Smoke and Mirrors

Earlier this week, Atrios and Josh Marshall noticed that Bush's budget was getting a pass of sorts from the press. Despite the budget's reliance on dishonest accounting tricks and gimmicks, nobody was using the time-honored phrase "smoke and mirrors" to refer to its thaumaturgic calculations.

We can all breathe easier now, for in today's Washington Post, Cheryl Block has a long piece entitled "Smoke, Mirrors, & Shades Of Enron!", outlining the truly awe-inspiring array of budgetary chicanery used by the administration. Here's a good example:

Under the proposal [for tax-favored savings accounts], existing Roth IRAs would be renamed RSAs and taxpayers would be permitted to convert funds from traditional and nondeductible IRAs into these new accounts. What the spinners don't tell you, though, is that while these new accounts amount to huge tax cuts, they are actually recorded in the budget as revenue increases in the first few years.

How is this budget magic achieved? For one thing, conversions from existing IRAs would be taxed now in exchange for tax savings later. In addition, since contributions to these new accounts would not be deductible, revenues are projected to increase in the first few years as taxpayers deposit funds into the new accounts rather than the old-style IRAs. Most of the revenue loss from these changes does not show up in the budget until savers withdraw their funds over decades into the future, well beyond a five-year or even a 10-year budget window.

My favorite trick, however, is one she doesn't mention: including as revenue $1 billion from drilling for oil in ANWR, even though nobody is currently drilling for oil in ANWR and Congress hasn't changed the law to allow anyone to start drilling for oil in ANWR. How crooked is that?