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National Deficit Down but Intragovernmental Loan Scam Continues

WASHINGTON - Surging revenues and a steady economy have led the White House to project that this year's federal budget deficit will drop to $333 billion, nearly $100 billion below earlier estimates. "We're ahead of projections now," President Bush said Wednesday. Bush said the improving deficit picture vindicated his stewardship of the economy and budget.

What would the headline have been if Democratic nominee John Kerry would have won the 2004 Presidential election. I imagine something like "Kerry Slashes Deficit in Record Time" with the President claiming his new economic policies made the difference.

This is not to say that the Bush administration deserves credit for the deficit reduction. The President’s ability to impact the economy in a significant manner is overstated by the media.

In addition, we are still going into debt at an alarming pace and continue to leave off that portion of the deficit borrowed from Social Security and other government funds [prior article]. We hear $333 billion but the books at the end of the year will probably reflect a figure that is 20-50% higher.

In fact, since Sept. 30, 2004, the National Debt held by the public has increased $233 billion, a figure in line with the published White House projections. However, the intragovernmental debt has increase by $228 billion (from 3.07 trillion to 3.3 trillion). Check the figures for yourself here.

This intragovernmental loan scam is not unique to Bush - every administration has reported the deficit in a similar manner. In fact, President Clinton claimed to have eliminated the deficit despite the fact that the national debt increased every year of his presidency due to intragovernmental debt.

The article quotes Bush, "These numbers indicate that we're going to cut the deficit in half faster than the year 2009 — so long as Congress holds the line on spending." Considering that the White House was off by 25% last year when it predicted a $427 billion deficit I’m not sure any projection out to 2009 is credible.

However, for what its worth I’m left with the good news that the increase in our national debt is not as bad as it could be.

Posted by tim at July 13, 2005 7:49 AM

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