Thursday, January 25, 2007

Budget Spin vs. Budget Reality

The CarpetBagger Report:

I saw a surprising number of headlines yesterday about the nonpartisan Congressional Budget Office’s budget estimates, and how the federal government really is on track towards balance by 2012. It’s probably worth taking a moment to remember that it’s completely untrue.

The federal budget deficit will fall to $172 billion this year and $98 billion next year, then disappear completely by 2012, according to a report released yesterday by the Congressional Budget Office. But virtually nobody — not even top CBO officials — believes it.

That is because the CBO, the nonpartisan office that supplies Congress with cost estimates, is required to make some whopping assumptions, including: that all of President Bush’s tax cuts will expire on schedule in 2010; that the alternative minimum tax will be permitted to ensnare millions of additional taxpayers; and that the war in Iraq and other military operations will never cost much more than the $70 billion that has so far been approved for the fiscal year that ends in September.

Back in the real world, even Democrats want to extend at least some of the Bush tax cuts. Even the White House wants to halt the expansion of the alternative minimum tax. And, as for global war efforts, the president is calling for an additional 21,500 troops to be sent to Iraq and is expected to ask Congress to approve an additional $100 billion for this year alone.

In other words, all of the “good” news we heard yesterday is a bit of a sham.

Moreover, as the Center on Budget and Policy Priorities
explained this week, the CBO also considered “alternative scenarios” for the next several years, including a more realistic set of expectations regarding tax cuts and the war. With these numbers, existing budget policies are expected to add as much as $3.4 trillion to the national debt.

The president said in his State of the Union that he can keep all of his tax cuts and balance the budget “
within the next five years.” Frankly, I’d love to see him try. Even the CBO acknowledges that Bush can move towards balancing the budget or he can fight to keep his tax cuts — but he can’t do both.

Read on for some suggestions on how Democrats can handle this politically.


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