Friday, January 28, 2005

A Deficit You Can't Refuse

By Jonathan Chait

I don't mean to sound cynical, but it's starting to look as though the Bush administration does not seriously intend to get the federal budget in order. At least that's the impression I got from White House Press Secretary Scott McClellan's attempt this week to explain the unfortunate fact that the administration projects that the deficit will climb this year.

To grasp the full vacuity of the administration's rationalization, you need to consider it piece by piece. Here's how McClellan began his response to a reporter's question about the growing deficit: "And in terms of the deficit, the president has a deficit reduction plan. It's based on strong economic growth and spending restraint."

So the two elements of this plan are strong economic growth and spending restraint. Let's begin with the growth.

"Strong economic growth" means an expanding economy that produces large gains in tax revenues. The trouble is that the economy, as the administration has been reminding us for a long time, is already growing, yet tax revenues are not rising anywhere fast enough to meet the level of spending. Tax revenue accounted for 20.9% of the economy in 2000 and is projected to account for just 16.8% this year. A really hot business cycle can usually push tax revenues up a couple percentage points in a great year. Even if that were to happen in 2005, calling this a deficit reduction plan is like assuring your teenager that you have a plan to pay for her education, and it involves her growing 10 inches and winning a basketball scholarship. And no, dear, this growth plan has nothing to do with that new luxury yacht I just bought myself.

Phase 2 of the "plan" is spending restraint. President Bush is confining his spending restraint to domestic discretionary spending, which accounts for about $500 billion, less than a quarter of the budget. So, as I noted on this page a few weeks ago, programs like the National Science Foundation will suffer a budget freeze.

If he can get Congress to accept his spending limits — something he's tried and failed to do in every year of his presidency — we would chop a whopping $9 billion from the deficit. The deficit, let me remind you, will exceed $400 billion.

McClellan, perhaps trying to make the plan sound more extensive than it is, proceeded to repeat points one and two before concluding: "We've got a plan to cut the deficit in half over the next five years. And we are on track to meet that goal." On track, huh? Last year, the deficit was $412 billion. This year, it's expected to hit $427 billion. At this pace, we'll cut it in half by — hmm, let me pull out my calculator here — approximately never.

Nor is this the first of the broken promises. Bush first said he would cut the deficit by half in five years in July of 2003. Now, 18 months later, his press secretary is still promising to cut the deficit by half "over the next five years." It seems that at any given point in time, the date of this promised halving is always five years away.

What the Bush administration's position on deficits most resembles — aside from Michael Corleone's insincere desire to legitimize his crime family — is the Bush administration's position on tyranny. Rhetorically, Bush stands foursquare against tyranny, has pledged to make democracy the central feature of his relations with every leader in the world and insists that this principle has always guided his presidency. In practice, though, he believes in democratization only when it does not conflict with some other strategic objective, hence his close relations with Pakistan, Egypt, Uzbekistan, Russia, China and the Persian Gulf states.

Lately, his spokesmen have taken to insisting that Bush's inaugural promise to sweep away global tyranny was actually a suggestion for what future administrations might tackle.

Likewise, Bush believes strongly in fiscal responsibility. Unless it conflicts with his desire to cut taxes while fighting a major war. But rest assured that one day, the deficit will disappear, long after he's left office. He's trying, darling


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