The federal deficit for the 2006 budget year was widely reported to
be $247.7 billion. That figure, however, was based upon the cash system
of accounting. When one looks into the 166-page "Financial Report
of the United States Government,” one finds that, under the accrual
method of accounting, the deficit for 2006 totaled $449.5 billion--81
percent more than the $247.7 billion. Under the accrual method, expenses
are recorded when they are incurred, rather than when they
are paid, thus raising costs for liabilities such as pensions and health
insurance.
Given a $247.7 billion deficit in 2006, the government spent 10 percent,
or $825 per taxpayer, more than it collected and thus had to borrow
and incur more expenses on interest. The Congressional Budget Office
discovered that legislation enacted over the last six years has increased
the national debt by $2.3 trillion, including $633 billion in interest
payments alone. In 2006, Uncle Sam spent $1 out of every $12 on interest
payments, or $227 billion. That is more than all the federal outlays
for education, housing, veterans’ benefits, and environmental
protection combined. Presently the gross national debt stands at $8.6
trillion. It is owed by the General Fund which is financed from income
tax revenues. Half of the General Fund is needed to pay for the military
and for interest on debt.
Both President Bush and Vice President Cheney have frequently claimed
that tax cuts pay for themselves. Yet, the administration’s own
Treasury Department determined that tax cuts would offset no more than
10 percent of their cost. Actually, half of the budget shortfalls since
2001, amounting to $1.2 trillion, were caused by the tax cuts.
While federal revenues have grown over the current business cycle,
real per-capita revenues have returned only to the level they reached
more than five years ago. According to the nonpartisan Center for Budget
and Policy Priorities (CBPP), much of the unanticipated revenue growth
comes from exceptionally strong corporate profits which have increased
more rapidly during the current economic expansion than during any
other comparable post-World War II period. Wages and salaries, however,
amounted to an unusually small share of income growth.
The CBPP projects that if the President's tax cuts are made permanent
and the alternative minimum tax for high-income taxpayers is extended,
annual deficits will average about $350 billion for the next ten years
until 2016, even if the costs of the wars in Iraq and Afghanistan decline
substantially. In spite of these nonpartisan projections, Mr. Bush--who
never proposed a balanced budget and never vetoed a spending bill--recently
promised to submit a plan to balance the federal budget by 2012.
The biggest burden on the American taxpayer is not the few billion
dollars annually earmarked by Congress for special domestic projects,
but rather the $360 billion so far wasted by the Bush administration
for the deficit-financed war in Iraq. Since there is no end in sight
to the President’s military projects on the other side of the
globe, it is impossible to predict whether one or two trillion dollars
more will have to be borrowed. According to the CBPP, “The budget
outlook for the next decade is bleak.”
Winslow Wheeler of the Center for Defense Information reported that “the
Congressional Budget Office has difficulty obtaining data on war obligations,
the supplemental requests do not provide enough detail to determine
how war funds were obligated, and the Department of Defense is deficient
in its financial-management systems, relies heavily on estimates versus
actual costs, and provides little documentation.”
In view of the alarming increase in the national debt, it is high time
for Congress to return to fiscal responsibility by mandating pay-as-you-go
budgeting and pay, rather than borrow, for tax cuts and entitlement
increases. We need to settle the nation’s bills now and not pass
them along to the next generation.