CAMPAIGN CONFIDENTIAL

By E.J. Kessler

Published September 17, 2004, issue of September 17, 2004.

Figures released last week from the Congressional Budget Office show a record $422 billion U.S. budget deficit this year — and a projected 10-year deficit of $4.5 trillion if President Bush succeeds in getting Congress to make his tax cuts permanent.

Democrats, including presidential nominee Senator John Kerry, were quick to seize on the statistics as proof that the Bush administration is fiscally irresponsible, noting that when President Clinton left office, the nation was looking at a projected 10-year surplus of $5.6 trillion.

“Only George Bush could celebrate over a record budget deficit of $422 billion, a loss of 1.6 million jobs and Medicare premiums up 17%,” Kerry said last week at a campaign stop in Greensboro, N.C.

House Democratic Whip Steny Hoyer said in a statement: “Every American man, woman and child ought to be deeply troubled by the enormity of these Republican budget deficits and the fact that President Bush and Congressional Republicans have no real plan to rein in the red ink.”

But one Democrat — Jack Lew — was especially rankled by the new numbers.

As director of the Office of Management and Budget in the late 1990s, Lew served as President Clinton’s budget architect, while the country went from deficits to record surpluses. Now his primary policy legacy is in tatters, and he’s blaming the current president.

Lew, who is not advising Kerry, gave a full-bore critique of Bush’s budgeting in an interview with the Forward at his office at New York University, where he is executive vice president. The Bush administration’s approach to budgeting, he said, reflects a fundamental pattern of dishonesty and attempting to hide costs in matters as disparate as the Iraq war and the Medicare drug bill.

“[W]hen you go to war, you have to go to war knowing that there is a cost,” Lew said. “This administration went to war, intentionally, I think, suppressing the notion that it was going to be an expensive war…. In a similar way that they tried to downplay the cost of the war, they tried to downplay the cost of the prescription drug bill.”

Lew, a religiously observant Jew who now lives in Riverdale, N.Y., drew a parallel between the administration’s treatment of both the former Army chief of staff, General Eric Shinseki, and the chief actuary for Medicare.

The civilian leaders of the Defense Department pilloried Shinseki after he testified to Congress that securing Iraq would take several hundred thousand troops, not the 100,000 the administration was proposing.

The actuary was ordered by Thomas Scully, who at the time was head of the Medicare agency, not to tell Congress the truth about the cost of the president’s proposed prescription drug benefit, because it was higher than the figure given in the administration’s bill. Investigators with the General Accounting Office said last week that Scully’s order was against the law and that he should be forced to return seven months of his salary, or about $85,000.

“There’s a pattern here,” Lew said. “It’s a pattern that I think reflects a lack of integrity. And in the policy process, integrity really matters.”

Bush is defending his fiscal policy on the campaign trail, saying that his tax cuts have created jobs and expanded opportunity. He talks about simplifying the tax code and reforming Social Security by privatizing accounts of younger wage earners.

Senate Budget Committee Chairman Don Nickles of Oklahoma, among other Republicans, has hailed the budget deficit for being $56 billion less than the Congressional Budget Office predicted in March. “The president’s economic policies are working,” the Los Angeles Times quoted him as saying. “Economic growth is significantly strong, tax revenues are rising, and deficits this year and next are much lower than previously projected.”

This year’s deficit is projected to be $47 billion more than last year’s.

Lew said Bush’s pattern of suppressing costs affects other areas of budgetary policy, and will soon force “draconian” cuts in Social Security and in health, education and social service spending.

“If you’re honest about what it costs to go to war, you’ve got to be willing to say to yourself, ‘I’m going to do this instead of other things,’” he said. “I’m going to do it instead of education, I’m going to do it instead of police on the street, and I’m going to do it instead of health care. And I think that’s what we’re seeing now. There isn’t money for those other things.”

Those areas are of prime concern for the Jewish community.

The Jewish Council for Public Affairs, which coordinates the public policy work of a dozen major Jewish organizations and 123 local community councils, has come out against making Bush’s tax cuts permanent, saying they starve the government of revenue to “feed the hungry, clothe the poor, heal the sick and educate our children.” United Jewish Communities, the roof body of the 146 Jewish charitable federations, abstained from backing the JCPA’s stance, however, saying tax cuts are not a Jewish issue. Through a spokesman, UJC’s new CEO, Howard Rieger, declined to comment for this story.

In particular, Lew said, Social Security benefits would suffer as a result of the tax cuts and the rising deficits. “I think there’s a rather cynical plan behind much of the economic policy that’s out there today,” Lew said. The GOP’s goal, he said, is to create a fiscal crisis that would force voters to choose between a cut in benefits or a hefty tax increase. “I think it’s almost inevitable and, therefore, you have to believe in some ways a deliberate attempt to force a collision, to create an environment where unpopular choices will have to be made between Social Security and other basic federal spending and taxes.”

Lew said that if you look at Kerry’s proposals, including his plan to provide more Americans with health care insurance, he “has done much more than the president” to demonstrate how he would pay for policy proposals. “[H]e’s asserted the principle that fiscal discipline matters,” Lew said.

“If you look back to 1984-85, the Graham-Rudman [balanced-budget bill] was going through Congress, and very few Democrats were supporting it,” Lew continued. “It was a Republican initiative. John Kerry actually was a Democrat who supported it in the Senate. It was a very courageous move for him. And he said at the time that other Democrats didn’t understand the perils of running deficits out of control…. That’s kind of where Kerry was in ‘84 and where he is now. I mean, he’s been remarkably consistent.”

Bush has been bashing Kerry at every turn, saying his programs, especially his healthcare proposal, would necessitate raising taxes. “There is a reason for supporting higher taxes — because he wants to dramatically increase government spending,” Bush said of Kerry at a campaign stop last week. “It’s part of his platform. On the campaign trail, he’s proposed more than $2 trillion in new federal spending, so far…. My opponent’s tax increases would bring only about $650 billion in revenue over the next 10 years, see. And he wants to spend over $2 trillion. So you do the math. The plan leaves him more than $1.4 trillion short. And guess who would wind up paying the bill?”

Lew has a quick retort for that: “I think it’s kind of ironic that — being the president at this time when we’ve seen a $10 trillion shift in the surplus to deficit, with no real plan for closing the gap — President Bush would have any credibility on this issue.”



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