Some members of Congress had the audacity to criticize the troubled savings and loan industry recently for "smoke and mirrors" accounting that hid billions of dollars in losses.
That's an ironic charge since the same technique is being used by Congress and the administration to make the federal deficit look smaller than it really is.With much fanfare, the White House and Congress announced a budget plan this week that would supposedly trim the deficit by $30 billion in fiscal 1990, bringing it down to "only" $100 billion.
Yet a big chunk of the plan is made up of one-shot savings and accounting gimmicks that don't really reduce the deficit, but only make it look smaller on paper. In addition, the budget is based on economic assumptions that are widely regarded as too optimistic.
The deficit plan includes $14 billion in new income from taxes and fees, and sale of assets, but the details of those revenue sources were left unidentified, to be worked out later, if ever.
Apparently the administration and Congress don't really care. Their first priority is to simply juggle the figures to meet Gramm-Rudman deficit reduction targets and avoid across-the-board budget cuts required if those targets are not met.
Any realistic budget decisions have simply been pushed back to next year - the same thing that was done last year under the excuse that it was an election year and such tough decisions were not possible. It's beginning to look like no year will be the right one for hard budget choices
Some of the smoke-and-mirrors budget-making steps include:
- Paying $1 billion in farm subsidies early so they show up in the 1989 deficit instead of 1990. Since when is over-spending now better than over-spending later?
- Selling about $6 billion worth of government assets for a one-time windfall.
- Taking the Postal Service "off-budget," thus knocking another $2 billion from the books. Off-budget is just a way of saying, "We owe the money but we won't count it."
- Making an accounting change in the food stamp program to "save" another $500 million, doing the same thing for $600 million in a federal retirement program, and claiming $2 billion of savings in Medicare by extending existing cost controls.
- The budget plan even claims a $100 million saving because Congress earlier this year rejected a pay raise for itself. How much might have been saved if an even larger raise had been turned down? Just think, if members had refused a big enough raise, they could have balanced the budget according to the school of thought that now seems to prevail in Washington.
This is patently ridiculous. If Washington doesn't stop playing such tricks and start coming to grips with financial realities, it will accomplish nothing except to push back the frontiers of fiscal hypocrisy.