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It's a pretty bold move by the president to eliminate the accounting gimmickry that undersold the deficits in the last eight years by putting the cost of the Wars in Iraq and Afghanistan, disaster response and Medicare reimbursements off the books. Of course, it's going to make the deficit numbers much bigger (even though we were carrying that shortfall before, just not acknowledging it) and Obama's conservative critics will no doubt use that number for political attacks. But as the new administration has negotiated the challenges of taking campaign-trail change to Washington governance, not always successfully, the decision is a big step towards greater transparency. It also demonstrates respect for the average American, a trait that Obama used to his advantage last fall. Most politicians don't want to scare voters with bad news, or at least try to spin it; the new president realizes that Americans want to know the truth about their government's fiscal situation. It's change we can something something:
As for war costs, Mr. Bush included little or none in his annual military budgets, instead routinely asking Congress for supplemental appropriations during the year. Mr. Obama will include cost projections for every year through the 2019 fiscal year to cover “overseas military contingencies” — nearly $500 billion over 10 years.For Medicare, Mr. Bush routinely budgeted less than actual costs for payments to physicians, although he and Congress regularly waived a law mandating the lower reimbursements for fear that doctors would quit serving beneficiaries in protest.One other interesting thing:The administration plans to account for the 10-year cost of success Alternative Minimum Tax fixes, a $1.2 trillion revenue shortfall. Normally, the executive and congress simply do the yearly "AMT patch" -- exempting many Americans from the AMT's reach, as they did in the stimulus -- but don't project those costs into the future. Talking to a Senate aide who works on tax policy during the stimulus debate, I wondered why they didn't just make the patch permanent. He replied that the "ten year cost estimate would be far too ugly." Well, it looks like the president is ready to face up to reality -- maybe congress will follow?
-- Tim Fernholz
