The Bush Budget Clown Show

Roger Runningen and Brian Faler of Bloomberg report on the Bushies' proposed budget for fiscal 2009:

Bloomberg.com.S.: President George W. Bush sent Congress a $3.1 trillion federal budget that trims Medicare and health care programs, boosts military spending and projects the deficit this year and next will hit near-record levels. The spending blueprint for fiscal 2009... would slow the rate of growth in spending for entitlement programs such as Medicare for savings of $208 billion over five years. Pentagon spending would rise 7.5 percent to $515 billion, the 11th consecutive year of increases....

Bush's spending plan stands little chance of being adopted. Criticism came today from Republicans as well as Democrats. "There's a lot of games, smoke, mirrors, incomplete numbers, basically there's not much realism" in the budget, Senator Judd Gregg, the top Republican on the Budget Committee, said in an interview. "They're playing the usual games."... The budget deficit is projected to reach $410 billion this year. That is up from $162 billion in 2007, reflecting a slower economy generating fewer corporate tax receipts, the cost of a $146 billion economic stimulus measure and spending on the wars in Iraq and Afghanistan. The deficit is forecast at $407 billion in 2009... 2.9 percent of the $13.2 trillion U.S. economy....

Bush, after meeting with his Cabinet this morning at the White House, called it a "good, solid budget" that puts a priority on national security and keeps spending in check. "Congress needs to pass it," he said. Lawmakers took a different view. House Budget Committee Chairman John Spratt, a South Carolina Democrat, said it "bears all the hallmarks of the Bush legacy -- it leads to more deficits, more debt, more tax cuts, more cutbacks in critical services"...

Their reference to "near-record levels" of the deficit doesn't give a full and fair account of the magnitude of what can only be called a clown show. The headline deficit number ought to be $738 billion--we have a $331 billion Social Security surplus for 2009, and an honest and honorable administration would be using that surplus to pay down the government debt in order to get ready for the challenges that our aging population will pose for the federal budget over the next two generations. The headline number shouldn't be 2.7% of GDP; it should be 4.8% of GDP. That is how far Bush fiscal policy is from what a prudent and responsible fiscal policy should be.

Now that we have an actual Bush administration proposal in print--one that Republican senator Judd Gregg doesn't think much of--it is time for an accountability moment. The Bush administration and its flacks and flunkies have long promised that the administration was going to "cut the deficit in half" by the time in left office in fisal 2009. The press by and large reported this straight--not pointing out that the "cut in half" was from a highballed projected peak deficit number that was artificially inflated in order to set the bar artificially low, not pointing out that such a deficit still left fiscal policy far from where it ought to be, and not pointing out that the Bushies' policies would produce such a reduction only if everything broke right and we had four uninterrupted years of macroeconomic good news. Republican economists who cared more about pleasing White House communications than in informing their audience chimed in--why, I get 100 hits on Google for Greg Mankiw saying both when he was under and since he came out from under message discipline that George W. Bush's proposals were projected to reduce the deficit by half by 2009 http://www.google.com/search?num=100&hl=en&client=safari&rls=en-us&q=mankiw+%22the+deficit+in+half%22&btnG=Search. Not under any projection that I would recognize as straight.

Among Republican economists Andrew Samwick has sounded the alarm about Bush administration fiscal policy. Bruce Bartlett has sounded the alarm. Damned few others. Among center and center-right commentators Stan Collender has told the story straight, and in context. Damn few others. Those three deserve to have their reputations and authority substantially boosted--because they have shown that they are more in the information than in the pleasing-White-House-communications business.

We want to run a budget that is in surplus during boom, in deficit during recession, that borrows in order to fund investments that benefit the future, and that runs surpluses and pays down debt in order to fund future expenditures that benefit today's taxpayers. The Bushies have not done that.

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Morning Coffee: The Bush Budget Clown Show

Comments

[Fifi]

Come Tuesday, something funny could happen for the 2009 budget.

It's already a given that the Democratic presidential nominee will be a senator - Clinton or Obama, both senators - and if McCain thumps Romney tomorrow, it will be the same deal for the Republicans.

It will be ... Senator vs. Senator.

May be those senators should get in the same room with their economic teams. After all, whoever wins, one of them will have to execute on this darn budget. They may as well write it themselves to their greatest common denominator. It will reduce their pain when he/she gets in the White House.

PS: Hum, well, it would also give David Broder a category 6 bigasm and that's a big, big negative. Anything that pleases David Broder is a negative.

[Doctor Jay]

I'm feeling pessimistic today, and wondering if this isn't a case of "bad money drives out good." That is, can any sane budget proposal survive in a world where there are far too many people willing to promise something for nothing, tax cuts that pay for themselves, and balancing the budget by cutting "waste, fraud, and abuse". Can any politician promising these things survive an electoral challenge?

Not too long ago, a woman knocked at my door and told me she had to sell her ring so that she could pay for diapers for her baby and would I be willing to buy it? I had just read "Going Postal" by Terry Pratchett, where the protagonist describes in detail how he scams people by using almost this very pitch. So I laughed in her face. She left quickly.

I dream of a day where the phrase "tax cuts pay for themselves" evokes precisely that kind of laughter in even two thirds of our population. Voting, donating population.

[bakho]

John Spratt:
“Far from proposing a plan to fix the budget, this Administration proposes policies that worsen it, and with little compunction, leaves the consequences for the next administration and future generations to correct.”

http://www.house.gov/budget_democrats/news/09_budget_statement.htm

Graphs and charts:

http://www.house.gov/budget_democrats/pres_budgets/09Instant_Analysis_Web.pdf

Analysis of Bush Budget Cuts by State
http://www.house.gov/budget_democrats/pres_budgets/09S_by_sFINAL.pdf

[bakho]

Kent Conrad goes shrill:

"So this is a budget that in many ways is imaginary."
This budget is not DOA, this budget is 'debt on departure'.

"You saw that the president did not himself print budgets this year.... perhaps he ran out of red ink."

http://www.senate.gov/~budget/democratic/statements/2008/stmt_bushfy2009budgetconradpressconftrans020408.pdf

[howard]

thank you for noticing the obvious: that greg mankiw has become a full-time propagandist, and no longer should be treated as an economist but rather as one of the clowns over at national review.

as for the fiscal failures of the bush administration, well, they've been obvious for the entire history of the bush administration: one wonders why judd gregg just noticed (well, one doesn't wonder, really, one knows that gregg is just another gop senatorial robot who when told by the bush white house to jump, asks "how high?").

[RKKA]

No suprises here. The rethuglican party is the party of "borrow and spend", and we should work hard to associate that little phrase with the rethuglican party, so that the blame for our coming national bankruptcy is laid fully on them.

That should keep them a regional party of the South for a good fifty years.

[kharris]

The guys at Cato disagree with your "honest" budget projection. They think that the obvious $100-$150 bln price tag for Iraq ought to be included, so that the deficit, published according to Washington rules ought to be north of $500 bln. Tack on your $331 bln and we are talking about $831 bln or so in deficit, about twice what the White House has published. Cutting the deficit in half, Bush style.

[skeptonomist]

Brad, I agree 100% with your conclusions, but the exact numbers may not be complete.

You give $331 billion for the social security surplus, but the official off-budget number for 2008 (projected) is only $211 billion. I think this is the number (or the one for 2009 or whatever) which should be used to correct the "unified"=phony budget.

I am guessing that you started with "Social insurance and retirement receipts" and subtracting SS expenditures, but this category includes Medicare, unemployment insurance and some other things which are on-budget. But the off-budget number has to be corrected for the interest on the Trust Fund, which is entered as a negative number under Interest Outlays. Simple, no?

On the other hand, it appears that some large sums are not included in the budget. As far as I can see, "Enacted Supplemental and Emergency Funding", amounting to $192.3 in 2007, is completely absent from the budget. This includes (in billions) Global War on Terror $173.6; Gulf Coast/Hurricane Recovery $7.7; Veterans Affairs $1.8; Border Security and Other $9.3. In fact the budget says "Note: Supplemental and emergency funding, both enacted and requested, is excluded." For fiscal 2008, which is not over till the end of October, $104.4 billion has already been allocated, with more to come. If you think the cost of the Iraq War is in the budget, find a specific item which can accomodate $173 billion - it's not in Defense, which has increased only $30-50 billion/year in the Bush years.

Taking all this into account, the deficit for fiscal 2008 will probably be about $400 billion larger than claimed, or about 5.6% of GDP.

The Congressional Democrats don't give the true figures either - they omit SS trust fund debt and Supplementals. Don't trust *any* politicians on this.

[mere mortal]

"Now that we have an actual Bush administration proposal in print... it is time for an accountability moment."

Well, I'm wondering if you were able to type that last bit without laughing, because I sure wasn't able to read it without laughing.

Almost as an iron rule for the Bush years, there is no accountability.