Critics: Bush budget includes key miscalculations

President Bush's mid-session budget review last week may have more spin than a whirling dervish.

"There seems to be no limit to how they will manipulate the numbers," says Robert Greenstein, director of the Center on Budget and Policy Priorities in Washington. "This is far beyond what I have ever seen."

Mr. Greenstein has been critiquing budgets for decades.

Most of the number games aim at appearing not to invade the Social Security surplus. Both President Bush and Democratic candidate Al Gore promised not to touch the surplus in the payroll tax revenues for the program.

With an eye on congressional elections in 2002, Democrats are already accusing the Republicans of breaking that promise as a result of too large a tax cut.

"The Democrats could win some points on this," says Greg Valliere, chief strategist for Schwab Washington Research Group.

The mid-session budget maintains there will still be a non-Social Security surplus in both fiscal 2001, ending Sept. 30, and fiscal 2002 of $1 billion.

That's cutting it fine in years when revenues are expected to run about $2.14 trillion and $2.19 trillion respectively.

For fiscal 2003, the non-Social Security surplus is listed at $2 billion; fiscal 2004, at $6 billion. It grows steadily to $157 billion in fiscal 2011.

Ignoring expenditures

All these numbers are guesswork, at best. Any budget projecting revenues and spending beyond a couple of years must make brave assumptions about the economy, congressional actions, and revenue growth.

This budget enters into the realm of fiction, some critics charge, because it ignores $800 billion or more in costs over 10 years.

For example, there are some 20 tax credits that the budget says should be renewed by Congress in "a fiscally responsible manner." But the $70 billion needed is not in the tables.

A farm bill now moving through Congress with bipartisan support will cost $75 billion over 10 years. It's ignored. The budget only calls for unspecified cuts to offset the spending.

The revised budget also calls for $198 billion in additional defense spending over 10 years. It doesn't provide for the national missile defense system sought by Mr. Bush.

"Heroic efforts have been made to leave out of this budget hundreds of billions of costs that will be certainly incurred," says Mr. Greenstein. "There is a high degree of hubris."

There's also talk in the budget of further tax cuts. But no provision has been made in the numbers for that.

Further, the administration altered the accounting for Social Security revenues to expand the non-Social Security surplus by $5.6 billion in 2001.

If a new budget were being devised from scratch, that change might be acceptable, says Greenstein. But it was done without consultation or discussion with the Congressional Budget Office or the budget committees of Congress. So the last-minute shift was "beyond the pale," Greenstein says.

Another feature of the budget is that it spends the Medicare account surplus, contrary to the pledge of Congress in February to use the money for debt reduction.

The budget defends this, saying there is no "raid" on the Medicare Trust Fund or on the Social Security Trust Fund. The document says any excess cash from the Medicare payroll tax not used to provide hospital insurance benefits is used for other Medicare spending, such as doctor bills.

Greenstein calls this assertion "flatly false." The excess goes into the general revenues, he says.

Perhaps the administration could argue that general revenues then pay the doctor bills.

A surplus spent?

In any case, the budget does correctly note that the huge surplus of payroll-tax revenues for both Social Security and Medicare will be credited to their trust funds, regardless of whether the actual cash is spent for other purposes.

Medicare will be there when needed, the budget says.

What is not said is that by using the Medicare surplus elsewhere, the money will not go to reducing the federal debt owed to the public.

So the government budget will need to include bigger interest payments down the road than otherwise would be the case.

The budget contains $2 trillion to $2.2 trillion in debt repayment in the next 10 years. It's dubious.

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