Why Oh Why Can't We Have a Better Press Corps? (Yet Another New York Times Edition)
Journamalism Over the Farm Bill

Fiscal Policy Once Again

Bruce Bartlett on fiscal policy:

Bruce Bartlett: Debts and deficits: On Oct. 11, George W. Bush went before the television cameras to proudly announce the budget deficit for fiscal 2006, which ended on Sept. 30, was only $248 billion. This was a great success, he said, because in February the Office of Management and Budget had estimated the deficit would be $423 billion.

If this is the standard for success, one wonders why we didn't do even better. All Mr. Bush had to do was order OMB to make an even bigger mistake than it did in estimating what the deficit would be. If it had wrongly projected the deficit to be $500 billion or $600 billion in 2006, then Mr. Bush could have announced an even bigger improvement. Maybe next year he should tell OMB to project a $1 trillion deficit. Then even if the deficit rises, Mr. Bush can congratulate himself for again beating expectations.

In the real world, of course, people measure progress not against some incorrect forecast but against actual results. By this standard, the numbers don't look as good. Mr. Bush inherited a budget surplus of $128 billion in fiscal 2001, which the government was already in the midst of when he took office. By the following year, fiscal 2002, the surplus was gone and the government had a deficit of $158 billion, which rose to $378 billion in 2003 and $413 billion in 2004, before falling to $318 billion in 2005 and $248 billion last year.

But these figures greatly understate the budgetary turnaround. In January 2001, the Congressional Budget Office (CBO) estimated budget surpluses as far as the eye could see. It projected an aggregate surplus of more than $2 trillion between 2002 and 2006. Instead, we had an aggregate deficit of $1.5 trillion -- a deterioration of $3.5 trillion.

Yet these figures still understate the budgetary damage caused by the Bush administration because it leaves out changes in the budgetary status of entitlement programs such as Social Security and Medicare. The federal budget only measures their current cash receipts and outlays. Because these are permanent programs not subject to annual appropriations, it is necessary to look at their budgets in what accountants call accrual terms -- taking into account future commitments already made....

[T]he government's total indebtedness... Social Security and Medicare, which have projected costs far in excess of projected revenues. Over the next 75 years, these two programs have an unfunded liability of $44 trillion -- $15 trillion for Social Security and another $29 trillion for Medicare.

What is really frightening is that Mr. Bush apparently has no clue the problems of Medicare are twice as bad as Social Security's.... Mr. Bush has said we must fix Social Security... while saying nothing about the way Medicare is hemorrhaging money. He can't because his massive, unfunded program for prescription drugs in 2003 is the principal reason Medicare's financial problems have gotten so much worse since 2002.

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