluses that year to wipe out the $187 billion deficit rolled up by all the other activities of the federal government.
In other words, Bush is borrowing from Social Security to achieve his budget surplus -- and that money will have to be repaid out of future taxes, or beneficiaries will suffer.
What's sad about this chicanery is that, in some other respects, this budget is an improvement over its predecessors from Bush. Responding to a congressional mandate, he has put the short-term costs of the wars in Iraq and Afghanistan into the regular budget, rather than withholding them until months later and then sending the big bill to Capitol Hill.
Bush also has described, in blunt terms, the dismal financial prospects for Medicare -- premiums will have to increase fivefold to sustain the program unless some way is found to curb health-care inflation. As a start on alleviating that crisis, Bush has proposed $66 billion in savings over the next five years, achieved mainly by trimming payments to providers and boosting premiums for the well-to-do.
Congressional Democrats are screaming even about these modest changes, but the problem is real. Bush would be in a stronger position to secure these savings if he were not pretending that he can balance the budget by 2012 while preserving all his tax cuts.
As Cooper says, "The happy talk from the White House will sap Congress's will to tackle the entitlement issues." The figures in Table S-10 are stark -- and they underline Cooper's warning.
In fiscal 2006, the past year, the total federal debt was $8.45 trillion. In 2012, by Bush's optimistic estimate, it will reach $11.49 trillion. That is $3 trillion of added debt in just six years.
More and more of that debt is held by foreign countries. Another table, buried back on Page 234 of a supplemental volume, shows that the foreign holdings of U.S. government securities have more than doubled in the past five years, going from just over $1 trillion to $2.1 trillion. Japan and China are our largest creditors, increasing their leverage over our economy. And Uncle Sam has become the world's biggest borrower.
That's another fact you won't find anywhere in this budget.