We commend to readers today's National Journal article by Stan Collender entitled "Budget Debate Gets Off to a Bad Start," which succintly reprises the charade involved in President Bush's pledge last week to balance the federal budget by 2012. It is reproduced in full below:
By Stan Collender, NationalJournal.com
© National Journal Group Inc.
Tuesday, Jan. 9, 2007
The FY08 debate got off to the worst possible start last week when President Bush announced he was going to balance the budget by 2012.
Pledging to balance the federal budget in five years is a tried-and-true White House public relations ploy. That is the case here as well: The short-term deficit likely will be rising, with the FY07 and FY08 deficits higher than what occurred in FY06.
Even though the deficit can't be eliminated all at once, a pledge to solve the problem several years in the future usually means "I'm not going to do much any time soon." That is certainly the situation in a case like this where the administration making the pledge won't be in office long enough to be held accountable for implementing it.
The FY08 budget will be the last one President Bush sends to Congress that will have any political impact. The FY09 budget will be submitted in the last year of the Bush presidency, when he will be a confirmed lame duck and his influence will be at its lowest point.
If President Bush submits a FY10 budget, it will be just before he leaves office and won't be worth the cost of the paper on which it is printed. The FY11 and FY12 budgets will be submitted by the next president, and he or she will likely have different priorities than the current administration.
But that's only the first reason the president's pledge shouldn't be taken seriously.
The second is that this administration has shown an extraordinary ability to exclude things from the budget that make its deficit outlook anything but realistic.
The most obvious example is the cost of the military and other activities in Iraq and Afghanistan. The White House has consistently refused to account for all of the spending it expects to do in just the year ahead -- even when it has already announced what it thinks that spending will be. Instead, it has relied on the specious argument that, because the funds are being requested in a supplemental appropriation, they don't have to be accounted for in the regular budget.
The White House has compounded the problem by refusing to project Iraq and Afghanistan spending into the future even though the president has indicated that it will be up to the next administration to finish the job. In other words, the administration admits that spending will continue through the end of the Bush presidency but refuses to include it in the budget. That makes the deficit look better than it will actually be and eliminates the need to do anything about it now.
Another example is the alternative minimum tax, which will continue to apply to millions more taxpayers each year until it is changed. It will cost between $50 billion and $60 billion a year to correct this problem. Even though the AMT fix is as certain as anything can ever be in Washington, the White House has steadfastly refused to account for the virtually certain year-by-year revenue loss in its deficit calculations. This has allowed future deficits to look smaller than they will actually be.
Like its refusal to recognize the Iraq/Afghanistan spending by relying on a highly questionable technical argument, the White House has refused to account for the AMT revenue reduction by saying it prefers to deal with the issue as part of an overall tax reform plan. As a result, the Bush administration has swept the lower revenues, larger deficit, increased national debt and higher annual interest payments resulting from the AMT fix under the federal budget rug.
I would be delighted to be proven wrong, but my strong suspicion is that the White House will do the same thing when it submits its FY08 budget to Congress in about four weeks. It will again understate the probable deficit and, therefore, make the president's pledge to balance the budget in 2012 seem plausible.
This year's debate would have started off much better had the president said that his budget will reduce the FY08 deficit compared to what it otherwise would be. That would have been an admission that the short-term deficit was rising and that the White House had set a very meaningful goal.
But trying to get us to focus on 2012 is the fiscal policy equivalent of a magician using misdirection to get the audience to look away from what is really happening. The president's pledge to balance the budget in the future is nothing more than an attempt to draw attention away from the short run.
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