Politicians and Budgets

Politicians, good and bad, are presumed by most people to be dishonest. When it comes to government budgets, the label of "dishonest" is well-earned by most politicians. Take for example President Bush’s reaction to the latest federal budget deficit numbers. The federal government is on track to run a $296 billion deficit this year, the fourth largest in history. Bush tells us that’s good news, however, because it is lower than expected. "This good news is no accident," Bush told taxpayers from the East Room of the White House. "It's the result of the hard work of the American people and sound policies in Washington, D.C."

Now keep in mind that President Bush inherited a budget surplus from his predecessor. Three of the largest deficits of all time have been recorded under President Bush, who ran on the promise of reducing wasteful federal spending. Of course, we’re expected to believe that 9/11 and the War on Terror are to blame for these record deficits. The Iraq War we were told by Bush’s first budget director, Mitch Daniels, would cost $50-$60 billion—similar to the cost for the first Persian Gulf War. Based on current congressional appropriations, the war has cost U.S. taxpayers $295 billion.

So understand my skepticism when Gov. Mitch Daniels announced that the State of Indiana ended the most recent fiscal year with a budget surplus of more than $370 million. But as today’s Star reports, “Indiana still owes schools, local governments and universities $700 million from delayed payments in 2002 that helped the state make ends meet.” Gov. Daniels is thinking about being nice though and paying a little bit of that money back sooner.

Let’s not forget all the extra help Gov. Daniels had in balancing the budget. There was a tax amnesty program, which accounts for more than $200 million, or over half of the budget surplus—a one-time boost in state revenues. There was all that extra money the state saved when FSSA Secretary Mitch Roob accidentally cut off benefits to more than 10,000 Medicaid recipients between January and May of this year. And then there was that small item in Jim Shella’s blog about the state holding up paying taxpayers their refunds until after the fiscal year. Surely that helped boost the surplus as well.

But if you think Gov. Daniels plays fast and loose with our budget numbers, take a look at Gov. Rod Blagoyevich (D) next door in Illinois. The Springfield State-Journal Register says that Gov. Blagoyevich’s claims that the state’s budget problems have been solved are simply not so. It turns out Gov. Blagoyevich simply delayed paying more than $2.9 billion the state owed to Medicaid providers, meaning the State really ran a budget deficit of more than $3 billion instead of the $500 million Blagoyevich bragged about. And he’s not alone. It turns out that every Illinois Governor over the past 16 years has done the same thing—balance the state’s budget on the backs of Medicaid providers by deferring payments from as little as $655 million a year to nearly $3 billion this year.

Former Illinois Senator Everitt Dirksen (R) once lamented about the casual attitude many in Congress took towards federal spending, “a billion here, a billion there, pretty soon you’re talking real money.” That’s a point that was lost on most of Sen. Dirksen’s colleagues in Congress during the 1960s and obviously not one taken seriously by many of our politicians today. So forgive me Gov. Daniels when I say I don’t believe a word of what you had to say today about the state ending the fiscal year with a surplus. The state of Indiana ran a deficit this past fiscal year just like it did year after year under prior administrations.