Tuesday, July 30, 2002
"Clinton," "Honest" in same paragraph: Yes, it's another Paul Krugman column. I'll let some bloggers from New Jersey, Tennesee and Alabama address some of the claims of mismanagement that Krugman alleges took place in those states.
It must be his training in business and economics, but Krugman repeatedly assumes in his attacks against President (and then-Governor) Bush and the governors of other states, like those mentioned in todays columns, that the governor or president has absolute power. It's almost as if Congress and the state legislatures don't really exist -- or maybe Krugman thinks they're like the board of directors of many major corporations today -- a rubber stamp.
What I do want to address is Krugman's continuing claim that Clinton was a "responsible adult" when it came to "running" the United States economy.
And the federal budget was in pretty good shape because the Clinton administration, unlike state governments, behaved responsibly. Budget projections were honest ? if anything, too cautious ? and boom-year surpluses were used to reduce debt.
Well, let's test the veracity of those claims.
What exactly is an honest budget projection? The truth is that all budget projections are is guesswork. The Center on Budget and Policy Priorities produced a February 2001 report which basically said the OMB, CBO and GAO analyses are, to quote Henry Ford: "Bunk."
All projections are wrong, but the question is by how much. CBO found that, on average, its own projections of the budget deficit or surplus for the coming fiscal year have been too high or too low by an average of 1.1 percent of the economy (Gross Domestic Product, or GDP). Its projections five years out have been too high or low by an average of 3.1 percent of GDP. Therefore, if CBO's current projection is no better or worse than the its past projections, the unified budget surplus CBO projects for 2006 could be understated or overstated by $412 billion (3.1 percent of projected GDP in 2006).
Well, that's budget projections now. What about then?
According to the National Center for Policy Analysis:
In 1995, the first year in which the budget contained estimates for FY2001, President Bill Clinton expected a budget DEFICIT of $193 billion this year.
In his last budget, in January 2001, Clinton put the surplus at $256 billion, subsequently upped to $281 billion by the incoming Bush Administration.
As far as the contention that Clinton's budget number were purposely conservative -- that's generally considered a true statement. But why were the budget numbers so conservative. Is it a possibility that huge surpluses would spur calls for a tax cut? If the budget numbers can be kept sufficiently low, Clinton can resist calls for a tax cut.
As far as "boom-year surpluses" being used to reduce debt -- well, that's partly true. Some of the surplus went to debt-reduction -- and "SURPRISE" some of it went to new spending.
House Budget Chairman John Kasich (R-Ohio) accused the administration of reverting back to a dangerous tax-and-spend style. "We need to have a smaller federal government, we need to have less taxes, we don't need to keep adding to spending. Now when the public hears that the president at the State of the Union said, 'the era of big government is over,' yet we are going to have $125 to $150 billion worth of new programs, they are not going to believe this. They are going to say, 'They are back at it again,'" Kasich said.
And that's the rest of the story.