Fudging the Numbers

Last week, while the president was spinning tall tales of steady progress in New Orleans and in Iraq, his budget office deputy was explaining away the latest rise in the federal deficit—now projected to rise over $400 billion this year. This was just a temporary setback, the Office of Management and Budget’s Joel Kaplan said, caused mostly by unforeseen spending on Katrina. He expressed hope that the deficit would soon be back on its “downward trajectory,” on track to keep the president’s promise of reducing the deficit by half by 2009.

Meanwhile, the chair of the Senate Budget Committee from the president’s own party went off message when he referred to an “expected increase” in the budget deficit. It would be hard—outside of Hollywood and the White House—to see anything else, given the plans for yet another round of tax cuts and for victory in Iraq.

It is an extreme oddity of our budget process that military spending is computed in a way that excludes spending on the wars we are currently fighting. In its latest “Budget and Economic Outlook” projection for the next 10 years, the nonpartisan Congressional Budget Office (CBO) shows what happens when you factor those costs in. They assume the scenario the Defense Department adheres to most often: troop levels in Iraq remaining steady at about 138,000 through the coming year and then declining to about 50,000 for the foreseeable future. If the costs of that deployment are added to the regular military budget, according to the CBO, from 2006 to 2015 the total deficit will rise from $855 billion to $1.4 trillion. And at the end of that period, our public debt will be absorbing a whopping 32 percent of our GDP. That’s like bringing home a $40,000 salary, and spending a third of it paying the interest on your credit card.

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