SYNOPSIS: Another tax cut article

Dishonesty in the pursuit of tax cuts is no vice. That, in the end, will be the only way to defend George W. Bush's deceptions.

Let's remember the way the debate ran during the spring. Back in May, The New Republic's cover showed a picture of Mr. Bush, with the headline "He's Lying." Inside were two articles about the tax cut. One, by Jonathan Chait, showed that -- contrary to administration claims -- the tax cut would mainly go to the richest few percent of the population. The other was an excerpt from my own book "Fuzzy Math," refuting the administration's claims that it could cut taxes, increase military spending, provide prescription drug coverage and still avoid dipping into the Social Security surplus. The New Republic cover caused much tut-tutting; the magazine's editors were accused of hyperbole, of rabble-rousing. But the headline was a simple statement of fact. Mr. Bush was lying. It was obvious from the start that the administration's numbers didn't add up.

And in case you were wondering, the administration is still lying. I could explain at length how the Office of Management and Budget has cooked the books so that it can still claim a surplus outside of Social Security over the next two years. But here's an easy way to see that the numbers are bogus: O.M.B. claims that the budget will show a surplus of $1 billion this year, and another $1 billion next year. Ask yourself how likely it is that revenues and outlays in a $2 trillion budget would line up that exactly. Then ask yourself how likely it is that they would line up that exactly two years in a row. The O.M.B. numbers are the result of desperate backing and filling -- shift some revenue from this year to next year, then move some of it back, then change accounting rules that have been in place for 65 years, then bump up the estimate of economic growth -- all so that the administration can pretend that it is keeping its promise.

The Congressional Budget Office, which does honest work but under certain constraints -- more on that in a minute -- is supposed to release its own estimate today, but the main results have already been leaked. They show a deficit outside Social Security this year, a tiny surplus next year, then a return to deficit in 2003 and 2004. And these numbers, read properly, flatly refute two of the arguments you'll hear over the next few days.

First, the administration will tell you that the return to deficits is the result of the economic slowdown. Not so: the C.B.O., like the administration, assumes that the economy will recover next year, but projects that we will be in deficit through 2004. Why? Because the tax cut grows over time, and the revenue lost because of that growing tax cut is more than the revenue gained from economic recovery. Why has the prospect of surpluses been replaced by the prospect of deficits, even after the economy recovers? To coin a phrase: It's the tax cut, stupid.

Second, the administration will try to blame big spenders in Congress for the deficits. But who are these big spenders? The only major new spending items in the C.B.O. projection are for defense and education -- both in response to administration initiatives. And it's the administration, not the Democrats, that has described the defense increase as a mere "down payment" on much larger future sums.

Those future defense increases aren't in the C.B.O. projection, because the rules under which C.B.O. operates force it to project the budget as if current policy will remain unchanged. So the C.B.O. projection leaves out the budget-busters it knows are out there, such as Donald Rumsfeld's next installment and the cost of fixing the alternative minimum tax. Put those items in, and the picture is clear: the surplus is gone, and we won't see it again as long as the tax cut goes through as scheduled.

I'll turn in future columns to the reasons why this year's deficit is not a bad thing, but those future deficits -- which will be much larger than the C.B.O. projects -- are very bad things indeed.

But the important point for now involves honor and credibility. Mr. Bush promised not to dip into the Social Security surplus; he has broken that promise. Critics told you that would happen; they have been completely vindicated. Mr. Bush told you it wouldn't; he lied.

Originally published in The New York Times, 8.28.01