President George W. Bush apparently has a rabbit up his sleeve. His administration is crafting a five-year budget plan that makes use of a variety of smoke and mirrors to hide the fact that his fiscal policies are bankrupting the nation.
According to an article in The New York Times in early January, the president will build his budget proposal on an outdated deficit projection to create the illusion that the deficit is larger than it actually is so that he can claim that his spending plan will cut it in half by 2009.
The administration will use a year-old estimated deficit figure of $521 billion rather than the actual $413 billion figure from this past year. By doing so, the administration can craft a budget that it says will reduce
the deficit to $260 billion (though the chances of the Bush administration actually getting the deficit down to that number remains pretty slim) and claim that it has met its campaign pledge.
The reality, of course, is far different. Even if the administration can get the deficit to $260 billion, it will only have reduced the budget by about 35 percent -- a significant number, to be sure. Basically, the math on the president's proposal, due in February, just doesn't add up.
"They are cutting the deficit from a number they never believed in the beginning," says Stanley Collender, author and analyst, to the New York Times. "What if they had forecast that the deficit would be $800 billion last year? Would they take credit for having cut it by half?"
But even that specious claim assumes that the rest of the Bush budget is built with solid material. According to the Times, the budget conveniently ignores the growing costs of the wars in Iraq and Afghanistan, the cost of the president's suspect Social Security plan and about $1 trillion in expenses that are expected to come due in 2010. And it relies on revenue projections that are about as rosy as they come.
Let's take these one by one.
The Iraq and Afghanistan wars: The administration spent $87 billion for Iraq alone in 2004 and already is on the hook for $25 billion for the first few months of the current year. The money is not included in the budget, but has to be paid for by someone. That someone is us.
There are no estimates for 2006.
Social Security: The Bush administration is planning a raid on the 70-year-old retirement program that will have significant short- and long-term costs to taxpayers and retirees. The administration is proposing to allow workers to take a portion of the payroll taxes they pay into the system to fund the program and invest that money in the stock and bond markets.
Forget for a moment that the proposal is, in economist Paul Krugman's words, a "bum's rush." Forget that privatization will undermine the security of the retirement system and that the so-called Social Security crisis is not nearly as bad as privatization proponents would have us believe.
The issue, as far as the Bush budget proposal is concerned, is that the privatization plan carries with it about $2 trillion in transition costs over the next 10 or so years to cover plunging payroll tax receipts caused by the Bush privatization plan. That's about $200 billion a year that won't be coming in as revenue any longer, revenue that the federal government has been using for the last couple of decades to balance its books -- or at least to try to.
Revenue projections: The administration is expected to anticipate an increase in tax revenues of about $200 billion, according to the Times, which would be "an increase of more than 10 percent, twice as big as the jump in 2004, and it would be followed by additional big jumps for the next five years."
The Times said many analysts believe the revenue projections overly optimistic.
"Even though the economy grew at a rapid pace of 4 percent in 2004, and corporate profits soared at double-digit rates, federal tax revenues were only 16.2 percent of the gross domestic product last year, the lowest level since the early 1950s," the story said. And tax revenues remain lower than when the president took office four years ago.
So when the president tells you his budget is righting America's economic ship or that his spending plan is geared toward the long-term health of our economy, don't believe him. And watch your wallet.
Hank Kalet is a poet and the managing editor of the South Brunswick Post and The Cranbury Press, two weekly newspapers in New Jersey. His email is email@example.com.