Smoke and Mirrors, Stupid

February 19, 1993

Much as we admire President Clinton's attack on federal deficits, much as we think his program is more credible than any seen in the Reagan-Bush years, we regret some of the misleading figures and number juggling used by the administration in presenting his program.

Mr. Clinton's economic policy, a hard sell in any case, will not prevail if the American people get the idea they are getting a Democratic version of the "smoke and mirrors" technique used to peddle Republican supply-side theories a dozen years ago. As the president himself said in his Wednesday night address to Congress: "Our people will be watching and wondering. . . We must scale the walls of the people's skepticism."

Good line. But in anticipation of the president's speech, the White House Office of Management and Budget put out a program summary that stated the administration's deficit reduction was "the largest in U.S. history -- $493 billion over four -- years, $703 billion over five years." OMB director Leon Panetta told a press briefing that administration critics had to hit these same targets: "No gimmicks, no caps, none of the kind of smoke and mirrors that we've seen in the last few years."

Mr. Panetta's $493 billion figure referred only to the gross savings in deficit outlays the administration hopes to get by raising taxes, cutting some government programs and saving interest costs. If you subtract from that its proposed $109 billion in spending increases and $60 billion in tax cuts, you get a net deficit reduction of $324 billion.

Impressive as that figure may be, it is still $179 billion less than the gross target trumpeted by Mr. Panetta and it is not the "largest (deficit reduction) in U.S. history" -- a title that belongs to the 1990 budget accord later disowned by President Bush.

Another problem: In a memorable exchange with Republicans who taunted him for using Congressional Budget Office economic assumptions, President Clinton said, "Well, you can laugh, my fellow Republicans [sic], but I'll point out that [the CBO] was normally more conservative. . . and closer to right than previous presidents have been." He said he had used CBO rather than OMB figures "so we could argue. . . with the same set of numbers."

Yet Mr. Clinton's numbers remain arguable. He did not use the CBO January baseline figure but a "modified" baseline incorporating his proposals for increased spending and tax cuts. This produces a $27 billion difference that allows the administration to target a $209 billion deficit for fiscal 1997 rather than a harder-to-attain $179 billion.

More obvious is the administration's attempt to describe proposed new taxes on Social Security benefits and a variety of user fees as "spending cuts." This is not just a semantic difference since the administration claims it is matching every dollar in tax increases with a dollar in spending cuts.

Americans want no more smoke and mirrors. Mr. Clinton can get his program through Congress only if he establishes real credibility.

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