Truth in Budgeting: Is It Enough?
President Obama is taking a significant step toward fulfilling another important campaign pledge this week: he is unveiling a federal budget that actually tries to tell us some hard truths about the government’s finances. Too many years in the past, the Bush administration engaged in deception by keeping the costs of Iraq and Afghanistan out of the regular budget plus pulling off some other shenanigans that disguised just how much the government was growing and how much its deficits were growing. By the time he left office, President Bush had practically doubled the national debt – doing as much damage in 8 years as the republic had suffered in more than 200 previous years combined.
Obama promised truth in budgeting, and he is succeeding far more than in the recent past. The costs of wars will now be included in this week’s budget, and the budget won’t show cost cutting in programs that everyone knows will be revived (e.g,, the alternative minimum tax).
The results of taking a truth serum –along with the horrendous costs we are piling up in fighting the economic crisis – will reveal eye-popping numbers stretching far into the future. We can expect at least $1.5 trillion in deficits this coming year, another mountain the following year, before the deficits will be shown to slope down to some $533 billion four years from now. The administration is touting that as serious progress, but only a year or so ago, an annual deficit of $500 billion would have been wholly unacceptable.
We need to know the hard truths about our financial capacity and the administration deserves congratulations for going as far as it has, but the question arises: has it gone far enough? Will even this first Obama budget tell us everything we need to know? Sadly, that does not appear to be the case.
Here are just a few things the administration must still tell us:
- How much are these outbursts of federal loans and loan guarantees likely to cost taxpayers in the next few years? How much are they likely to add to deficits in the next five years? For example, how likely is it that General Motors and Chrysler are likely to repay their billions in bailouts so far? If they are unlikely to repay, shouldn’t the books show these as additional costs to Uncle Sam? That’s what corporations are required to show when they make loans that are unlikely to be repaid. Why not Washington?
- How should we think about the real cost to the taxpayer of the housing bailout program the President announced last week? Two leading newspapers (The Washington Post, USA Today) called it a $75 billion program; two others (New York Times, Wall Street Journal) put the cost at $275 billion. If some of the best journalists in the country cannot agree on the real costs to taxpayers, shouldn’t the government tell us?
- What about all the unfunded liabilities that the government is facing just around the corner? The Pete Petersen Institute bought a full page ad in Sunday’s New York Times pointing out that our entitlement programs – Medicare and Social Security – have some $56 trillion in liabilities stretching into the future. Shouldn’t the government give us a full accounting of just how big and serious these monstrous liabilities are?
- And what about all the different financial programs that the Federal Reserve has launched in an effort to stabilize the economy. How much do they add up to? How will they be covered? How much will fall upon taxpayers? How much might lead to more inflation. To his credit, Fed chairman Bernard Bernake promised at a National Press Club speech last week that the Fed would come up with a better accounting. The White House and Treasury need to hold feet to the fire.
In short, as much as President Obama’s truth in budgeting deserves praise for shedding more light on our financial conditions, there is still far too much that is hidden in shadows. With hundreds of billions of dollars in new commitments being casually tossed about, almost numbing in size and always confusing in content, the Obama administration will do a great deal to begin rebuilding trust and confidence in the future if it tells us what we need to know – and not just part of it, all of it!