February 23rd, 2009
11:02 PM ET

Truth in Budgeting: Is it enough?

Program Note: Tune in to hear more from David Gergen tonight on AC360° at 10 p.m. ET.

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David Gergen | Bio
AC360° Contributor
CNN Senior Political Analyst

President Obama is taking a significant step toward fulfilling another important campaign pledge this week: he is unveiling a federal budget that actually tries to tell us some hard truths about the government’s finances. Too many years in the past, the Bush administration engaged in deception by keeping the costs of Iraq and Afghanistan out of the regular budget, plus pulling off some other shenanigans that disguised just how much the government was growing and how much its deficits were growing. By the time he left office, President Bush had practically doubled the national debt – doing as much damage in 8 years as the republic had suffered in more than 200 previous years combined.

Obama promised truth in budgeting, and he is succeeding far more than in the recent past. The cost of both wars will now be included in this week’s budget, money will be set aside to respond to natural disasters, and the budget won’t show cost cutting in programs that everyone knows will be revived (e.g., the alternative minimum tax).

The results of taking a truth serum – along with the horrendous costs we are piling up in fighting the economic crisis – will reveal eye-popping numbers stretching far into the future. We can expect at least $1.3 trillion in deficits this coming year, another mountain the following year, before the deficits will be shown to slope down to some $533 billion four years from now. The Administration is touting that as serious progress, but only a year or so ago, an annual deficit of $500 billion would have been wholly unacceptable.

We need to know the hard truths about our country’s financial situation and the Administration deserves congratulations for going as far as it has, but the question arises: has it gone far enough? Will even this first Obama budget tell us everything we need to know? Sadly, that does not appear to be the case.

Here are just a few things the administration must still tell us:

  • How much are these outbursts of federal loans and loan guarantees likely to cost taxpayers in the next few years? How much are they likely to add to deficits in the next five years? For example, how likely is it that General Motors and Chrysler are likely to repay their billions in bailouts so far? If they are unlikely to repay, shouldn’t the books show these as additional costs to Uncle Sam? That’s what corporations are required to show when they make loans that are unlikely to be repaid. Why not Washington?
  • How should we think about the real cost to the taxpayer of the housing bailout program the President announced last week? Two leading newspapers (The Washington Post, USA Today) called it a $75 billion program; two others (New York Times, Wall Street Journal) put the cost at $275 billion. If some of the best journalists in the country cannot agree on the real costs to taxpayers, shouldn’t the government tell us?
  • What about all the unfunded liabilities that the government is facing just around the corner? The Peter G. Peterson Foundation bought a full -page ad in Sunday’s New York Times pointing out that our entitlement programs – Medicare and Social Security – have some $56 trillion in liabilities stretching into the future. Shouldn’t the Administration give us a full accounting of just how big and serious these monstrous liabilities are?
  • And what about all the different financial programs that the Federal Reserve has launched in an effort to stabilize the economy. How much do they add up to? How will they be covered? How much will fall upon taxpayers? How much might lead to more inflation? To his credit, Fed Chairman Ben Bernanke promised at a National Press Club speech last week that the Fed would come up with a better accounting. The White House and Treasury need to hold feet to the fire.

In short, as much as President Obama’s truth in budgeting deserves praise for shedding more light on our financial condition, there is still far too much that is hidden in shadows. With hundreds of billions of dollars in new commitments being casually tossed about, almost numbing in size and always confusing in content, the Obama Administration will do a great deal to begin rebuilding trust and confidence in the future if it tells us what we need to know – and not just part of it, all of it!

Filed under: David Gergen • Economy • President Barack Obama • Raw Politics
soundoff (205 Responses)
  1. Bill

    Now, this is good reporting and news. Instead of all the hype like we had for a while about a NY Times gorilla cartoon with explicit, racial finger pointing going on. Besides we should look deeper than the whole cartoon scandal in the NY Times when that same newspaper is selling for-profit university advertisements that are connected to scams all over the Internet. Now, that’s not good news or reporting. That’s scandalous!

    Are for-profit universities the only well-lubricated, NASDAQ endorsed, Corporate America/U.S. Government setups out there that seems to consistently fleece taxpayers? This might be a perfect example of racism and falsified budgeting based on educational services provided to U.S. citizens by the U.S. government, through the pretext of private business enterprise.

    Let’s really take a look at truth in budgeting (and spending)!

    February 24, 2009 at 9:55 am |
  2. Kim

    Where are the details and specific's when they discuss nationalize the banks ? When do the checks for the stimulus package arrive in NC ? We just want to make sure it's not lost in the mail !

    February 24, 2009 at 9:53 am |
  3. Jim

    Will congress consider replacing the banking system to its healthy state before de-regulation? CEO's in banking do not know how to run Investment companies or Insurance companies, and the same is true CEO's of insurance companies do not know how to run banks etc. The merging of these three vital financial entities has obviously played a huge roll in the downfall. Also when banks are allowed to merge into one or five major institutions instead of hundreds of banks across the country sharing in large loans it is again obvious a large default in investments, insurance, or banking will bring down the industry. Does this make sense?

    February 24, 2009 at 9:24 am |
  4. Mr. Kelly Hoffman

    Let's not fool ourselves. this whole thing isn't about wal street so much as it is about buisnes not wanting to invest in fair wages in this country. President Oboma has said we need to invest in the middle class, and buisness doesn't want to. They're taking thier cookies and going home. It wont be untell enough of them loose thier shirts, that the rest of us can get back to buisness as usual.

    February 24, 2009 at 9:14 am |
  5. Jamie

    Ok if obama bought the stimulus plan and spent milllions of dollars, and in the end if it doesn't help the economy what will we do then?! That is the REAL question, besides we need to concentrate on the enviroment more than politics. Politics will always be there but not if we don't take care of our enviroment!

    February 24, 2009 at 9:04 am |
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