SYNOPSIS: We now have a new language to discuss the budgetary consequences of Bush's tax cut courtesy of his favorite economist Paul Krugman
Winston Smith, the protagonist of George Orwell's "Nineteen Eighty-Four," was a rewrite man. His job was to destroy documents that could undermine the government's pretense of infallibility, and replace them with altered versions.
Lately, Winston Smith has gone to Washington. I'm sure that lots of history is being falsified as you read this — there are several three-letter agencies I don't trust at all — but two cases involving the federal budget caught my eye.
First is the "Chicago line." Shortly after Sept. 11, George W. Bush told his budget director that the only valid reasons to break his pledge not to run budget deficits would be if the country experienced recession, war or national emergency. "Lucky me," he said. "I hit the trifecta."
When I first reported this remark, angry readers accused me of inventing it. Mr. Bush, they said, is a decent man who would never imply that the nation's woes had taken him off the hook, let alone make a joke out of it.
Soon afterward, the trifecta story became part of Mr. Bush's standard stump speech. It always gets a roar of appreciative laughter from Republican audiences.
So what's the Chicago line? In his speeches, Mr. Bush claims to have laid out the criteria for running a deficit when visiting Chicago during the 2000 campaign. But there's no evidence that he said anything of the sort during the campaign, in Chicago or anywhere else; certainly none of the reporters who were with him can remember it. (The New Republic, which has tracked the claim, titled one of its pieces "Stop him before he lies again.") In fact, during the campaign his budget promises were unqualified, for good reason. If he had conceded that future surpluses were not guaranteed, voters might have wondered whether it was wise to lock in a 10-year tax cut.
About that 10-year tax cut: It basically takes place in two phases. Phase I, which has mainly happened already, is a smallish tax cut for the middle class. Phase II, which won't be completed until 2010, is a considerably larger cut that goes mostly to the richest 1 percent of taxpayers.
That two-phase structure offers substantial opportunities for misdirection. If someone suggests reconsidering future tax cuts, the administration can accuse him of wanting to raise taxes in a recession — implying, falsely, that he wants to reverse Phase I rather than simply call off Phase II. On the other hand, if someone says that tax cuts have worsened the budget picture, the administration can say that tax cuts explain only 15 percent of the move into deficit. This sounds definitive, but in fact it refers only to the impact of Phase I on this year's budget; by the administration's own estimates, 40 percent of the $4 trillion deterioration in the 10-year outlook is due to tax cuts.
There is, however, an art to this sort of deception: you have to imply the falsehood without actually saying it outright. Last month the Office of Management and Budget got sloppy: it issued a press release stating flatly that tax cuts were responsible for only 15 percent of the 10-year deterioration. The Center on Budget and Policy Priorities noticed, and I reported it here.
Now for the fun part. The O.M.B. reacted angrily, and published a letter in The Times attacking me. It attributed the misstatement to "error," and declared that it had been "retracted." Was it?
It depends on what you mean by the word "retract." As far as anyone knows, O.M.B. didn't issue a revised statement, conceding that it had misinformed reporters, and giving the right numbers. It simply threw the embarrassing document down the memory hole. As Brendan Nyhan pointed out in Salon, if you go to the O.M.B.'s Web site now, you find a press release dated July 12 that is not the release actually handed out on that date. There is no indication that anything has been changed, but the bullet point on sources of the deficit is gone.
Every government tries to make excuses for its past errors, but I don't think any previous U.S. administration has been this brazen about rewriting history to make itself look good. For this kind of thing to happen you have to have politicians who have no qualms about playing Big Brother; officials whose partisan loyalty trumps their professional scruples; and a press corps that, with some honorable exceptions, lets the people in power get away with it.
Lucky us: we hit the trifecta.
Originally published in The New York Times, 8.6.02