Tuesday, August 16, 2005
The budget deficit is not $331 billion!!! Everybody is reporting that the "non-partisan" Congressional Budget Office is calling for a budget deficit of $331 billion for FY 2005. Everybody.But that's not true. Get the report (PDF) and go to page 2. Here is what you will see:  Social Security surpluses (and some other minor inputs) are being used to lower the number from the true deficit, $507 billion, to the less scary $331 billion. That's misleading. The federal government is borrowing from the Social Security trust fund, just like it's borrowing from China and other places. And check out those top-line numbers for all years. With increasing Social Security surpluses, you can actually have larger real deficits, but subtract the surplus in order to present a shrinking deficit. What the hell is going on here? Why is this charade allowed to go on? Who is going to blow the whistle on it? This blog? You've got to be kidding. Where are the heavy hitters, either in the media or in the blogosphere (and especially the liberal blogosphere). Oh, and about the "non-partisan" CBO, check the cover page for their budget report: Hey, look at that horrible spending on elderly, poor, and the disabled. Why not put the defense budget on the cover instead? Amazing: We just did a quick Google News search for " $331 billion $507" and nothing shows up (lots of stories pop up for a news search on " $331 billion"). Does that mean that no news outlet is telling readers about the real deficit? That's beyond belief.
posted by Quiddity at 8/16/2005 09:11:00 AM
9 comments
With all due respect, Q, the CBO number is the correct one for whatever deserves to be called the deficit of the U.S. Government, of which the Trust Fund is a part.
Luv,
MaxSpeak
Yup. If you discount SS surplus, Clinton never reached surplus. Money goes in, money goes out, difference is the deficit/surplus. The fact that there are different sources & sinks is an internal accounting matter (managed by the infamous IOUs back to the trust fund).
Of course Clinton reached surplus! He spilled it all over her dress!
And why do you think George wants to "privatize" Social Security? It's so that no one can find out he's got his fingers dickdeep in the nookie jar!
Call me old-fashioned, but I consider the Social Security trust fund to be separate from the Federal budget. In fact, if you look at the table (above), the line item at the top is labeled "On-budget deficit". SS surplus is in the line for "Off-budget" items.
When the national debt is calculated, it would seem that all debt obligations of the federal government, excluding trust funds, would be determined by the cumulative amount of ON-budget deficits (or surpluses).
I don't claim to be an economist, but the debt is a little hobby horse of mine. I've been keeping a spreadsheet of the debt vs gdp at work for showing the various wingnuts, using this website for the debt numbers. Between 1999 and 2000, the change in debt came to its lowest level since 1960; I'm sure it went negative if you were to show the quarterly numbers.
So it seems to me that the SS surplus is being counted along with everything else. I don't see why it shouldn't, as long as when we start running a SS deficit we pay for it with whatever we have around (you know, income tax, more borrowing, whatever).
The off-budget surplus is partly the cash payroll tax revenue not needed to pay benefits this year, and partly a credit for interest earnings to the Trust Fund. The latter is what Holtz-Eakin was referring to as a 'paper transfer' from the Gov to the Fund. The transfer is a credit to the fund and a debit to the Gov. When you put them together for the total ("unified budget") deficit, one cancels the other.
cheers,
Max(Speak)
My head will defer to Max, 'cause he's an expert in these matters. But my gut is still perturbed.
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