President Bush boasts that a lot of trees were saved in the first electronic transmission of a White House budget to Congress. The White House is less forthcoming about the potential deficit involved in the still-undisclosed war costs of its 2009 budget.

by Mark Silva

The Bush White House has been playing war games with its budgeting for years.

Now the White House is playing a deficit game as well.

The new, $3.1 trillion budget for 2009 which President Bush delivered to the Congress this week in a tree-saving e-budget transmission predicts deficit spending of $407 billion next year. This is close, in sheer dollar terms, to the record deficit of $413 billion which Bush set in 2004.

The deficit had been coming down, pegged last fall at $163 billion. But a slowing economy as well as the determination of both the Republican White House and Democratic congressional leaders to give the American public about $145 billion in tax relief this spring to spur the economy will push the deficit upward again.

It is projected at $410 billion this year, the White House says - just $3 billion shy of the record – and at $407 billion in 2009.

But the White House, which also likes to save much of its funding requests for the wars in Iraq and Afghanistan for "supplemental" mid-year budget requests, has included just $70 billion for the wars in that 2009 budget submitted to Congress this week. The White House also concedes that the $70 million is only a “piecemeal’’ part of what will be needed, a “bridge’’ for wars that most "certainly" will cost more. The administration already is seeking nearly $200 billion for the wars in 2008.

So, if the White House had included only a modestly bigger bridge for the war in its 2009 budget - say $10 billion more - it would have had to forecast a deficit of $417 billion - a new record. And had the White House added a much more likely war number - say $100 billion more than the $70 billion it has posted for the year - that projected deficit would be even greater. That sort of added war cost would push total outlays in the 2009 document to $3.2 trillion - $507 billion beyond what the government expects to have on hand to spend. A new, half-trillion-dollar record deficit.

For more on the war and the deficit, read on below. For more on the budget, see the Tribune's report today. For more on the rising costs of war, see this Tribune report by Washington correspondent Aamer Madhani.

This is nothing that any departing president wants to advertise for his successor, certainly not a president who inherited a budget surplus at the start of his terms in 2001. But the true costs of the war have been hard to come by, year after year, since 2003.

“The war stuff, I have found beyond shameful for years now,’’ says Norman Ornstein, resident scholar at the American Enterprise Institute. “ This is just utterly dishonest. It is openly in your face dishonest. If you want to have a debate about national priorities, there is nothing wrong with that. When you manipulate the costs of the war year after year and try to hide it… by trying to throw it into emergency spending when it’s not an emergency… it goes beyond the usual budget legerdemain.’’

Jim Nussle, the director of the White House Office of Management and Budget and a former congressman, doesn’t like to talk about the budget deficit in sheer dollar terms. Nor did his predecessors in the Bush administration – why would they, considering the scenario we have spelled out here?

Rather, the director likes to speak of the deficit as a percentage of the nation’s Gross Domestic Product. By that measure, the deficit is certainly growing this year, but it will be shrinking, the way the White House reports it: From 2.9 percent of GDP this year to 2.7 percent of GDP in 2009.

As for war costs, Nussle suggests, the $70 billion contained in the 2009 budget is a good starting point for discussion. That may be because setting it only $10 billion higher would have prompted an entirely different discussion – about not only spiraling war costs, but also new, record-level deficits, in dollar terms.

Nussle notes that it is a “bipartisan’’ tax relief plan that will “raise the deficit by $145 billion, and obviously that will have an impact, but we believe that this up-tick is temporary, and is also a manageable budget deficit if we keep taxes low, if we can keep the economy growing, and if we can keep spending in check.

“In fact, as deficits go -- I checked back to see what it was like during the Reagan administration and Bush and Clinton -- and under Reagan in 1983, as an example, it was 6 percent of GDP; under President Bush 41, it was at 4.7 percent of GDP; and under Clinton, it was 2.9 percent of GDP,’’ Nussle says. “So this can be temporary, and we believe this is manageable.’’

Now, as for that low-balled war cost in the 2009 budget:

“The president, last year -- in fact, on this very day,’’ Nussle noted on Monday,’’ sent up to Congress a very specific budget for the war, and in fact requested Congress to send to us and to the Defense Department resources in order to deal with our men and women who have been asked to do a tough job in the field. Congress, in a somewhat unprecedented way, did not act on it until late, and in fact has not acted on that entire package.

“There are still $108 billion that remains un-appropriated, that they have not yet demonstrated a desire to even consider or to pass on either floor,’’ Nussle said. “So we believe that we need to address 2008 first. We need to make sure that the men and women who have been asked to do a tough job have the resources they need to do that job. So Congress needs to act on the specific budget that we asked for last year.

“Congress has demonstrated that they only want to take this in piecemeal,’’ the budget director says. “And so rather than sending up a detailed budget that we saw last year had to change as a result of the Petraeus report and his testimony before Congress, Petraeus is coming back now again in March, will report to the President on the ongoing challenges and opportunities that are occurring in theater, and will hopefully give us a much better road map and strategy that we can then budget from. So we need to wait for the Petraeus report.

“So we put in a $70 billion bridge in order to deal with that which we know, as best as we can know it a year in advance,’’ he says, “without having the opportunity yet for the President to meet with his commanders in the field.’’

And they have built a $407 billion “bridge’’ to the 2009 deficit in the budget presented to Congress this year, because it’s more palatable to deal with deficits in “piecemeal’’ as well.

“The future is difficult to predict,’’ Nussle says. “I mean, there's obviously a lot of fluid situation on the ground in Iraq, and to know -- and thankfully good news, generally -- but to know exactly what that strategy will be, at this point in time, would be unrealistic. I spoke with the Secretary just this morning about that, and he will testify this week in front of Congress that he doesn't know what that amount will be, but we know that $70 billion, based on the kind of piecemeal approach that Congress is taking to funding the war, is an appropriate amount to put into the budget at this point.’’

We left Nussle with this question at Monday’s budget briefing at the White House: “The up-tick that you spoke about in the deficit takes it from $162 billion to $407 billion. So clearly there's something more going on there than just a tax relief program of $145 billion. And if you start with that premise, and then you add the $70 billion placeholder for the war, and acknowledge that you're really going to be looking at something above and beyond that, how are you not, in effect, really looking at essentially a new record level in sheer dollar terms?’’

“You can only compare something in relationship to something else,’’ Nussle replied. “And comparing it on a nominal dollar figure amount really doesn't tell you much. It's only when you compare it to the size of the economy it tells you whether or not you're able to manage that debt or that deficit.

“So I believe that the right comparison is to compare it against the economy,’’ he said. “There's no question when you add in the final amount it will change, and it may grow higher, but we don't know what that is because Congress has not even yet completed its job of working on the 2008 war package.’’