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How to Read a Bush Budget -- A Rerun

Last year at about this time, I cranked out a blog post in about half an hour very late at night that appears to have been the most useful of anything I've written. It was an inventory of all the basic little dishonesties that go into the president's budget and a skeptical readers' guide to the inevitably gullible press stories about the budget. I noticed someone make reference to it the other day in a comment on someone else's blog, so I thought maybe it's time to bring it out again. I could update the examples based on this year, but there's really no need to. It's the same story, different year.

I should emphasize a point I should have made more strongly a year ago: These are the dishonesties in every modern president's budget. Some of them have reached a level of absurdity in the Bush world, and there are also special deceits in the current administration that would never have occurred to even the more I-am-not-a-crook occupants of the White House. Most notable among these is the decision to base its plan to "cut the deficit in half" on an inflated estimate of what the deficit would be last year, rather than what it actually was, thus making it easier to cut in half. And then, of course, there are the multi-trillion dollar dishonesties connected with Social Security.

But this is a guide to the little billion-here-billion-there scams, as well as real budget cuts, that will litter the newspapers between now and the formal submission of the budget.


How to Read the Bush Budget (from January 2004)

The strategic leaks have begun about what will be in the President's budget when it appears in a month or so. This is a period when the White House will use every day to create managed news on some aspect of the budget or the State of the Union address.

From today's Times story, (Bush's Budget for 2005 Seeks to Rein In Domestic Costs), it's obvious that the topline story the administration wants to put out is just that: reining in domestic spending. This is a way of appealing to their own conservative base that is upset about the deficit and lack of restraint, and also a way of showing, at least on paper, that they can afford some of the additional spending, mostly through the tax code, that they will propose.

All I've read so far is this story, so I don't have many specifics to go on (neither does anyone else). But as this month of strategic leaks begins, it's time for a reminder that presidential budgets are political documents -- they are not actually guides to what the government will really spend in the next fiscal year. And to understand this one as a political document, here is a brief guide to the four different kinds of cuts that will be in play.

First, there will be some real cuts to programs whose congressional defenders are out of power and whose beneficiaries are not swing voters. An example from the Times story is probably the the President's proposal to restrict the number of housing vouchers available through local housing authorities. Twenty-three years ago, Reagan's budget director David Stockman drew a distinction between "weak claims" and "weak clients," promising to attack weak claims and protect the politically weak who had a strong claim to help from the government. Stockman didn't exactly keep that promise, but still, we look back at the Reagan years nostalgically now. There is no longer even a pretense of protecting those with a strong claim; this is all about going after those too politically weak to defend themselves, whether they need housing or not.

But these programs have all been cut plenty, and there isn't much more room to cut the weak without running into what they want to avoid, which is, according to the article, "alienating politically influential constituencies." So beyond the real cuts, the tricks is to find things that appear to be cuts, sufficient to make the budget appear reasonably close to balance, while also paying for the additional spending, mostly through the tax code, that the President will propose. The cuts and the new spending have to add up, but just for one day.

So the second type of "cut" in the budget will be proposals for cuts that will simply never happen and everyone knows it. No one even gets that worked up when the president proposes them. This category usually comprises the largest portion of the cuts in any president's budget. Here the secret is to go after strong clients, clients so strong that everyone knows no one will ever touch them. It's not clear from this first article which of the cuts fall into this category, but they will not be hard to spot in the actual budget. For example, most years presidents propose to cut Impact Aid, an education fund for school districts that have lots of federal employees or federal land exempt from local taxes. It's a wasteful program, but there are tens of thousands of Impact Aid school districts, their lobby is well-organized and relentless, and cutting it just isn't going to happen. But if you're OMB, and you need your numbers to add up today, there's no reason not to put it in. It saves a few hundred million on paper, and your job is done. Proposing to cut a defense project whose prime sponsor chairs the defense appropriations subcommittee is another good way to get some savings on paper. And the affected congressman probably doesn't even mind. It gives him a way to announce that he "saved" the project. The proposed cuts to veterans benefits mentioned in the Times probably fall in this category.

Third, and a variation on the second, is the cut that the administration will itself reverse with great fanfare. Here's how it works: You propose some cut in the budget. It helps your numbers add up, which is to say, it offsets the cost of your tax cut or your spending on such urgent national needs as "encouraging sexual abstinence among teenagers." But weeks after the budget is announced, you grandly announce that you have reconsidered, and will put the matter off for further study. Everyone's happy. And you're not required to go back and find another cut to replace the first one. The Times article mentions one cut on which this process seems to have already begun: it reports that "the Pentagon has been considering a new proposal to increase pharmacy co-payments for [military] retirees," but also that the indignant Military Officers Association believed it had won a concession from the Pentagon to study the issue for another year. Sometimes you don't judge this right, and have to withdraw the proposal even before you use it to make your numbers.

Finally, there is the kind of gimmick that can be used to reduce apparent spending on entitlement programs, which is where the real money is. Here the trick is to propose some sort of inoffensive policy change that might lead to a chain of events that would reduce spending on some federal program. And then get the Congressional Budget Office to "score" the change as producing a budget savings. Whether it actually does or not is a matter for another day. There's a great example of this in the Times story:

Federal officials said they would also require families seeking housing aid to help the government obtain more accurate information on their earnings. As a condition of receiving aid, families would have to consent to the disclosure of income data reported to a national directory of newly hired employees. The directory was created under a 1996 law to help enforce child-support obligations.

(As a congressional staffer, I drafted the bill that created that directory of new hires, so this is familiar territory.) I'm sure this is a perfectly good idea, and it's hard to argue with getting accurate information about people's eligibility for programs. Some analyst at the Congressional Budget Office is going to be handed this proposal and told to score it. "I don't know" is not an option, so he will produce a number for the savings this provision will produce. But what if the income information reported through the directory doesn't really change the criteria of who is eligible? What if other people with low incomes appear to replace those who are disqualified through use of the database? What if it takes longer than expected to add income data into the database, and set up privacy protections? And on and on. The connection between the small and inoffensive act of including income in the database, and actually reducing public housing costs, is rather tenuous. But as long as you can get the number you want from CBO, the reality doesn't matter one bit.

If you can spot these gimmicks, you might be protected from the baloney that will fall from the sky every day from now until the budget is released at the beginning of February.

Posted by Mark Schmitt on January 21, 2005 | Permalink


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"I should emphasize a point I should have made more strongly a year ago: These are the dishonesties in every modern president's budget."

My personal favorite was when Dick Darman (Bush I's OMB director) devoted most of his introduction to the FY 89 budget to a long rant against the evils of current services budgeting, then proceeded to propose a zero baseline for every agency in the government, EXCEPT the Pentagon, which got current services plus 2%. Stockman's explanation of the origins of the infamous "magic asterick" is also pretty funny, if you like absurdist humor.

I will argue, however, that the Clinton budgets were, relatively speaking, honest with numbers, even if the rhetoric wasn't always.

Posted by: Billmon | Jan 21, 2005 8:21:28 PM

I know you'd prefer to just play the material off your new album, but a lot of us come to hear the hits, so thanks.

Posted by: Delicious Pundit | Jan 22, 2005 12:58:47 AM

Thanks. This is very helpful information.

Posted by: Asheesh Siddique | Jan 25, 2005 7:44:07 AM

Off topic, but I think you will be interested in this book


on darwinism in institutional economics.

Posted by: Stirling Newberry | Jan 28, 2005 4:25:12 AM

Budget cuts education programs but connected corporation continue to benefit.

For example:

Manufacturing a weak integrity argument to justify free speech violations...

It started in a federal Court in Pittsburgh and has moved quickly to Colorado Universtity and Iraq. It's a stretch, but political hacks have besieged first amendment free speech protections.

They attempt to combine a provacative essay comparing victims of 911 with Nazi criminals and an emotionally charged General's comments on war, questioning whether such is permissible when the comments may cause damaged to an institution's integrity.

Churchill was a relatively unknown professor at the University of Colorado at Boulder, until Bill O'Reilly reported a piece about him and requested his audience to make a fuss.

Why did O'Reilly target Ward Churchill?

Because in a Pittsburgh federal court a well connected corporate crony has suggested the novice argument, and the legal question is waddling without any legal precedent in need of an activist court.

Thus the current unexplained campaign against “free speech” appears to be little more than a Madison Avenue scheme to control any discussion of the President’s desire to privatize higher education.

That is, a number of for-profit colleges have faced inquiries, lawsuits and other actions calling into question the way they inflate enrollment to mislead/increase the value of their parent company’s stock.

In the last year, the Career Education Corporation of Hoffman Estates, Ill., has faced lawsuits, from shareholders and students, contending that, among other things, its colleges have inflated enrollment numbers. In addition, F.B.I. agents raided 10 campuses run by ITT Educational Services of Carmel, Ind., looking for similar problems.

But in a Pittsburgh federal court there is a bigger can of worms.

Kaplan, Inc., is wholly own by the Washington Post Company. For-profit postsecondary education has turned the company around and individuals far more powerful than Martha Steward have made millions. However, there is a nominal “Watergate” styled federal court proceeding (scandal) involving campus “free speech,” that could expose the administration’s violation of public trust

In short, I provided the S.E.C., Department of Education, and federal courts information that appears to prove Kaplan inflated the Concord School of Law enrollment, telling investors that the “flagship” of its higher education division has as many as 600 to 1000 or more students.

I also provided evidence to prove apparent violations of sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder.

However, in an attempt to protect important icons of the Washington and New York financial/political circle, hacks have been hired to stir a free speech controversy.

But even Stan Chess (En Passant http://lawtv.typepad.com/en_passant/2004/a_question_of_l.html) innocently questioned the obvious - a clear violation of the federal securities laws.

“Kaplan’s Concord School of Law says it’s one of the largest law schools in the country, yet for each administration only about 25 of its graduates sit for the bar exam. What happens to the hundreds of other students in each class?”

What are you willing to do?

Posted by: kstreetfriend | Feb 7, 2005 4:14:38 PM

As a supplement, please note the following.

Introduction: In a Pittsburgh federal court a well connected corporate crony has suggested a novice "free speech" argument and the legal question is waddling without any legal precedent in need of an activist court.

Creating the free speech crisis is a "red herring" to draw attention away from the plain and clear evidence of the Pittsburgh Federal Court proceeding (best example of the corruption).

Ward Churchill was a relatively unknown professor at the University of Colorado at Boulder, until Bill O'Reilly reported a piece about him and requested his audience to make a fuss. His provacative essay was written more than three years ago.

The connection:

Ms. ElizaBETH Hoffman is the President of Colorado University. Go to http://www.hss.caltech.edu/Photos/Alumni/HoffmanElizabeth.jpg and/or http://www.colorado.edu/Carillon/volume47/images/1.jpg to view her picture.

Ms. BETH (Rue) Kotcella Buchanan is the U.S. Attorney for Western Pennsylvania. Go to http://www.pittsburghlive.com/photos/2002-02-26/PH_2002-02-26_iattorney-b.jpg to view her picture.

Background: I attended undergraduate school with Ms. Buchanan. At the Pennsylvania University I succesfully re-established (and served as president) the pre-law society and graduated in 1983. Here Ms. Buchanan would become interested in the law. She graduated after me in 1984.

In addition, I was listed in Whose Who Among American Colleges and Universities, and given the 1983 Progressive Leadership Award, and 1983 Distinguished Honor Award.

Before joining the U.S. Attorney's Office in 1988 Ms. Buchanan secured a clerkship with U.S. District Judge Maurice B. Cohill, Jr.

Judge Cohill is the Western District Judge responsible for enforcing a consent decree governing United States of America v. Port Authority of Allegheny County, Docket No. 91-CV-1694. However, he turned a blind eye to my case Docket No. 95-CV-00339. I had organized (secure a union) a political sub-division.

During that same year members of the state judiciary were charged and convicted for violating my civil right (fixing cases against me in retaliation of Docket No. 95-CV-00339).

In a case related to Docket No. 95-CV-00339, an alleged EEOC investigative file was prematurely purged and the U.S. Department of Labor refused deliver its copy despite a subpoena, FOIA Request and Motion to Compel. See Docket No. 98-CV-230. That is, the Department of Labor closed its investigation based on the alleged EEOC decision. But, I had proffered to the court EEOC's writings that demonstrated no investigation was conducted.

Discussion: At issue is the reauthorization of the Higher Education Act. The Bush administration is attempting to change the 50 percent rule. That is, financial aid is available for postsecondary education provided at a college or university that has at least 50 percent of its students campus-based.

Corporations have paid Senators and Congress men and women well, attempting to change the 50 percent rule. The rule is necessary to prevent fraud (absentee students and/or diploma mills).

It appears at least three corporations have abused the administration's Distance Education Demonstration that wavied the 50 percent rule.

The Career Education Corporation of Hoffman Estates, Ill., has faced lawsuits, from shareholders and students, contending that, among other things, its colleges have inflated enrollment numbers. In addition, F.B.I. agents raided 10 campuses run by ITT Educational Services of Carmel, Ind., looking for similar problems.

Nonetheless, the S.E.C. and FBI investigation is just spin to make it appear the administration is doing its job.

The Pittsburgh case involves Kaplan, Inc., who is wholly own by the Washington Post Company. For-profit postsecondary education has turned the company around. Individuals far more powerful than Martha Steward have made millions.

Thus the current unexplained campaign against “free speech” appears to be little more than another Madison Avenue scheme to control any discussion.

Posted by: kstreetfriend | Feb 12, 2005 2:33:16 AM

He prepared meals for two U.S. presidents over 11 years.

The White House chef, Walter Scheib, has been fired. He told The New York Times, that his ouster followed the appointment of a new social secretary to serve the first family.

"We've been trying to find a way to satisfy the first lady's stylistic requirements," Scheib, 50, told the paper in a telephone interview, "and it has been difficult. Basically I was not successful in my attempt."

Scheib, who was hired 11 years ago by then first lady Hillary Clinton, said he was asked to resign a few weeks after White House social secretary Cathy Fenton was succeeded by Lea Berman, the wife of a wealthy contributor to the Republican Party.

Before working at the White House Mr. Scheib was executive chef at the Greenbriar Resort (Virginia). On or about the same time as his firing the Ward Churchill "free speech" controversy gained momentum. I did submit comments on several blogs identifying the free speech crisis as connected to a Pittsburgh federal court. In fact, I'd called the Pittsburgh federal court case a nominal free speech matter that has "Watergate" problems. That is, too many coincidental links to bigger issues.

For example:

To follow through on a promise President Bush re-nominated 12 candidates for federal appeals court seats whose confirmations were blocked by Senate Democrats during his first term. The re-nomination of the judicial candidates ignited the partisan battle with Senate Democrats.

The battle over the makeup of the federal bench is an important concern for conservative evangelicals at the core of the president's political base. They see judges as crucial to their efforts to end abortion, allow for broader religious presence in daily life and limit the influence of the federal government. Senate Democrates will attempt to block those re-nominated.

Although not verified, my sources identify Raymond Scheib, a former Pittsburgh judge involved in a "case-fixing" scandal, as a relative (sibling or inlaw). That is, the executive chef working in the White House is possibly linked to the same judge and scandal involving the Pennsylvania judiciary where individuals were charged and convicted for violating my civil rights (fixing cases against me).

Note: The chef was hired on or about the same time that I started having unexplained difficulties with the federal court in Western Pennsylvania.

See vls.law.villanova.edu/locator/3d/Nov2002/003466.pdf

See also www.cjdpa.org/decisions/fulltext/jd97-02-01-op.html

Posted by: kstreetfriend | Feb 17, 2005 8:58:47 PM

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