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Published: Saturday, 5/6/2006

Rocky Horror deficit show

"MISSION: Impossible III" has just hit the theaters, but Rob Portman, President Bush's latest budget director, already was well acquainted with the story line. His intractable task in the new job - assuming confirmation by the Senate - is to reconcile a federal budget starved by tax cuts with the apparently limitless proclivity for spending already demonstrated by the Bush Administration and its partisan soul mates in the Republican-controlled Congress.

This is a role reversal for Mr. Portman, who formerly served in the House of Representatives from the Cincinnati area before joining the administration in his previous job as U.S. trade representative.

To add to the drama, he moves into the budget post at a time when deficit hawks in Washington are pointing out that the current method of accounting for federal finances vastly understates the government's financial obligations.

Last year's declared federal deficit was $319 billion, but the "2005 Financial Report of the United States Government," signed by Treasury Secretary John Snow in December, puts the actual shortfall at $760 billion.

The higher figure is what the deficit would be if it were calculated according to the accounting standard in use by corporate America, the accrual-basis method. It includes future liabilities promised by the government - veterans' pensions, for example - that somehow will have to be paid later.

The $319 billion figure is assembled via cash-basis accounting, which doesn't track long-term obligations, arguably distorting the financial picture.

As the chief budget analyst for the conservative Heritage Foundation put it, "Director Portman will be inheriting the most dire long-term fiscal outlook we've ever had.

"The first Baby Boomers retire in 18 months, and Social Security, Medicare, and Medicaid costs are set to explode. On top of that, he'll be dealing with a Congress that's absolutely addicted to runaway spending and pork."

To further add to Mr. Portman's woes, his script already is written and there is little he can do to change it. His predecessor, Josh Bolten, saddled with untouchable war spending, left a plan in place that gives preference to extending President Bush's tilted-to-the-rich tax cuts. It will require draconian cuts in virtually every domestic program.

We can be sure, however, that even the pre-ordained climax to the annual budget extravaganza will not prevent the usual actors from donning their masks and taking to the Washington stage to declare that this year's mammoth deficit is in the best interest of American taxpayers.

Talk about a theater of the absurd.



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