Bush's new $2.6 trillion federal budget is a masterpiece of misdirection. He says he makes hard choices and projects that he can cut the defecit in half by the time he leaves office, but the truth is that he and his cronies are looting the treasury and will do nothing to help the defecit. Here's a few reasons why.
1. The cuts he proposes this year for social programs, while painfully large percentage-wise for some of the smaller programs, would only amount to $15-$20 billion. Meanwhile, his increases in military spending more than offset that. Just like in previous years, all the painful cuts are scheduled for future years--and these cuts aren't going to materialize either. For example, Bush's 2004 budget slashed 65 programs to save $4.8 billion, but when the ink dried, his Republican friends in Congress only cut $200 million. To make his fuzzy math work out right, Bush makes unrealistic cuts that he knows full well will be restored by Congress. Why else would he target after-school programs to keep kids off drugs?
2. Despite the increases in military spending, the costs of the wars in Iraq and Afghanistan are not included. A "supplemental" $80 billion will be added later. The cost of rolling back the alternative minimum tax, averaging $50 billion per year for the next 10 years is not included either, nor is any of the projected $3 trillion in "transitional costs" that his proposal to raid the Social Security trust fund (excuse me, "privatize") would incur.
3. The budget projections rely on very optimistic forcasts for economic growth and tax revenue increases, requiring economic growth of 3-4% every year, even though the only year in Bush's term that has seen that high a GDP is 2004. Furthermore, most of this presumed economic growth would go to the richest Americans, and yet despite the fact he has cut their taxes, Bush is still relying on the same formula linking tax revenue to GDP from the 1990s for his forecasts.
4. Did I mention that the pledge to "cut in half" the defecit refers to the projected estimate of the defecit for FY2004, not the real one? The projection was for a defecit $109 billion worse than materialized, thanks to unexpectedly good economic growth (a growth rate that is now apparently taken for granted). Oh, and the dollar value won't be cut in half, not even in real dollars. Read the fine print: Bush means "cut in half" with respect to the size of the economy (which he projects will grow at a brisk 3-4% per year). Thus we see how FY2004's $422 billion defecit can be "cut by more than half" and still be over $250 billion in FY2008.
Yes, his budget is a masterpiece of lies, damned lies, and statistics--and sometimes, all three once! Meanwhile, regardless of the math, our defecits keep compounding and the total Federal Debt has now surpassed $6 trillion. By way of comparison, our GDP is at $12 trillion. So my question is: to whom do we owe half our country?
Monday, February 07, 2005
The Art of Fake Budgeting
Posted by Dr. Strangelove at 1:52 PM
Subscribe to:
Post Comments (Atom)
11 comments:
China. China owns half our country. And it isn't Alan Greenspan that matters, but Sheikh Abdul Wassar Whatever over in Saudi who decides to change oil prices by closing down a well or two.
But have no fear, Dr. Strangelove. We all know what our budget really is. It is a creation based on estimates and projections that were initially based on more estimates and projections. No one really knows what the actual GDP is or how many dollars there really are. I don’t think it would be possible. Money, my friend, is a myth. An illusion. There is never enough and always more- until China forecloses.
Another perpetual Washington lie concerns the Social Security trust fund. Payroll taxes have been steadily growing and the Social Security system is running a surplus of around $200 billion annually. Despite the fact that it is meant to be saved in a trust fund and is considered "off budget," Bush's budget plan (as has been traditional) offsets this against the defecit to make it look smaller. The defecit would be more like $600 billion if Social Security's surplus were not included. How ironic is it that Bush must rely on a healthy Social Security trust fund to pump up his figures so he can make the case for gutting that same trust fund?!
And don't be fooled into thinking that Social Security money has gone into a safe bank account somewhere. Nope. It's gone to buy U.S. treasury bonds. In other words, the government is borrowing from itself. It's all sleight of hand. The government is spending our payroll taxes to finance its debt. There is no big trust fund out there... just a mound of IOUs issued from a government that's broke.
Someday, people will look back on how the Federal Government lied to the people, squandered all of our money, issued out false financial statements and misleading budgets, and they will say: Enron and WorldCom were nothing. The Federal Goverment's accounting practices were the biggest financial scandal in history. If Sarbanes-Oxley applied to the government, Bush would be in leg-irons by now.
OK, now wait a minute. It's fun to say that China has us over a barrel but the facts are that all foreign lenders put together only hold about 22% of the national debt. Compare that to over 40% that is owed to the Federal Reserve and government accounts ("government accounts" is probably code for raiding the social security fund). The rest of the debt is owed to state governments, individual investors who own treasury bonds, mutual funds, commercial banks and other relatively small lenders. The bottom line is that the majority fo the U.S. Government's "national" debt is owed to American institutions and individuals. So let's not all start learning Chinese just yet.
This website shows a neat little pie chart but the data is 5 years old.
http://www.brillig.com/debt_clock/faq.html
This is the Treasury Department's own information sheet. The data is up to date but its much harder to find what you want to know.
http://www.fms.treas.gov/bulletin/index.html
Dr. Strangelove's comment about Sarbanes-Oxley is great. I was not just "Raised by Republicans" but by Republican accountants. I also have a good friend who is an accountant back in Ohio. From what I hear, the amount of pain and suffering imposed on innocent accountants by Sarbanes-Oxley requirements is quite large. Apparently, it is quit nit-picky. But doesn't actually address the fundamental oversight problems that caused the Enron and World Com scandals that lead to its passage.
One last thing worth noting. According to the pie chart webpage, since 1970 there have only been three U.S. Presidents who presided over a reduction in the national debt when controlled for inflation: Gerald Ford, Jimmy Carter and Bill Clinton. The Democrats have been the party of fiscal responsibility for decades! And I doubt Ford (R-Michigan) could win a Republican primary these days.
I just heard on NPR that the Bush budget proposal includes a provision doubling the "homeland security fee" attached to every airline ticket from $2.50 to $5.00. So they aren't raising taxes...they're raising user fees.
This is the same non-tax tax increase smoke and mirrors that Schwarzenegger engages in in California.
A Swedish friend of mine in the 1980s had a poster with a picture of the leader of the Swedish Communist party next to a picture of a Soviet tank in Prague in 1968 with the caption "Same Communists here as there."
With regard to Arnold..."Same Republicans here as there."
Speaking of his phoney Social Security "crisis" today, Bush said that the Social Security fund would be running "in the red" after 2018. He said that in 2027, for example, Congress would have to come up with $200 billion from somewhere (my emphasis) to fill the gap.
Of course, the money is supposed to be coming from the Social Security trust fund. The fund is supposed to have enough money in it that Social Security will remain solvent, despite running negative balances, until at least 2042. But Bush revealed, perhaps accidentally, the truth: there is no actual fund. It's all been spent as it comes in. It's just an accounting maneuver. It really will require dipping into the general fund to pay out checks after 2018... and the defecit will no longer look artificially smaller thanks to payroll taxes.
Thanks to Bush's giveaway to his wealthy supporters, he's basically been handing our payroll tax dollars over to the rich--and then some--putting us all in debt. You've got to love it.
I've said it before and will say it again. The media will not call Bush on his lies - they will report them without comment. They WILL report the Democrats calling him a liar, however, which is why the ball is in their court to say so. Good news so far is they are saying so and it's getting in the papers.
I am floored by putting the wars "off budget." Can you imagine Henry VIII telling his counsellors that wars were "off budget"!?
If I remember my British history correctly, Charles I had his reign (and his height) shortened rather abruptly because of the fall out on just this issue.
The rise of Parliamentary sovereignty in Britain (i.e. the rise of representative democracy in Britain) is a story of resisting debt and taxes brought on by the war like adventures of unrestrained monarchs.
Now, if George II Bush hires some German composer to play chamber music on a barge in the Potomac, we'll know we've come full circle!
The comments of the Democrats are all over the map. Some say he's ballooning the federal government and will never trim the defecit. Others say the budget is "austere" and cuts too much. Even Sen. Jeffords (I-VT) said that Bush was, "balancing the budget on the backs of the poor"--which sounds great, except Bush isn't balancing the budget.
Once again, those who oppose Bush seem to think they can fight the unified Republican front with their usual desultory little barbs. But this time, Social Security is on the line, so the Democrats really need to get their act together and push forward a simple message that even Fox News can't screw up: Bush's budget is a tissue of lies. He doesn't make hard choices--he puts them off until he's out of office! He won't reduce the defecit--he will keep piling on more debt every year! His "plan" doesn't include the costs of the war or the tax cuts or the Social Security boondoggle he's proposed--he's going to hit us with the bill for all that later and hope we don't notice. All this budget does is what the right-wingers have been doing for years: stealing desperately needed funds from education and the environment and pumping it into their own pork-barrel projects and tax giveaways.
In the past, Democrats have tried to be reasonable and compromise with him. But now he's trying to destroy Social Security too--and there's no compromising anymore. It's war.
One "restatement" for the pile: today, the Bush Administration came out with a revised estimate (and still only an estimate) for its prescription drug benefit: $720 billion instead of $400 billion for the first 10 years. That's nearly twice the cost they sold Congress on. Whoops!
The difference? Well, for one thing, the estimates are higher in general. But for another thing, the revised estimate covers the actual first 10 years of the full program starting in 2006, rather than the 10 year period starting in 2004 that includes the two start-up years. Apparently, the full costs in 2014-15 are going to be much higher than the partial costs in 2004-5.
Was this fakery important? Did Bush need to undersell it in order to get it to pass. Well, CBS News notes that the bill narrowly passed the House, 220-215, after an "extraordinary three-hour, middle-of-the-night vote in which GOP leaders and administration officials cajoled reluctant Republicans" to change their votes. I believe LTG remembers this vote vividly. You can connect the dots.
Let's not let Bush get away with this kind of crap again. Play with words and you irritate me, but lie with the hard numbers and you really piss me off.
Post a Comment