The proposed budget that the Administration released yesterday runs 184 pages, if the sections called “Notes”, which are blank pages for calculations and thoughts, and the order page where anyone can put in a credit card and get a hard copy for $26, are left out. There is also a bar code on the last page so that the Budget can be scanned at a grocery store like a can of peas.
The most prominent parts of the document have already been overexposed in the press. If the budget as it has been presented is voted into law, the US will have a deficit of $1.75 trillion, which is about 12% of GDP. That is the highest ratio since WWII, but no one seems to understand why that bit of trivia matters. For this year, the federal government will spend $3.6 trillion. A great deal of that money will go to lifting the economy out of its dire condition. The most important part of the budget which is not in the budget per se is that the Administration’s assumptions about future revenue and expenses are based on an economic contraction this year and GDP expansion of 3.4% next year, and 4% and 4.6% in the two years that follow. Japanese economists who lived though the “lost decade” would probably dispute the validity of those forecasts. They are, without question, astonishingly optimistic. As a matter of fact, there is no chance whatsoever that the economy will bounce back that quickly.
The government has an odd way of contradicting itself in public, often over extremely short periods of time. The “stress test” program being applied to banks to check their financial viability assumes that unemployment could rise to 10% and housing prices drop another 20%. No one seems to have pointed out that the Treasury is using one set of pessimistic numbers to examine banks while the budget office is claiming that within a year the US economy will hit one of the most glorious periods in history.
So, before getting to the first page of the new budget, it is worth noting that most of the assumptions on which it is based are flawed.
Most accountants and business school students would, when asked to point to an example of a budget, come up with a document with figures showing expenses, income, profits and losses. It might even have a balance sheet and cash flow statement. The budget as it has been passed out to Congress and the press looks nothing like that.
A long march through the document, which will be replaced with an even more detailed version in a few weeks, turns up almost no hard figures until the very end. The great majority of the space is devoted to wish lists, which offer very little concrete information about how the nation would be governed if these proposals were to be approved by Congress. An excellent case in point is the section on the National Aeronautics and Space Administration, NASA, which is everyone’s favorite government agency with good reason. The Department of Commerce does not oversee fiery launches of large rockets and the EPA has never put a man on the Moon.
NASA gets two pages in the budget, only two. That is to run an arm of the federal government which the Administration proposes will spend almost $19 billion next year. The descriptions of how the money will be used are a bit broad. The most eye-catching is that the money NASA gets “Funds a robust program of space exploration involving humans and robots.” It is noteworthy that the budget does not say how the money should be split between humans and robots. That may have to be determined by a hand of poker in which the robots would have a clear advantage. The document does say that the US plans to return to the Moon by 2020, but that is the most detailed portion of the NASA section.
The way that the Budget has been put together makes debating the budget difficult. Arguing over expressions is easy. Arguing over numbers is hard. But, since most members of Congress do not have degrees in mathematics, that may be for the best.
There will be a huge fight over what happens to the budget, how much of it is changed, and how much will make it into law. This budget starts by saying “there are the years that come along once in a generation, when we look at where the country has been and recognize that we need a break from a troubled past, that the problems we face demand that we begin charting a new path.” With a credit card and $26 anyone can get a copy, but they won’t find much in the way of solid figures to find out where the money goes.
Douglas A. McIntyre
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