Budgetary three-card monte: war spending aside, federal budget shenanigans continue.

Authorde Rugy, Veronique
PositionColumn

LAWRENCE LINDSEY, President George W. Bush's first National Economic Council director, was fired in 2002 after estimating publicly that the war in Iraq could cost upward of $200 billion, about four times as much as the administration was predicting. Lindsey's numbers were off, it turns out, but not in the direction the White House claimed: The Iraq war has ended up costing at least $700 billion to date.

You wouldn't be able to deduce that last number by looking through Bush's budgets. That's because his administration funded the Iraq and Afghanistan wars almost entirely through emergency supplemental bills. Emergency spending is effectively off budget, immune to caps and other constraints, and shielded from public criticism through obfuscation. Supplementals are an effective way for lawmakers to avoid making difficult tradeoffs in policy areas ranging from war to public education.

Last year President Barack Obama vowed to change Bush's opaque practice of supplemental spending. "I am committed," he said during his February 2009 address to a joint session of Congress, "to restoring a sense of honesty and accountability to our budget. That is why this budget looks ahead 10 years and accounts for spending that was left out under the old rules--and for the first time, that includes the full cost of fighting in Iraq and Afghanistan. For seven years, we have been a nation at war. No longer will we hide its price."

So far the president has delivered admirably on his promise to budget the cost of war. But that doesn't mean that the era of White House budget gimmickry is over. The incentives for using tricks to disguise the size of the budget deficit and to bypass formal budget process requirements are as powerful as ever.

Responding to voters' demands for fiscal discipline, most lawmakers (including Sen. Obama on the campaign trail) claim to be budget hawks. Hence the various rules meant to tie Congress' hands and slow down spending. But in reality, voters only favor cuts in programs from which they do not personally benefit. And since most voters think they benefit from most programs, politicians have little incentive to make real cuts. Instead they resort to budget tricks that disguise the cost of government.

A classic gimmick is keeping spending off the official budget, and the emergency spending supplemental is not the only way to do that. Some off-budget items, such as the U.S. Postal Service and the Social Security and Medicare trust funds...

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