BALANCE THE BUDGET? WHAT BUDGET?
Our inability to account for all contingencies is no reason to give up hope of balancing the federal budget, as discussed in "You can't balance tomorrow's budget today" (News: Analysis & Commentary, July 10).
It would be instructive, though, for the budget to be better defined. There are a number of factors that seriously cloud the budget-balance issue. One factor is the distinction between "on" and "off" budget items. Another, the treatment of legislated appropriations for longer-term capital projects vs. actual expenditures in a given year. A third is the impact of inflation (even at low rates) on reducing the real value of the national debt, which may partially offset a current deficit. A fourth is accounting for changes in the value of government assets.
Uncertainties will always vex us, but it is crucial to define what budget it is that we are aiming to balance and to discuss if that is the relevant budget concept.
Associate Professor of Economics
University of Hawaii