Bush describes a "good, solid" budget

On 02/04, President Bush just submitted his proposed budget, one that he described as a "good, solid budget" and one he claims that puts the federal government on the path to balancing its budget in the very near future -- by 2012.

Chicago Daily Observer (Martire, 02/11), however, finds that "the only verifiable good thing about it [the proposal] is the president's description." Likewise, Investment News (02/11) sees the budget proposal "just plain dishonest."

The proposal will increase the "acknowledged" federal deficit from $162 billion in FY2007 to $410 billion in FY2008. Then the proposal suggests that it may drop marginally in FY2009 to $407 billion -- that is what the president claims "on the path of balancing its budget."

Note that the talk is about the "acknowledged" deficit, which is the number after the surplus in Social Security has been borrowed by the administration. While the "acknowledged" deficit is $401 billion, the actual budget deficit is a whopping $602 billion, after spending $192 billion Social Security surplus on current operations (CDO).

Even worse is the fact that both the $410 billion "acknowledged" deficit in FY2008 and the $407 billion in FY2009 may have been severely underestimated. On the revenue side:

• The revenue growth for the coming two years has been "certainly overstated" with the current economic slowdown being simply ignored;
• The proposal assumes no change in the Alternative Minimum Tax (AMT), which is "most likely" to be fixed by a Democratic Congress and the cost may be another "$20--$100 billion annually in lost revenue" (CDO).
  

On the spending side there are even more unrealistic assumptions:

• The budget proposes only about $70 billion for the war in Iraq and Afghanistan, while the true costs are likely to be "more than double that figure" (IN);
• The budget projects cuts in Medicare spending of $12.2 billion in FY2009, which may be unlikely to pass Congress.