Balanced Budget By 2012? Bush's Numbers Don't Add Up

    Here's a look at Resident Bush's proposed " Balanced Budget " plan for 2012. As we have all known since he came out with this sham, his budget doesn't hold water.

Citizens For Tax Justice

In his fiscal 2008 budget proposals, President Bush claims to have a plan to balance the federal budget by fiscal 2012. The truth is, he doesn’t.

First of all, to “balance” the 2012 budget, the President would spend the entire Social Security surplus, estimated at $248 billion that year, on other government programs. According to the President’s own figures, the regular government budget, outside of Social Security, would still have a deficit of $187 billion in 2012.

But that’s only the beginning of the President’s budget chicanery. Even to lower the regular budget deficit to $187 billion (from $434 billion last year), the President posits the following:

# 1
In 2012, outlays for defense and homeland security as a share of the gross domestic product (GDP) will be 22 percent lower than in fiscal 2006.

# 2
Other appropriations (mostly domestic programs) will be slashed by 29 percent as a share of the GDP.

The President characterizes these huge real cuts in outlays as a budget “freeze,” by which he means that he would keep appropriations at their 2006 level in nominal dollars. But using nominal dollars as a measuring stick doesn’t make sense. Most federal spending on appropriations reflects employee salaries and purchases of services. The costs of these generally must keep up with the growth in overall wages and population to avoid real reductions. So, comparing outlays as a share of GDP is a reasonable way to make year-to-year comparisons meaningful. In contrast, adjusting outlays solely for inflation is quite inadequate. And comparing outlays from one year to another in nominal, unadjusted dollars, as the President suggest, is totally misleading.

The President offers a few, albeit very broad details about where his enormous program cuts will supposedly occur. For example, from fiscal 2006 to 2012:

# 3
Community and regional development outlays are to fall by 85% as a share of the GDP.

# 4
Education and related programs: down 45%.

# 5
Agriculture: down 42%.

# 6
Environmental protection and natural resources: down 30%.

# 7
Transportation: down 21%.

“History makes clear that such implausible budget cuts would be highly unpopular, and extremely unlikely—not to mention ill-advised,” noted Robert S. McIntyre, director of Citizens for Tax Justice. “Yet once you discount these phony program cuts and count Bush’s egregious diversion of Social Security money, the President’s so-called balanced-budget plan is a hoax.”

Here’s the arithmetic for fiscal year 2012:

# 1
The President claims his program produces a budget surplus of $61 billion that year.

# 2
From that, subtract the projected Social Security surplus of $248 billion. That leaves a projected 2012 deficit in the regular budget of $187 billion (as the President admits).

# 3
Finally, adjust appropriations to keep up with the growth in the economy, as they have historically done. That adds another $382 billion to the 2012 deficit.

# 4
This revised fiscal 2012 deficit totals $569 billion. At 3.2% of the GDP, that’s about the same as in fiscal 2006.

 

Technorati tags: Balanced Budget, 2012, Bush