and White House "Press Corpse" naive credulity:
(1) The actual total US budget deficit for the fiscal year ending 9/30/06 was $248 billion, according to initial estimates. How is this half of the actual baseline for Dubya's pledge, $412.7 billion in 2004? Dubya compared apples and oranges. He used not the actual 2004 figure as a baseline, but rather a $521 billion projection that was more than $100 billion off.
(2) Dubya apparently uses such faulty projections strategically, for political purposes. The average of the past six forecast misses has been over $111 billion. Under Clinton, it was $58 billion.
(3) The total US budget deficit includes the effect of Social Security cash flow, which now is peaking before it goes negative as Baby Boomers retire. Between 2004 and 2005, there was a $22.4 billion jump in FICA cash flow, and presumably a similar jump from 2005 to 2006. A truer picture of spending and tax revenues would come from on-budget deficit figures, which Dubya did not mention.
(4) More than $80 billion of the decline in the deficit may have come from a time-limited gimmick: the Orwellian-named "American Jobs Creation Act". That 2004 legislation raises short-term revenue by temporarily reducing the tax on some corporate profits from 35 percent to 5.25 percent. When the rate goes back up, the temporary burst of revenue will cease, and bursting corporate treasuries will have been fattened substantially further by a historically generous give-away.
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(1) and (3): From
http://www.cbo.gov/budget/historical.pdf :
"Revenues, Outlays, Deficits, Surpluses, and Debt Held by the Public (Billions of dollars)
Year, Total Deficit or Surplus, On-Budget Deficit or Surplus, Social Security Cash flow
Clinton
1993 .. -255.1 .. -300.4 ... 46.8
1994 .. -203.2 .. -258.8 ... 56.8
1995 .. -164.0 .. -226.4 ... 60.4
1996 .. -107.4 .. -174.0 ... 66.4
1997 .... -21.9 .. -103.2 ... 81.3
1998 ..... 69.3 .... -29.9 ... 99.4
1999 ... 125.6 ....... 1.9 .. 124.7
2000 ... 236.2 ..... 86.4 .. 151.8
GW Bush
2001 ... 128.2 .... -32.4 .. 163.0
2002 .. -157.8 .. -317.4 .. 159.0
2003 .. -377.6 .. -538.4 .. 155.6
2004 .. -412.7 .. -568.0 .. 151.1
2005 .. -318.3 .. -493.6 .. 173.5
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(1) From
http://www.iht.com/articles/ap/2006/10/11/business/NA_FIN_US_Budget_Deficit.php :
"Federal deficit falls to lowest level in four years
The Associated Press; Published: October 11, 2006
... in making that claim, the president is using the administration's original forecast of what the 2004 deficit was expected to be, not what it actually turned out to be. Back when Bush made his promise, the administration was predicting that the 2004 deficit would be $521 billion. That prediction turned out to be off by $100 billion. To achieve the feat of slicing the actual 2004 deficit number in half, the federal deficit Bush was highlighting would have to have dropped to $206 billion, not $247.7 billion.
Democrats say the narrowing of the deficit will be temporary because when 78 million baby boomers retire, the cost of Social Security and the Medicare health care program for the elderly will soar. "The fact that some are trumpeting this year's deficit number as good news shows just how far we've fallen. Our budget picture is extremely serious by any measure," said Sen. Kent Conrad ....
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(2) From
http://www.bloomberg.com/apps/news?pid=20601087&sid=aatZlsRzu6fw&refer=home :
Bush Trumpets Deficit That Misses Forecast by Most in 21 Years; By Brendan Murray
Oct. 11 (Bloomberg) -- For President George W. Bush, the announcement today that the U.S. budget deficit shrank for the second straight year is an opportunity to trumpet the wisdom of $2 trillion in Republican-backed income-tax cuts. For government bean counters, it was the biggest forecast miss in 21 years. The Treasury Department said in Washington today the shortfall for the fiscal year that ended Sept. 30 narrowed to $248 billion from $319 billion last year. That final figure is $175 billion less than the $423 billion gap that Bush projected in February. Tax revenue is hard to project when an economy accelerates and then slows as it has in the past year.
Initial government projections are also sometimes unreliable because they include a factor that private forecasts don't -- politics. ``It's a little bit similar to the corporate earnings dynamic,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. ``There's a definite incentive for the administration always and everywhere to overestimate the deficit numbers so that when it comes in better than expected, they can say things worked out better than they thought.'' ``The White House has a track record of projecting budget numbers to be a lot worse than they end up, which therefore helps them defeat the gloomy expectations and declare victory,'' said Brian Riedl, a budget analyst at the Washington-based Heritage Foundation...
Few administrations have managed precision in budget projections. Since 1982, 25 forecasts in February budget releases have missed the year-end final figure by an average of $87.8 billion, according to figures from the White House's Office of Management and Budget. The Bush administration's estimates have been notably off the mark, with the gap between forecast and reality exceeding the averages of the previous three presidents. Bush's budget-forecast misses in the past six years averaged $111.5 billion, according to figures from the White House Office of Management and Budget. That ranks him behind the Reagan administration's $98.1 billion average gap, George H.W. Bush's average of $69.9 billion, and about twice the Clinton administration's $58 billion average.
Administration officials have defended their forecasts as objective and free of political interference, saying tax revenue -- and surpluses or deficits -- in a fast-moving economy are hard to model. Last week Edward Lazear, chairman of Bush's Council of Economic Advisers, sought to ``defend my fellow economists'' in the administration about the unanticipated revenue influx. ``This is just a pure statistical phenomenon,'' Lazear told reporters Oct. 6 in Washington. ``It has nothing to do with strategic behavior by anybody.''
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(4) See the bill's sponsor's estimate of his impact, at
http://www.house.gov/list/speech/pa03_english/081505.html .
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