by Calculated Risk on 4/16/2005 10:25:00 PM

US Treasury Secretary John Snow made the following comments at the G7 meeting in Washington regarding the US budget deficit:

-Snow said the US is strongly committed to cutting its budget deficit.

The White House motto apparently is: "Promise Prudence, Deliver Squander". Actions speak louder than words, and there are no actions that indicate the Bush Administration is committed to cutting the budget deficit. After four years of progressively worse deficits, only a fool would take their word. And next year's budget promises more of the same (see Another Budget, Another Disaster).

-[John Snow] said the budget deficit is expected to be 3.5 pct of GDP this year which is 'still too large', but the Bush administration's plans mean that the deficit should be cut to well under 2 pct of GDP by 2009.

This statement is simply untrue. The budget deficit will be close to $650 Billion this year or about 5.5% of GDP. Mr. Snow is using the Enron style "unified budget" that includes the Social Security surplus to offset Bush's deficit. A close approximation to the General Fund deficit is the annual increase in the National Debt. Anyone can check the increase in the debt by checking the US Treasury site.

As of April 14, 2005 the National Debt is $7.79 Trillion. At the start of the current fiscal year (Sept 30, 2004) the National Debt was $7.38 Trillion. That is a 6 1/2 month deficit of $408 Billion (close to 6% of GDP) and there are still 5 1/2 months remaining in the fiscal year.

There are no public plans to cut the deficit to under 2% of GDP by 2009. If they have a secret plan, they should tell the American people. More likely the deficit will be over 7% of GDP in 2009.

-'Deficits matter, they are unwelcome, and must come down,' [John Snow] said.

Tell that to Vice President Dick Cheney who, according to former Treasury Secretary Paul O'Neill, said "Reagan proved deficits don't matter." Since the Bush Administration's actions mirror Cheney's alleged comments, why should we believe Mr. Snow?

Is John Snow mendacious or just misinformed? Either choice is troubling.