Gore, Bush sorely need better grasp of economy

July 02, 2000|By Barry Rascovar

NEITHER George W. Bush nor Al Gore was an Einstein in college. Apparently, the presidential candidates didn't pay much attention to their economics professors, either.

These two men don't understand common-sense fundamentals of budgets and surpluses.

To them, surpluses are meant to be spent, or given away, as political prizes. It's all in a game of playing "Let's Make a Deal" to win the White House.

That their plans could turn a growing federal surplus into a ballooning deficit doesn't register.

They're intent on playing politics with the budget and pandering to the greatest number of voters.

The whole thing's insane.

All of a sudden, we're basing our nation's tax and spending plans on 10-year forecasts of what's going to happen in this country.

Whoever heard of a 10-year budget forecast?

Not Federal Reserve Chairman Alan Greenspan. He's been juggling interest rates almost monthly to reflect the fast-changing economy. If someone of Mr. Greenspan's stature can't predict what will happen beyond a few months, how can we believe a 10-year prognosis?

Economists have no way of knowing what the world will look like in 2010. A year ago, electronic commerce companies were all the rage. Now, many have tanked. Investors lost billions. Bumps along the Internet superhighway can demolish economic forecasts.

Washington's new 10-year prediction -- a $1.9 trillion cumulative surplus -- is as bankable as a $3 bill. Here are some potential spending items not included by the soothsayers: Drought, hurricane and tornado aid; military conflicts; recessions; inflation; economic collapses abroad; more federal spending on education, health and national defense.

The $1.9 trillion surplus only appears if none of those things happen for 10 years. Fat chance.

Yet George Bush and Al Gore blithely plot ways to consume this phantom surplus.

Mr. Bush pledges to spend money on social programs. But his main gambit is a gigantic tax cut, giving much of the surplus back to taxpayers.

Mr. Gore's main thrust is massive spending on every conceivable domestic ill. His tax cut gambit is half the size of Mr. Bush's.

Here's the rub: That money they are committing won't be there when it's time to pay up. Not unless the nation's economic Good Times continue unchecked, without a blip, for a decade.

Pretend you work at a company that's been heavily in the red for decades but has stayed in business through heavy borrowing.

Recently, the company has blossomed. You receive a fat bonus. The boss says he sees even bigger bonuses for you as the business prospers over the next 10 years.

Would you rush out and buy a million-dollar house with a mortgage based on receiving those big bonuses between now and 2010?

Of course not. For starters, the mortgage company would laugh you out of its office. There's no assurance you'll ever see a dime of those bonuses. That vision of flush corporate profits could easily prove a mirage.

It's difficult enough for a business to project six or 12 months into the future, much less forecast its profit margins 120 months for now.

Look at the crystal-ball gazers at the White House and Congress. Four months ago, they said the nation's 10-year budget surplus would be $750 billion. Now they're saying $1.9 trillion.

If these fiscal gurus were off by a mere trillion-plus dollars in February, imagine what might happen with their next estimate. It could go up or down like a yo-yo.

No sober economist could base a corporate budget on such wildly fluctuating numbers. But they do in today's Washington. Our presidential candidates are taking this manipulative numbers game to new levels of absurdity.

For them, it's all about winning, not being responsible.

They seem to have taken to heart H.L. Mencken's cynical view: "No one in this world ... has ever lost money by underestimating the intelligence of the great masses of the plain people."

The American public is being conned. Mr. Bush and Mr. Gore want to spend tomorrow's money -- 3,650 days' worth -- right away. They think no one is smart enough to figure this out.

As that great 19th-century promoter P.T Barnum put it, "There's a sucker born every minute."

Barry Rascovar is deputy editorial page editor.

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