Debt and the Bush budgets

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According to the Bush administration's fiscal 2008 budget blueprint, the unified budget deficit of $248 billion in fiscal 2006 will decrease to $244 billion in 2007 and $239 billion in 2008. Then the unrealistic assumptions kick in. For example, the budget plan assumes that the costs of the war on terror will decline from $163 billion in budget authority in 2007 to $142 billion in 2008 to $50 billion in 2009 to zero in 2010, 2011 and 2012. It also assumes that the alternative minimum tax will be imposed on tens of millions of middle-class and upper-middle-class families beginning in 2008 and extending indefinitely thereafter. Combined with numerous other unrealistic assumptions, the Bush plan then projects that the deficit will decline to $187 billion in 2009, $94 billion in 2010 and $54 billion in 2011 before achieving a unified budget surplus of $61 billion in 2012.

Even then, such an achievement would be completely overwhelmed by an intervening explosion in the national debt. As recent history has demonstrated, the yearly change in the national debt bears little relationship to annual unified budget deficits. For example, while the unified budget deficit totaled $158 billion in 2002, $378 billion in 2003 and $413 billion in 2004, the national debt totaled $429 billion (2002), $562 billion (2003) and $595 billion (2004). That's because the gross federal debt (i.e., the national debt), unlike the federal debt held by the public (which the Bush administration emphasizes), appropriately includes the Treasury bonds in the Social Security and other government trust funds.

Moreover, while the Bush administration has been taking victory laps as the unified budget deficit declined from $413 billion in 2004 to $318 billion in 2005 and $248 billion in 2006, the annual increase in the national debt barely changed. The national debt soared by $595 billion in 2004, $551 billion in 2005 and $546 billion in 2006. To put a fine point on the matter, the national debt has increased from $5.728 trillion on Jan. 20, 2001, to $8.713 trillion last week. When fiscal 2007 ends on Sept. 30, the national debt will exceed $9 trillion, according to the administration's forecast.

At the end of fiscal 2001, the national debt was 57.4 percent of gross domestic product, having dropped from 67.3 percent at the end of fiscal 1996. At the end of the current fiscal year, the national debt is projected to be 65.5 percent of GDP.