Spending illusions

The next Congress – newly balanced and itching for a fight – will need a lot of help to avoid the bitterness that seems the inevitable legacy of this historically ugly election. Such help may at hand with a new and rosy surplus projection by the Congressional Budget Office.

The projected increase should be more than enough to soothe hurt feelings in Washington. The CBO estimates the surplus during the next 10 years in non-Social Security funds may be a full $1 trillion higher than the surplus that just a few weeks ago formed the basis of the presidential candidates’ spending and taxation plans.

The new estimate, however, is no balm for the rest of the country. Americans for whom fiscal prudence is not just a campaign slogan but a way of life no doubt recall how Congress’ pre-election spending spree made the candidates’ economic plans largely theoretical and essentially ensured that the next president will be forced to break promises to an unprecedented degree. The new estimate is every bit as enticing and just as much an illusion.

The obvious flaw in the estimate is that it is based upon the CBO’s assumption that the rate of economic growth in the next decade may be as much as 25-percent greater than previously thought. Such prosperity would be cause for celebration if there were some rational basis to expect it. There is not – nothing has happened in the economy during the last few months to suggest a change of that magnitude; in fact, Federal Reserve policy for the last 18 months has been designed specifically to avoid lurching. Just as the recent series of gradual interest-rate increases have not sent the economy tumbling, a series of decreases is not likely to ignite a boom, especially one that comes on top of the boom already forecast in the previous CBO estimate.

Don’t, however, blame CBO economists. Congressional rules governing CBO accounting practices require the reports that guide and justify federal spending decisions to look 10 years ahead – no less and, unfortunately, no more. For the last several years, then, while everyone knew about the Baby Boomers rushing toward retirement and its associated federal benefits of Social Security and Medicare, the impact was too far in the future to be factored into CBO reports; they can only be mentioned in footnotes and addenda. And no footnotes or addenda ever stopped a politician with a program, a project or tax cut to push.

It is silly that the office created to provide Congress with nonpartisan assessment of the nation’s financial prospects is prohibited from including such vital information and true facts in its reports. Even sillier is this: the CBO is required to include in its projections the current Congress’ promises that future Congresses will exercise more fiscal discipline than it could muster. But at least there’s this -with the collision between baby boomers and retirement now about 12 years away, future Congresses will have to.