George H.W. Bush: “I think you will recall, at the opening of my remarks, I invited that kind of suggestion. Now, inasmuch as you raised a…”

“I think you will recall, at the opening of my remarks, I invited that kind of suggestion. Now, inasmuch as you raised a couple of specifics, I think you're entitled to an answer. And I'd like Dick Darman, who has testified, to respond to those two points. Director Darman. Thank you, Mr. President. The accrual accounting point is really quite arcane. But for those who are aware of the issue to which the Governor referred, let me clarify a couple of things. First of all, the budget numbers that we published and the deficit numbers we published do not, do not include the effect of the accrual reforms. In other words, the number that is an unattractive number for fiscal year '92, which we published, $399.4 billion estimated deficit with our program, does not include the effect of the accrual accounting reform we recommend, point one. In other words, the premise is wrong. Second, the accrual reforms which we proposed, we proposed in June of last year before the growth package. They are independently desirable. We were asked by the Congress to make a recommendation. We made that recommendation. The Congressional Budget Office was also asked. They made the same recommendation, that insurance programs should be subject to accrual accounting. The two different independent accounting organizations, outside CPA's, made the identical recommendation. And in fact, many States followed the same approach and are ahead of the Federal Government. Some have argued that had we had accrual accounting in the past, we would have seen the adverse effect of the S&L crisis in advance, and it would have taken the appropriate preventive action in advance. So, I think that that point is not quite apt as a criticism. In fact, it's a useful reform we're recommending, but it is not used in the deficit numbers that we published at the lead of the budget. On the IRA scoring issue, again I'm afraid there's a little bit of confusion. We actually scored the IRA proposal as losing money. But we nonetheless propose it because we think it has a favorable long-term effect on growth. There are some in Congress who have proposed IRA reforms which they score positively. We did not adopt those. We adopted and explicitly over 5 years showed revenue losses: small gain in the first 2 years, substantial decline in the 3d, 4th, and 5th year, with the declines increasing in exactly the manner you suggested, Governor Romer. But we did it above board, and we financed it. On the point about the asterisk--sorry for going on so long, Mr. President, this is all rather arcane. This one is extremely technical. I believe what you're referring to shows up in fiscal year '94 and '95. And it's the only thing that I can think of that would qualify as related to the number you've mentioned. What we have done is we have proposed a budget authority freeze, fiscal year '93 relative to '92, with every single program cut fully identified above board, with every program termination fully identified, and with all the increases identified. That's what the law asks us to do. That's all we have to do in the Federal appropriations process, one year. For the outyears, we extended the budget authority freeze forward, '94, '5, '6, '7. The outlays that are associated with that you can't know at this stage; you don't know until the Congress has made the decisions on fiscal year '93. And you have to assume an outlay ratio. We did, but they've hit the cap. So, we made an allowance adjustment to make it consistent with the law on the outyears at the same time as we proposed to amend the caps to make it conform correctly. But none of that has effect on the actual appropriations process. For the appropriations process for this year every single line, every project, every proposal is specified in detail. There is no magic asterisk. Thank you, Mr. President.”