Federal Budget Outlays Proposed (Reagan) and Actual (Congress) and Cumulative Percent Difference (billions of dollars)1 Outlays Fiscal Year Proposed Actual % Difference (Cumulative) 1982 695.3 745.8 7.3 1983 773.3 808.4 4.5 (12.1) 1984 862.5 851.8 -1.2 (10.8) 1985 940.3 946.4 0.7 (11.6) 1986 973.7 990.3 1.7 (13.5) 1987 994.0 1003.9 1.0 (14.6) 1988 1024.3 1064.1 3.9 (19.1) 1989 1094.2 1144.2 4.6 (24.5) ______________________________________ Totals $7,357.6 $7,554.9 Avg 2.8 (3.1) (averages for 82-9)
The problem with this chart is that the proposal numbers are phony.
Reagan's proposals were based on such optimistic forecasts of the economy
that they bore little resemblance to reality.
To understand how the ruse works, a brief review of the budget process
is helpful. A budget passed by Congress is not written in stone; there
are actually many flexible items in it. One example is unemployment. The
budget says, "Pay each unemployed person XXXX amount in unemployment
compensation." If the unemployment rate rises higher next year than
anticipated, the budget automatically pays these extra individuals without
requiring Congressional action.
Another example of a flexible budget item is interest on the debt.
If interest rates soar or receipts drop more than expected, then interests
costs are going to be greater. These are paid without Congressional action
(unless the debt limit is reached).
In the president's budget proposals, he must estimate next year's unemployment
rate, interest rates, and several other economic indicators. We have already
seen that in Reagan's first budget, David Stockman came up with a super-optimistic
forecast that predicted 5 percent economic growth. (The higher the growth,
the less government has to spend on unemployment, welfare, stimulus packages,
etc.) Today, Stockman derisively refers to his first budget as the "Rosy
Scenario." Although Reagan's remaining budgets were not quite as far-fetched
as the Rosy Scenario, they were indeed much too optimistic. In fact, the
only reason why spending surpassed the requests in only 7 instead of all
8 years was because one year -- 1984 -- actually saw a phenomenal spike
of 6 percent growth.
What supply-siders are doing with the above chart, then, is comparing
what was spent in the real world with what Reagan proposed in 8 Rosy Scenarios.
They then blame the difference on Congressional action -- despite the fact
that Congress didn't act on these increases.
The ruse is akin to a President proposing to spend one dollar on the
budget next year, and blaming Congress for (inevitably) exceeding this
proposal. Even if it turns out that Congress cuts the real budget, and
the economy does better than normal!
As reported on the previous page, the House Appropriations Committee
conducted a study that compared Reagan's concrete proposals to what Congress
actually passed, not what was spent afterwards. And it found that Reagan
asked for $29.4 billion more than Congress passed.
Return to Overview
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1 Budget Message of the President,
FY's 81 to 89. Budget of the United States, FY 1993, Part 5, Table 1.3,
page 5-18. Proposed outlays for 1981 from 1981 FY 1982 Budget Revisions.