The disappearing trillion

By David S. Broder Published:

By Davd S. Broder

WASHINGTON -- Back when the late John Mitchell was attorney general in the Nixon administration, he advised reporters, Watch what we do, not what we say.

That advice certainly applies to the Bush administration as well. The latest bit of evidence to come to my attention is what you might think of as the Case of the Disappearing Trillion.

The tip-off arrived last week in an e-mail from the Center on Budget and Policy Priorities. It is a Washington research organization with a distinctly liberal point of view but a deserved reputation for accuracy in its figures.

In this case, the information the center cites was confirmed to me -- though with a very different interpretation -- by officials of the White House Office of Management and Budget (OMB). It involves the treatment in the budget of the Bush tax cuts passed by Congress in 2001 and 2003.

Those rate reductions, when enacted, had expiration dates of 2010, designed to keep their long-term costs within the limits set by the budget resolutions of which they were a part. The president is urging Congress to make those tax cuts permanent, but his proposal is controversial and has not yet passed.

This year, however, the budget the president submitted on Feb. 6 simply assumes that the tax cuts have been made permanent -- and thus includes them in the baseline for all future years.

The effect, according to the centers analysis, is that legislation to make these tax cuts permanent will be scored as having no cost whatsoever.

In fact, this analysis says, The administrations proposal, by changing the rules after the 2001 and 2003 tax cuts were enacted but before they are extended, would ensure that the cost of continuing the tax cuts in the years after the current sunset dates would never be counted. The costs in those years were not counted when the tax cuts were first enacted. ... Now, the administration is proposing that the tax cuts for those years also be ignored when the tax cuts are extended. To fail ever to count the cost of the tax cuts in the years after the sunset dates ... would represent one of the largest and most flagrant budget gimmicks in recent memory.

How large? The Congressional Budget Office scores the cost of making these tax cuts permanent at $1.6 trillion over the next decade. The administrations estimate is somewhat less -- $1.35 trillion.

But, the folks at OMB told me, its wrong to claim that they are hiding that cost. They told me to get out my copy of the budget, and told me right where to look. And sure enough on Column 8, Line 11 of Table S-7 on page 324 of the green-bordered book, I found the very figure they had cited -- $1.35 trillion.

The heading on the chart of Effects of Proposals on Receipts reads: Make Permanent Certain Tax Cuts Enacted in 2001 and 2003 (assumed in the baseline). Those last four words conceal more than a trillion dollars worth of lost revenue.

But that is not all, my OMB friends argued. If you turn to the separate 396-page volume called Analytical Perspectives, as any conscientious citizen should do, on Page 215 and again on Page 360, you will also find acknowledgement of the change in the bookkeeping. The key passage says, without elaboration, that the 2001 Act and 2003 Act provisions were not intended to be temporary, and not extending them in the baseline raises inappropriate procedural roadblocks to extending them at current rates.

That sentence must be parsed. The basis for saying those two tax cuts were not intended to be temporary is that when Bush recommended them to Congress, he said they should be permanent. But Congress put time limits on them -- which Bush now finds it inconvenient to acknowledge.

And those inappropriate procedural road blocks to extending them? Translation: If you tell Congress the cost of making those tax cuts permanent, lawmakers might have second thoughts about doing it.

In fact, it turns out that Bush tried to get Congress to go along with this bookkeeping switch back in 2004, actually submitting legislation to authorize the change. The House refused to accept it. He put it back in his budget last year, with the same result. But this year hes back again, with more urgency, as he presses the case to make these tax cuts permanent.

Now that you know exactly how easy it is to find this all explained in the budget, Im sure you are as reassured as I am about the candor of this administration.

2006, Washington Post Writers Group

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