Playing by White House rules, Bush is bankrupting the government

A Call To Action


Posted 01:30 PM

In the context of the Social Security debate, the record-high budget deficits are discouraging in large part because Bush would like to add an additional $2 trillion to the debt to pay for privatization. But I think the deficit should be considered in this debate in a slightly different way.

We learned yesterday, for example, that last year's record deficit is about to get worse.

Additional war spending this year will push the federal deficit to a record $427 billion for fiscal 2005, effectively thwarting President Bush's pledge to begin stanching the flow of government red ink, according to new administration budget forecasts unveiled yesterday.
Administration officials rolled out an $80 billion emergency spending request, mainly for Iraq and Afghanistan, conceding that the extra money would probably send the federal deficit above the record $412 billion recorded in fiscal 2004, which ended Sept. 30. Bush has pledged to cut the budget deficit in half by 2009, a promise the administration says it can keep. But at least for now, the government's fiscal health is worsening.


For that matter, it's on track to keep getting worse, as our long-term fiscal health continues to deteriorate.

On the other hand, there's the Social Security system, which Bush believes is in "crisis" because it's poised to "bankrupt."

"As a matter of fact, by the time today's workers who are in their mid-20s begin to retire, the system will be bankrupt. So if you're 20 years old, in your mid-20s, and you're beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now. And that's what we're here to talk about, a system that will be bankrupt."
What, in Bush's mind, constitutes Social Security "bankruptcy"? It's always been a ridiculous claim, but using White House definitions, the system will be "bankrupt" when liabilities outnumber assets. Social Security, in other words, will be bankrupt -- in Bush's mind -- because it may be unable to meet all of its obligations at some point down the road.

I think you see where I'm going with this.

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If Social Security is on track for bankruptcy, under the White House's defintion, then Bush has already bankrupted the federal government because in each of the last several years, his budgets have spent far more than they've received.

As my friend Liam recently asked me, "Since [Bush's] definition of bankrupt seems to be running a deficit, why not confront him with the current accounts deficit in the federal budget? If he is unable to get a grip of that, why should the American people believe he could be reasonably expected to deal with Social Security?"

Indeed, as luck would have it, Social Security is in far better shape than the federal budget. We've known about minor, long-term shortfalls in Social Security and have acted accordingly. The system is stronger now than it has been in years and is on track to be in good health for several future decades without any effort at all.

The federal budget, meanwhile, is not only deep into the red, it's a mess that's getting much worse.

...CBO Director Douglas Holtz-Eakin said tax cuts and spending enacted by Congress last year will contribute $504 billion to the government's overall forecast debt between 2005 and 2014. Additional debt over that decade should total $1.36 trillion, well above the $861 billion figure the CBO projected in September.
"We're doing a little bit worse over the long term," Holtz-Eakin said, "and it's largely due to policy" changes.

A senior administration official told reporters that Bush's budget -- to be announced Feb. 7 -- will show the government on track to cut the deficit in half from the White House's initial deficit projection for 2004.

But the CBO projections cast significant doubt on that claim. In total, the CBO projected that the government will amass an additional $855 billion in debt between 2006 and 2015, but Holtz-Eakin cautioned that the figure almost certainly understates the problem. The total assumes no additional money will be spent in Iraq or Afghanistan over the next decade. Perhaps more important, the CBO, by law, must assume Bush's first-term tax cuts will expire after 2010, sending the government's balance sheet from a $189 billion deficit that year to a $71 billion surplus in 2012.


So, here's what I'd like someone to ask Bush: If you believe Social Security should be described as "in crisis" and poised to go "flat bust" and "bankrupt," how would you describe what you've done to the federal budget?