The numerical wizardry behind budget

Smoke and mirrors may make it hard to tell if the awaited budget will tap into Social Security funds.

By , Special correspondent of The Christian Science Monitor

Down a dull, gray corridor at the Congressional Budget Office is a modest row of cubicles under a plain brown sign. Welcome to Washington's version of ... Wonderland?

The accounting wizards who toil here figure powerfully in the current dispute over how to spend - but not exceed - the $592 billion that is up for grabs in the fiscal 2000 budget. They take frenzied proposals from the Republican-led Congress and President Clinton, and zap them into tidy spread sheets bearing bold, black totals.

Ultimately, this is the place that will answer the politically loaded question: Does the budget dip into the Social Security surplus?

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But these number-crunchers live in two budgetary worlds: the real one, based on the CBO's generally respected economic projections, and the fake one, based on politicians' fantasies, a little like the bits of cake in "Alice in Wonderland" that magically make things shrink or grow.

It's not surprising, these days, that nerves are a bit frayed at the CBO's "scorekeeping unit," as workers deal with impatient politician-taskmasters.

"Tempers are short," says one anonymous scorekeeper, who has been working 12-hour days. "You have a lot of frustration."

A promise and a pressure cooker

CBO scorekeepers are under pressure largely because both Congress and the Clinton administration have boxed themselves in with a promise they really don't want to keep: to curtail spending in an era of budgetary surplus.

Negotiations over spending priorities are expected to intensify this week with the approach of an Oct. 28 deadline to finish the 13 annual bills that fund federal programs - or face another government shutdown.

So far, the president has signed seven of the bills and vetoed two others. Unresolved is a huge bill that includes about $90 billion in discretionary spending for labor, health, and education.

With the federal government enjoying its first surpluses since the 1960s, Mr. Clinton wants to spend more on his top priorities of law enforcement, education, foreign aid, and the environment. Congressional Republicans, too, have endorsed spending increases for defense and their own education initiatives.

But for largely political reasons, both sides have vowed to stop a decades-old practice of spending that part of the surplus - now the bulk of it - that is generated by Social Security payroll taxes. That means holding fiscal 2000 discretionary spending to about $592 billion.

To stay within this limit while still boosting funding for their priorities, Clinton proposed raising billions with new cigarette taxes and other revenues - a nonstarter with Republicans, who staged a House vote earlier this month that overwhelmingly rejected the tax hikes.

Republicans, for their part, are pushing an across-the-board, 1.4 percent budget cut that they say would save about $4.5 billion in "waste, fraud, and abuse." Yet Democrats and the White House have balked at the cuts, saying they would indiscriminately hit both efficient and wasteful programs.

Failing tax increases or an across-the-board cut, how will Congress and the White House raise spending while sticking to the budget limit? The answer, as the CBO scorekeeping unit well knows, is simple: Camouflage billions' worth of funding with accounting gimmicks.

Pointing to a line on the latest budget status report labeled "scoring adjustments" - a growing figure that now stands at $19 billion - one CBO analyst struggles to define the accounting trickery in the most diplomatic terms possible.

"It's a bogus assumption ... I mean, it's not a correct assumption," she says, betraying only the hint of a smile. Like others here, she demands strict anonymity. No names, no photographs ... no revealing emotions. "What we feel about this is really irrelevant."

The six official scorekeepers, mostly trained economists, work this way. First, they take spending plans submitted by congressional leaders and members, usually from appropriations committees, and plug them into a big, main-frame computer, nicknamed "BADS," on the sixth floor.

Then BADS, a database for all 1,500 accounts covered by the 13 spending bills, spits out how much the plans will cost.

If the lawmakers like the CBO numbers they get back, fine. If not, they can order something called "directed scorekeeping" - essentially tinkering with the figures.

They do this in three main ways: by imposing more optimistic economic assumptions, for example, about rates of spending or revenue growth; by shifting money from place to place; or by pushing spending into the following year.

"If it's a scoring adjustment, by definition we don't agree with it," says CBO senior analyst Susan Tanaka.

Here a gimmick, there a gimmick

This year, such gimmicks could surpass $30 billion, funds that if accurately accounted for would significantly eat into the Social Security surplus. The current grab-bag of tricks includes billions' worth of "advances," which provide money in the next fiscal year.

Another gimmick includes postponing payments. For example, defense contractors are upset about a plan in the defense appropriations bill to lengthen the average time to pay contractor invoices from 24 to 30 days - for a savings of almost $1.3 billion. Another idea would delay payday for the nation's military personnel from a Friday to a Monday, pushing $2.3 billion in spending into the following year.

Lawmakers are also hunting for pools of unspent funds to shift into the 2000 budget. These include about $240 billion in balances from previously appropriated funds that have not yet been "obligated" for spending.

GOP leaders had to back down from other widely criticized plans that would have withheld welfare block grants to states and delayed tax-credit payments for low-income families.

2001: a budget odyssey?

Most of these gimmicks mean that the spending crunch will simply be worse next year, barring some unexpected jump in the non-Social Security surplus, scorekeepers say.

"In 2001 there will be more screaming in the room," predicts one.

All this adds up to a vital need for reform of the budget process, say analysts here and outside the CBO.

Today's rules, designed to reduce deficits, "don't work well for allocating surpluses," says Ms. Tanaka. But, she says, serious system reform is not likely to be taken up until after the 2000 election, at the earliest.

For now, however, CBO scorekeepers take refuge in comic relief. Along with bright, abstract paintings of pink flamingos and photos of co-workers wearing fake fangs, quirky humor dots the office walls.

One door alone is devoted to "silly state statistics," including a state-by-state tally of tooth loss.

(c) Copyright 1999. The Christian Science Publishing Society

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