AFTER the stock market crash of 1987, Congress and the White House passed a budget plan they claimed would reduce the deficit by $75 billion over two years. In reality, however, the deficit increased from $150 billion in 1987 to $155 billion in 1988, and it is expected to break the $160 billion mark this year. How could politicians claim they cut the deficit by $75 billion when the actual deficit increased by about $10 billion? Easy. Just use a gimmick called the ``current services budget.''
President Bush has proposed spending $94.8 billion on medicare next year, an $8 billion increase over this year's level. The Washington Post reported, however, that the administration should not expect ``the $5 billion in cuts George Bush urged in medicare.'' The President also asked for a $3 billion increase for defense, yet policymakers speculate on how the Defense Department will manage with less money. The current services budget strikes again.
For years, Washington politicians have manipulated the definition of a budget cut in order to protect spending programs. Misled by the phony political terminology of the current services budget, many citizens have been deceived into believing that the deficit was caused by ``tax cuts'' rather than by excessive federal spending. Now, Republican Sens. Bill Armstrong and Rudy Boschwitz have introduced a bill that would legislate ``truth-in-budgeting'' by preventing politicians from claiming that spending increases are actually spending cuts.
The current services budget started as an innocent accounting technique to help legislators prepare budgets by providing information on how much spending would have to increase if legislators wanted to adjust spending levels for predicted inflation, demographic shifts, and previously-made commitments to spend money. What began as a planning tool has now become the starting point for each year's budget debate. So the definition of a spending cut has changed from spending less than you did the year before to increasing spending, but not by as much as called for in the current services budget.
For example, if the current services budget calls for a spending increase of 12 percent in a certain program, and the president's budget provides for a 7 percent increase, proponents of higher spending claim that the president is trying to cut the program by 5 percent. This makes it easier to understand how federal spending has risen by more than $500 billion during the 1980s, despite endless stories about the Reagan ``budget cuts.''
The same sleight of hand technique applies to taxes. According to Congress, if the current services budget projects that tax revenue will increase by 5 percent, and the president proposes legislation that would limit the increase in tax revenue to 3 percent, that slowdown in the growth of tax collections becomes a tax cut. Thus, opponents of fiscal restraint can argue that 1981's ``tax cuts'' caused the deficit even though actual tax revenues have increased by nearly 90 percent since 1980.
Although the president is supposed to submit a current services budget along with his yearly budget proposal, President Bush is wisely basing his budget on actual year-to-year changes in spending levels. We can expect, however, that some members of Congress will compare President Bush's spending proposals to the current services budget, thereby drumming up opposition to nonexistent spending ``cuts.''
The Bush approach, which Senators Armstrong and Boschwitz have drafted into legislation, would put an end to this abuse of the current services budget. Without current services budgeting, special interests will find it more difficult to rally opposition against efforts to restrain the growth of government spending.
The average American family understands that a spending cut means spending less than you did in the previous period, and they assume that politicians use the same standards. Most Americans are completely unaware that a spending cut in Washington means something completely different than it does on Main Street, USA.
The American people have been subject to 13 tax increases in the last seven years, and the tax burden in America is at an all-time high, according to the Tax Foundation. Yet some politicians still think ``tax cuts'' caused the deficit!
By abusing the current services budget, the special interests have created the perception that spending has been cut to the maximum extent possible. Not only does this make it difficult for responsible policymakers to restrain spending growth and reduce the deficit, this misinformation also makes the political climate even more amenable to tax increases, threatening to throw the economy into a recession.
The Armstrong-Boschwitz legislation would put an end to the current service budget gimmick. Congress would no longer be able to use accounting tricks to protect special interest spending programs. With accurate figures, citizens will be better able to compare the costs and benefits of specific programs. The legislation will help make Congress and the special interests more accountable for their actions.