Kevin G. Hall, writing for McClatchy, does a nice job of describing the tricksyness with which federal budget numbers are bandied about. From the voice of Pollyanna to that of the bard of the Apocalypse, St. John, talk of the budget elicits a whole range of degrees of concern. To wit:

Pollyanna:

The nonpartisan Congressional Budget Office has projected that the federal deficit for the fiscal year ending Sept. 30 will total around $260 billion, aided by a surge in revenues. That's $58 billion lower than last year's deficit and about $77 billion lower than projections at the beginning of the fiscal year.

St. John:

Buried deep in the nation's financial report, issued every December, is an alternative accrual-basis deficit calculation. For the fiscal year that ended Sept. 30, 2005, that deficit totaled $760 billion. It has grown every year of the Bush presidency. It will grow in the 2006 fiscal year too, approaching $800 billion or more.

Comptroller General David Walker, the nation's chief accounting auditor, has added up all the federal government's unfunded liabilities, or promises, and offers a present-day figure of $46 trillion. Think of that as promises to the tune of $155,932.18 for each of the 295 million Americans.

And finally, Goldilocks:

[T]he Social Security trust fund...is running a $177 billion surplus this year. Washington spends it, but doesn't count it as spending. It's officially listed as "off-budget" borrowing.

[...]

So the deficit is actually about $437 billion, the CBO calculates: the $260 billion official deficit plus the $177 billion borrowed from the trust fund. Since the money is "borrowed," it adds to the gross federal debt, which is expected to reach about $8.5 trillion by Jan. 1.

So, when policymakers and politicians talk about the fiscal health of the nation, it is important to keep in mind how they're measuring it. This is not a cynical indictment of federal accounting and that anyone can get the numbers to tell any story they like. Rather, the point here is that there is no one budget figure. With talk of the budget come lots of numbers, lots of ways to express what's in the Treasury, what isn't, and what may or may not be at some undetermined point in the future.

According to the House Budget Committee Democratic Caucus' Materials for Five-Minute Speeches on the Budget, released Tuesday, federal government spending on publicly held debt is $504 million every single day.

What could we do with today's worth of interest expense alone, if we didn't owe it to our creditors? We could:

• hire 8,930 new airport security agents
  
• increase the solvency of Social Security by half a billion dollars
  
• give every college freshman $342 in tuition assistance
  
• provide full health care benefots to 71,479 more veterans

Columnist Allan Sloan has come out in favor of deficit figures that show the long-term consequences of our spend now-pay later fiscal policy. Today, on Marketplace:

SCOTT JAGOW: We're less than two weeks from the end of the government's fiscal year and it looks like the federal budget deficit will come in about 20 percent smaller than last year, around $260 billion. Or it could be twice that amount if you do the math the way Newsweek's Allan Sloan does it.

ALLAN SLOAN: $558 billion dollars, give or take a few buck for rounding errors.

JAGOW: Well that's about a $300 billion difference. How do we come up with that?

SLOAN: I'm sort of an old-fashioned person and I have this idea that when the government issues an IOU to somebody it's the same thing as paying cash because at some point somebody will have to pay the IOU. So by my rough math the government will have issued $298 billion of IOUs to the Social Security trust fund and a batch of other trust funds. And I expect the IOUs to be paid.

Earlier, Matt posted about a GAO report released today about the unsustainability of the federal budget. The report illustrates in six pages the enormity of the challenges the federal budget faces. And it makes clear that even if Congress allows the 2001 and 2003 tax cuts to expire, as is currently the law, the federal government will have to make serious changes to its current fiscal policy. This fact is particularly relevant in light of the fact that Sen. Majority Leader Bill Frist (R-TN) has been desperately trying to push through Congress another $750 billion in tax cuts.

...under GAO’s optimistic simulation the fiscal gap would grow from 4.5 percent of the economy today to 5.7 percent in 2016 simply by waiting to act."

In other words, in order to simply maintain the current level of debt (relative to the size of the economy), the federal government would have to raise taxes or cut spending (or a combination of the two) by $600 billion today, and then maintain this level of revenue and spending (relative to the size of the economy) for the next 75 years. If the government procrastinates, as the current administration and Congress are wont to do, that number grows to $1 trillion (in today's dollars) in 2016.

Waiting longer, of course, means even more drastic changes.

...waiting until 2040 means that as a share of the economy, either taxes would need to be increased by almost 60 percent or total spending reduced by a third in order to balance the budget in that year. Sudden, drastic changes of either kind--and revenues at such a level--are outside post-World War II historical experience in this country. "

And, like every other report issued by the federal government - be it CBO, GAO, Treasury, or even the president's own budget - this document puts another nail into the supply-sider coffin.

Additional economic growth is critical and will help to ease the burden, but the projected fiscal gap is so great that it is unrealistic to expect we will grow our way out of the problem. To do so under any reasonable set of assumptions would require double-digit real economic growth for many decades to eliminate the long-term fiscal challenge. However, since the end of World War II we have not seen economic growth of this kind.

To bring some context to that statement: On average, the economy has grown 3.4% per year since WWII; at the eight of "dot com" boom of the roaring 90's, economic growth peaked at 4.4% per year.

The points here are that 1) we can make changes that will bring sustainability back to the federal budget and that 2) waiting to make these changes has very real consequences on the kinds of policy options available to us.

CBO chief Donald Marron, a month ago : "[T]he message I would send is that we've gone from a period in which the fiscal deficits we were running in this country were large and not sustainable if they had persisted, to a situation in which, at least now and for next year, for several years going forward, deficits appear to be in a range that they're sustainable.”

GAO, today: "GAO’s current long-term simulations continue to show ever-larger deficits resulting in a federal debt burden that ultimately spirals out of control. The timing of deficits and the resulting debt build up varies depending on the assumptions used, but under either optimistic (“Baseline extended”) or more realistic assumptions, current fiscal policy is unsustainable."