Dollar Delirium
Uh-oh. The federal government might soon be only a trillion bucks in the black.
Washington's political wags are famous for playing fast and loose with the numbers, but the current flap over budget projections and taxes has taken the fine art of spin to new speeds. It has gotten so bad that nobody even bats an eyelash when congressional leaders complain that swimming in an extra $1.79 trillion dollars is somehow akin to being mired in red ink.
The $1.79 trillion figure comes from Democrats on the House Budget Committee. A few papers reported the dire economic news last Sunday, but Rep. John Spratt from South Carolina, the ranking Democrat on the committee, didn't unveil the numbers until Thursday. According to him, the nation is in serious financial straits, and it's because of last summer's tax cut. Sure, the recession has been a downer, and there is that whole war on terrorism thing going on, but when it comes down to it, the tax cuts are what's really going to cost us. Things are so bad, according to Spratt, that leaders might actually be forced to prioritize spending and–sit down–cut back to make ends meet.
But what do politicians mean when they talk about tough times? Nearly everyone agrees that in the short run, the best we can hope for is a balanced budget. Spratt and company predict deficits for 2002. It's in the long run that things get really interesting. Spratt said that over 10 years, the skyrocketing federal deficit will in fact become–a $1.79 trillion surplus. That somehow spells trouble. Take additional funding for new measures against terrorism into account and things look even worse. Spratt moaned that after it's all said and done the federal gravy train would amount to "maybe a trillion at best."
A few of the charts Spratt trotted out speak volumes about the new budget mindset. One particularly glum one was titled, "The Bush Budget Shaved the Projected Surplus to the Bone." Another screamed "The Tax Cut Did the Most to Reduce the Surplus." The New York Times gave everyone fair warning about these numbers last Sunday, with a front- page headline that roared "Huge Decline Seen in Budget Surplus Over Next Decade."
The operative word in all of these statements is "surplus." Sadly, a trillion dollars, give or take a few hundred billion, is not nearly enough money for the programs these legislators have in mind. Spratt said the lean times will be bad news for a new farm bill. The Social Security "lock box"? Forget it. When a reporter asked Spratt if Congress could balance the budget without either rescinding or delaying the tax cuts, he laid it on the line: "Sure, but you'd have to forego other priorities, and that's the point."
It sure is, especially for congressional leaders who had big plans for the 10-year surplus, which only a year ago was projected to come in at about $5.6 trillion. In a much-ballyhooed speech last Friday, Senate Majority Leader Tom Daschle (D-S.D.) made waves when he blasted the Bush tax cuts as irresponsible fiscal policy. He didn't argue that the cuts should be reversed, of course, because that would be a tough sell in an election year. Instead, he dropped his bomb and said it was the Republicans' job to clean up the mess. Smelling blood, Republicans immediately went on the offensive to cast Daschle's speech as a call for higher taxes. On Saturday, Bush said that would happen "over my dead body." The Republican chorus has continued ever since.
So Democrats want to pay for a host of new programs, only they won't say they have to raise taxes to do so. Republicans want to cut taxes, but they refuse to talk about cutting programs or admit that the Social Security trust fund is a sham. In fact, the administration has been happy to increase spending on education and pay lip service to wildly expensive schemes such as a prescription drug benefit.
Both sides are wrong. Nobody knows what the surplus–or deficit–is going to be. The Congressional Budget Office, tasked with making these impossible predictions, changes its numbers every six months. If Democrats were honest, they would unveil a proposal to raise taxes to pay for all the goodies they want. If Republicans were truly serious about smaller government, they would put a few federal programs on the block to show what they are willing to sacrifice in order to keep the tax cuts in place–and propose even more cuts to put that $5.6 trillion surplus (or $1.79 trillion, or whatever it is at the moment) back in taxpayers' pockets. This is an election year, however, and it's much easier to crow about the other side's irresponsible economic plan.