Put the Truth in Budgeting
PETERSON, WALLACE C.
PUT THE TRUTH IN BUDGETING WALLACE C. PETERSON It is lime for a Truth in Budgeting Act. We already have a Truth in Lending Act designed to keep lenders honest by requiring them to tell the...
...If we take away the trust fund surpluses ($52.8 billion), the deficit jumps to $204.8 billion—it is bigger, not smaller, thon the real 1988 deficit...
...Isn't that what the Gramm-Rudman-Hollings Act is all about...
...But hold on...
...If a fund, like the Social Security Trust Fund, is generating a sizable surplus, then by all means bring it into the overall budget...
...It's time for ? Truth in Budgeting Act...
...There are at least a dozen of them, of which the best-known are those for Social Security and Medicare, highway building, and airport and airway development...
...The answer to both questions is No...
...Doesn't the government do that now...
...There are basically two ways this is done...
...Most of the time in the not-too-distant past, the income and outgo from the trust funds were roughly in balance...
...Whether or not Americans want to do anything about the deficit is another matter...
...The government is not "cooking the books," using phony figures to describe what is going on...
...But it is being deceptive, employing "creative" accounting to tell American citizens something less than the whole truth about the real size of the deficit...
...ATruth in Budgeting law could keep the government honest by requiring it to tell Americans how much the government spends, how much it collects in taxes, and the real difference between the two...
...Again the deficit will look better...
...Here is where the "on budget, off budget" concepts enter the picture...
...A drop is advertised for 1990, but don't bet on it...
...Once we strip away the fancy rhetoric, we find that these funds are simply a device to enable the government to earmark money for particular purposes...
...In recent years the "biggies"—Social Security and Medicare, highways, airports —have been running impressive surpluses...
...The smallest real deficit the government has had since 1983 was $169.3 billion in 1987...
...This makes the deficit look better...
...We already have a Truth in Lending Act designed to keep lenders honest by requiring them to tell the consumer how much he or she is really paying in interest...
...Let's look first at the Trust Funds...
...At the very least, however, we ought to have straightforward figures, not manipulated ones that make the folk in Washington look more attractive...
...Usually the activities to be financed in connection with a particularfund are paid for by a special tax, such as the payroll tax for Social Security, the gasoline tax for highways, or the taxes on airplane tickets and aviation fuel for airport construction...
...On the other hand, if a trust fund happens to be running a deficit, then leave it "off budget...
...One is through the growing use of the so-called Trust Funds that the government administers, the other is through "on budget" and "off budget" accounting techniques...
...To see how this works, let's look at the numbers for 1989...
...Wallace C. Peterson is a professor of economics at the University of Nebraska...
...By law the government is required to "invest" the surpluses in Federal securities, so money flowing into the funds but not spent immediately for the earmarked purpose winds up in the Treasury, available forspending anyway the government sees fit...
...The publicized deficit, the one that supposedly met the GrammRudman-Hollings targets, was $152 billion—down slightly from the prior year...
...Not now...
...The next two real deficits have gone up, not down...
Vol. 73 • July 1990 • No. 9
