We compiled a long list of tax and budget whoppers from the Bush administration in All the President’s Spin, but the progression of spin over the last month is shocking even to me. Up is down!

Economic Policy Institute, 12/8/04: The Bush budget released in February 2004 projects a deficit in fiscal 2009 of 1.6% of GDP (the much-touted reduction of more than half of the fiscal 2004 deficit), but reasonable assumptions from EPI show it will actually be 3.4% of GDP in fiscal 2009, more than twice as high as projected.

The Associated Press, 12/9/04: “White House budget director Joshua Bolten said the cost of implementing Bush’s [Social Security] plans would not undercut Bush’s goal of cutting the deficit in half over the next five years,” even though a transition cost of $1-2 trillion over ten years would push the deficit higher than the projection of 3.4% of GDP above. Bolten added that “such costs ‘may well’ add to short-term annual deficits. ‘I don’t want to prejudge how they might be accounted for,’ Bolten said.’If we maintain the policies the president has put out, I believe our path out over the next five to 10 years looks sufficiently strong that we could absorb transition financing’ costs without swelling deficits that are too large compared to the economy, he said.”

New York Times, 1/2/05:

To show that President Bush can fulfill his campaign promise to cut the deficit in half by 2009, White House officials are preparing a budget that will assume a significant jump in revenues and omit the cost of major initiatives like overhauling Social Security.

To make Mr. Bush’s goal easier to reach, administration officials have decided to measure their progress against a $521 billion deficit they predicted last February rather than last year’s actual shortfall of $413 billion.

By starting with the outdated projection, Mr. Bush can say he has already reduced the shortfall by about $100 billion and claim victory if the deficit falls to just $260 billion.

But White House budget planners are not stopping there. Administration officials are also invoking optimistic assumptions about rising tax revenue while excluding costs for the wars in Iraq and Afghanistan as well as trillions of dollars in costs that lie just outside Mr. Bush’s five-year budget window.

The five-year plan, due in February, is likely to reaffirm previous predictions of a $217 billion surge in tax revenues in 2005, the biggest one-year jump on record, and almost $800 billion a year by 2009.

…As in past years, the budget will exclude costs for the wars in Iraq and Afghanistan, which could reach $100 billion in 2005 and are likely to remain high for years to come. The budget is also expected to exclude Mr. Bush’s goal to replace Social Security in part with a system of private savings accounts, even though administration officials concede that such a plan could require the government to borrow $2 trillion over the next decade or two.

Among the costs that are expected in the five years after 2009 are nearly $1 trillion to make Mr. Bush’s tax cuts permanent, nearly $500 billion for the new Medicare prescription drug program and at least $400 billion to address widely acknowledged problems with the so-called alternative minimum tax.

…White House officials are making several budgeting decisions that make their tax revenues look higher and their spending look lower than many analysts think is realistic.

The first is to exclude a wide range of future costs for proposals, like those for military operations in Iraq, that White House officials say are impossible to predict.

Mr. Bush has consistently refused to include Iraq costs in his annual budget request, seeking money through a supplemental appropriations bill that lies outside the official budget. The White House asked for and received $87 billion for the last fiscal year, as well as another $25 billion to cover the first few months of the 2005 fiscal year. The administration is expecting to ask for as much as $80 billion more in the next few months, but it will not include any cost estimates in Mr. Bush’s budget for the 2006 fiscal year.

…Administration officials are omitting a second big group of costs for goals Mr. Bush has identified but not formally proposed.

By far the biggest of these is his plan to privatize Social Security in part and let people divert some of their payroll taxes to private accounts.

Republican and Democratic analysts alike say the proposal would require the government to incur “transition costs” of $2 trillion or more over the next decade or two. That is because payroll tax revenue would immediately plunge, while benefits owed to retirees would decline only gradually.

Administration officials say any such transition costs should be treated separately from the regular budget, because they would eventually be recouped as benefits decline sharply over the next 75 years.

But the issue poses a ticklish problem for the administration, because it is already using surplus revenues in the Social Security trust fund to cover part of the annual budget deficit. The Social Security and Medicare trust funds took in about $146 billion more than they paid out in benefits in the last fiscal year, which reduced the government’s overall deficit to $413 billion from about $560 billion.

One idea to prevent private savings accounts from causing an abrupt rise in annual deficits is to treat deposits into private savings accounts as a “transfer” within the government. Another idea is to include all the borrowing for transition costs in an account that would be separate from the government’s operating budget.

White House officials say it is reasonable to treat the expected transition costs separately, because they will eventually be repaid as the government’s obligation to pay benefits declines sharply after 30 or 40 years.

“These aren’t costs, they are savings,” said Scott McClellan, Mr. Bush’s spokesman, at a recent news conference.

See Chapter 4 and Chapter 7 of ATPS for more. This is right out of the White House budget playbook – omit costs, move the goalposts on the deficit reduction plan (now on its second or third iteration), make shaky projections, etc.

Update 1/8: See this Campaign Desk destruction of a Reuters story on more budget mumbo jumbo.