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.

Chris Edwards of the Cato Institute testified at a Senate Finance Hearing on Tuesday.

Essentially, Edwards argued that the federal government has a "spending problem." Increased spending, he said, is almost entirely responsible for the last 5 years of high deficits. Therefore, we ought to get to the root of the problem and cut back on spending to get the deficit under contol. This is the same tack that Senate Budget Committee Chairman Judd Gregg (R-NH) has taken while advocating for drastic budget cuts.

There are a lot of things wrong with this line of reasoning, not the least of which is the canard that spending increases alone have caused the deficit. The Center on Budget and Policy Priorities has shown that the cost of the 2001 and 2003 tax cuts is three times the cost of all legislated spending increases. And revenues as a percentage of GDP are far lower than historical averages, suggesting that it's revenues that are out of whack, not spending.

Anyway, the most important thing that's wrong with this argument is that it doesn't matter what policies created the deficit. We don't have a "revenue" or a "spending" problem. What we really have is a deficit problem.

Mr. Edwards points out, correctly, that spending has gone up a great deal since 2001. Yet much of that spending increase has been for defense and homeland security. By Edwards's logic, if defense spending increases created a bigger deficit, we must cut back on defense spending. But nobody wants to do that just yet (including Mr. Edwards), because defense spending is a national priority.

The point is, the factors that caused the deficit tell us nothing about how to address it. We budget according to what our priorities are. We should decide how to address the budget deficit in similar fashion.

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

Rep. Jim Cooper (D-TN)’s article in Roll Call today points out that “The Financial Report of the United States,” a document so embarrassing to the While House that it published only 2,100 copies this year, reveals a true accounting of the deficit -— one that encompasses veterans’ benefits, civil service retirement, Social Security, and Medicare.

Cooper notes that a partial unmasking of the true extent of the nation’s financial condition was mandated this summer, when:

[t]he Federal Accounting Standards Advisory Board voted 6-4 to include Social Security and Medicare obligations as liabilities on our national balance sheet. Incredibly, we elected officials have been promising the benefits without bothering to budget for them.

He also includes this unsettling forecast: Standard & Poor’s, the nation’s leading credit analyst, is projecting that the United States will lose its AAA bond rating by 2012 and fall to junk bond status by 2025.

Donald Marron, acting Director of the Congressional Budget Office, as recently as last month, called the nation's deficit "at least now and for next year, for several years going forward, deficits appear to be in a range that they're sustainable.”

Guess he didn't get one of the 2,100 copies of the report.

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.

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."