A Magical Mystery Tour Through the Bush Budget and Deficit

Posted February 4, 2008 at 4:14pm

Even though this week’s Fiscal Fitness was written the day before the Bush fiscal 2009 budget was sent to Congress, it wasn’t hard to figure out what’s likely to happen to it.

[IMGCAP(1)]After all, a few details about the president’s proposals were leaked over the past week or so. Actually, “selectively released” probably is more accurate. What else can you conclude when high-level administration officials are quoted by name about what is in the budget before it is officially unveiled?

But at this point in the Bush administration, reading federal budget tea leaves probably is just as valuable as knowing what’s actually being proposed anyway.

First, if you are planning to look at the Bush fiscal 2009 budget, you had better do so quickly. No one actually is likely to call it “dead on arrival,” but this budget won’t be alive and kicking much by Wednesday.

There are two major reasons.

This is the eighth budget submitted by President Bush and there will be few, if any, proposals in it that haven’t already been rejected at least once. For example, the list of programs the president said in his State of the Union address he will propose to eliminate have substantial support on Capitol Hill. That’s why they continue to exist. If they didn’t have this support, they would have been gone years ago.

Most of this Congressional rejection occurred when there was a Republican majority in the House and Senate that saw supporting this president as its major mission. Now the president is facing Democratic majorities in both chambers, and Republicans don’t necessarily see going along with the White House on cuts in programs important to their states and districts as being in their best political interests just before an election.

The Bush budget also will get little attention by Wednesday because of the massive coverage the Super Tuesday primary results will generate. Relative to everything else happening in the political and policy worlds, what this lame-duck president proposes to a Democratic Congress just won’t be that important, interesting or relevant.

Second, the headline number from the Bush fiscal 2009 budget will not be as important as it seems.

Many stories will lead with the $3 trillion in spending proposed in the Bush budget, which will be a nominal all-time record. The “$3 trillion” will be italicized in print to dramatize the size, and radio and television reporters will change their tone when speaking these words to make it clear this is something that deserves your attention. They also will note the irony of a self-proclaimed fiscal conservative president being the first to propose spending at this level and, for context, will note that Bush also was in the White House when the $2 trillion level was achieved for the first time in fiscal 2002.

Yes, $3 trillion in nominal spending will be a milestone. But it’s hardly as important or telling as the italicizing and speech tone will indicate. The truth is that it won’t be a record as a percentage of the gross domestic product and won’t be that different from the approximately $2.9 trillion that will be spent this year. Crossing the $3 trillion mark was virtually inevitable given that two-thirds or so of the federal budget is “uncontrollable,” that is, will result this year from decisions made in prior years. So whether it’s military procurement projects approved earlier in the Bush administration that are now starting to result in significant outlays, entitlement programs approved 40 years or more ago, or interest on the federal debt from the borrowing done over the past seven years and before, the increase in spending to $3 trillion largely was determined by policies put in place well before the Bush fiscal 2009 budget was formulated.

Bush can be blamed not just for failing to slow the growth in federal spending but for accelerating it while he was in office. New and expensive entitlements were put in place, and the president did nothing to push a Republican Congress to reform others.

But while it may be a record and a round number that’s easy to sensationalize, federal spending rising to $3 trillion from $2.9 trillion is no more of a big deal than if the Yankees win 65 percent of their games in 2008 after winning 63 percent in 2007 (unless you’re a Red Sox fan).

Third, no matter what they are, don’t believe the deficit numbers included in the Bush budget.

This will be hard because, if the $3 trillion total spending number is not the headline, the $400 billion or more deficit number will be.

The Bush administration typically has overstated the deficit at the start of the budget process so that it could take credit for what it has always claimed is a “better-than-expected” deficit later in the year.

I’m expecting the same thing to happen for fiscal 2008. Administration officials have so openly talked about a $400 billion deficit that it’s hard not to conclude they are trying to decrease the shock value of the number when the budget is released and setting us up once again for a smaller number later in the year. That would allow the Bush administration to claim in October — that is, just before the election — that the deficit outlook had improved.

The administration’s more interesting deficit estimate will be for fiscal 2009, the budget year that will start with Bush in the White House but end with someone else as president.

Given this administration’s tradition of manipulating the estimates for its own political purposes, overstating the fiscal 2009 deficit makes little sense because that would allow the next president to take credit for producing the lower number. It makes far more political sense for the Bush administration to do the opposite: deliberately underestimate the projected 2009 deficit so that, no matter who is elected, she or he will have to explain why it’s so much higher than what the outgoing president said it would be.

Stan Collender is managing director at Qorvis Communications and author of “The Guide to the Federal Budget.” His blog is Capital Gains and Games.