Wampum

Duke Football and the Bush Budget Deficit

My alma mater, Duke University, has perhaps the best college basketball program in the country. Football is a different story. Except for a brief period when Steve Spurrier coached at Duke, it has been a long time since Duke consistently had a good football team.

Perhaps the low point for Duke football was 1996. We got blown out by Northwestern, Navy and Army early in the season and the conference schedule was tougher.

Some Dookies were concerned that we might not win a game. I was not too concerned because we still had Wake Forest on the schedule. Wake Forest’s football ineptitude has been immortalized in Steely Dan’s Deacon Blue. Surely we would beat Wake.

As the clash of the non-titans approached late in the season, Duke was winless and Wake Forest was 2-7. Nonetheless, Duke fans were confident. At pre-game festivities, Duke fans were heard to chant “we want Wake, we want Wake.” One wag followed that up by beginning to chant “we’re not the worst, we’re not the worst.”

Alas, we were the worst. Wake prevailed on its home field, 17-16. Duke went on to a 0-11 season. All of which brings me to the subject of George W. Bush’s budget deficit.

Until the current administration was put in charge of fiscal policy, the largest budget deficit since WW II had been the $290 billion deficit under George H.W. Bush in 1992.

The son soon shattered the record of the father with last year’s deficit of $375 billion and stands ready to extend that dubious achievement with this year’s projected $521 billion deficit.

Like the Duke fans, administration supporters are claiming “we’re not the worst.” They contend that the dollar amount of the deficit is not the meaningful measure and that when measured as a percentage of GDP, Mr. Bush’s record is not the worst.

For instance, the administration makes just such an argument in its budget documents:

With Treasury receipts only beginning to reflect a recovering economy––and major ongoing expenditures in Iraq, Afghanistan, and elsewhere in the War on Terror––we still face a projected $521 billion deficit for the 2004 fiscal year. Although a legitimate matter of concern, that size deficit, at 4.5 percent of GDP, is not historically out of range. Deficits have been this large or larger in six of the last 25 years, including a peak of 6.0 percent in 1983.

In other words, the administration is chanting “we are 19th out of 25, go team.” Even that limp claim is as overly optomistic as Duke’s fans.

As a percentage of GDP, the largest deficit between the end of World War II and the Presidency of George W. Bush was run in 1983 under Ronald Wilson Reagan. That deficit was 6% of GDP.

The 1983 deficit was incurred before Mr. Reagan and Congressional Democrats agreed on a plan to save Social Security. When it became clear that the retirement of the baby boomers would wreak demographic havoc with Social Security, Mr. Reagan and the Dems agreed to raise Social Security payroll taxes well beyond the current expenses to create a Social Security surplus. Those surpluses materialized in 1985. Thus, Mr. Reagan’s 6% of GDP deficit was only for the on-budget operations of the government.

When the administration compares its deficit of 4.5% of GDP to Mr. Reagan’s of 6%, it is comparing apples to oranges. The proper comparison would be to compare on-budget operations of Mr. Bush with on-budget operations of Mr. Reagan.

Mr. Bush’s OMB estimates this years’ deficit at $521 billion. That estimate is for the net of the on-budget surplus and the off-budget (read “Social Security) surplus. The Social Security surplus is estimated by OMB to be $154 billion.

For on-budget items, Mr. Bush’s proposes a budget deficit of $675 billion.

That is the truth but not the whole truth. Mr. Bush’s budget for this year does not include money for Iraq. Mr. Bush intends to seek such funding in a supplemental Defense Department appropriation later this year. That supplemental request will be for at least $50 billion. When the costs of the Iraq war are included and the Social Security surplus subtracted, the deficit proposed by Mr. Bush for on-budget operations will be about $725 billion.

The OMB’s budget documents estimate GDP for FY 2004 at $11.612 trillion. A deficit of $725 billion for on-budget operations of the government (apples to apples) amounts to 6.24% of GDP, nearly a quarter of a percent higher than Mr. Reagan’s 1983 deficit.

Like the 1996 Duke football team, this administration really is the worst.

Posted by Dwight Meredith at February 23, 2004 06:32 PM | TrackBack