Creative accounting

It’s budget season, and there’s plenty of smoke and mirrors being used by both parties. 

 President Obama says his new budget request for fiscal 2012 would reduce the deficit by $1.1 trillion over 10 years. Obama is not the first president to make bold claims about what will happen 10 years into the future if Congress adopts his budget. And he won’t be the last.

ADVERTISEMENT
 Of course, Obama won’t be president in 10 years, and the next president(s) will not just rubber-stamp what No. 44 outlined this week.

There are proposals in Obama’s budget that Congress will surely reject, including a scaled-back version of a controversial provision in the healthcare reform law.

Democrats and Republicans have attacked the part of the law that requires businesses to report to the IRS annual purchases of goods and services of more than $600 from each vendor. The president’s new blueprint would scrap the mandate for goods but retain it for services.

But the truth is that Congress is poised to eradicate the entire provision, known as the 1099 requirement, so Obama can claim to be saving $10 billion, though the money will not actually be saved.

Republicans blasted the budget request as gimmicky, though the House GOP has been playing some accounting games itself.

When they first unveiled their budget plan for the remainder of this fiscal year, House Republican officials hailed $74 billion in cuts. But that number didn’t represent actual cuts; it was the figure they arrived at by comparison with what Obama had requested for 2011 — a headline number based on another headline number, neither of which was made real by legislation.

Conservatives balked, saying the real cut of $32 billion that this represented did not square with the House GOP’s “Pledge to America” to cut spending by $100 billion in the first year alone.

So Republican leaders unveiled a revamped spending measure that they say got them to the $100 billion cut, but again it was only $100 billion compared to Obama’s 2011 request, not $100 billion less than actual spending. The real figure is around $40 billion less.

Pressed on the matter, Republican leaders have explained they used Obama’s request as a marker because congressional Democrats didn’t adopt a budget last year. That is true, but it’s also true that when the “Pledge” was crafted, everyone on Capitol Hill was aware that Democrats were not going to adopt a budget. 

Savings should be counted as savings, and the real marker that should be used is simple: How much less money is the federal government spending?

Simplicity in the budget debate is always elusive, and both ends of Pennsylvania Avenue are guilty of using numbers that are confusing, to put it no more strongly.