To Tell the Truth

Posted: Jan 21, 2004 12:00 AM
Americans shell out more than $2 trillion each year to keep our federal government running. The least we should expect in return is honesty.

Alas, Washington officials aren?t telling the truth about how much they?ve spent, are currently spending or plan to spend. Consider the omnibus spending bill the Senate will consider later this month.

The House of Representatives has already passed this measure. Lawmakers claim it would increase federal discretionary spending?what congress spends above and beyond what it must spend on mandatory programs such as Social Security and Medicare?by ?only? 3 percent.

Even that seems excessive. That would be like your family increasing spending 3 percent after the mortgage and car payments. Few among us could afford that.

Still, even the 3 percent estimate is deceptive. As my Heritage Foundation colleague
Brian Riedl explained in a recent study, if the House bill passes the Senate, it would actually increase discretionary spending by 9 percent -- three times what lawmakers claim.

That?s because lawmakers have used bookkeeping tricks to reach their 3 percent growth figure.

It started last spring, when they set aside $79.2 billion for the war in Iraq. A good chunk of that money will be spent this year but credited to last year?s account. That helps lawmakers in two ways: They get to spend more this year, but since much of the spending gets credited to last year (even though it didn?t happen then), they can claim year-to-year spending isn?t increasing all that much.

It?s sort of like writing a bunch of checks on New Year?s Eve?you get to date them 2003, even though they won?t be cashed until 2004. Your bank balance isn?t affected by when the check was written. What matters is when the check is cashed. And when Congress writes a bunch of checks, whether for mandatory or ?discretionary? programs, the money all comes out of the same account, made up of our tax dollars.

Iraqi spending isn?t the only accounting shell game lawmakers are playing. As Riedl put it, ?Congress reclassified $2.2 billion of 2004 education spending into the 2003 spending totals. This reversed last year?s decision, when lawmakers interested in keeping the 2003 budget numbers artificially low had reclassified this amount into the 2004 spending totals.?

These kinds of fancy (some would say slippery) accounting practices, make it almost impossible to determine how much lawmakers are actually spending.

When the executives at Enron did something shady, Congress passed the Sarbanes-Oxley bill. Today, a senior partner at an accounting firm would be arrested if he tried to boost stock prices with bookkeeping tricks. Yet, Congress itself is playing accounting games, pretending the money they are spending has appeared out of nowhere.

This can?t go on forever, of course. Just last month the non-partisan Congressional Budget Office cautioned that ?substantial reductions in the projected growth of spending or a sizeable increase in taxes as a share of the economy -- or both -- will probably be necessary to provide a significant likelihood of fiscal stability in the coming decades.?

Of course, we can?t afford to start raising taxes. Our economic models show that doing so would slow the economy and could even plunge us back into recession. So the only workable solution is to start cutting spending, and to do so right away.

There?s plenty of wasteful spending in the 2004 budget. Lawmakers could easily trim spending 3 percent this year, instead of increasing it 9 percent. But first we?d need Congress to show some honesty in the budget process. Sadly, we can?t count on it.