The editorial staff at Investment News has written a scathing critique of Bush’s 2008 budget. This is the best critical analysis I’ve read yet, and it doesn’t shy away from calling the budget a Big Fat Lie. They estimate the deficit will be at least $550 billion.

In this election year, the country deserves a realistic budget, and President Bush’s proposed budget for fiscal 2009 isn’t it — even though it predicts a deficit of $407 billion.The budget document released last week is just plain dishonest. Let us count the ways.

The article identifies the following obvious problems:

• Revenue is generally overstated,
• It ignores the current economic slowdown,
• It ignores the $152 billion stimulus package,
• It assumes the AMT will remain unchanged,
• It assumes large cuts to Medicare, Transportation, Justice, Labor, Agriculture and Interior, none of which will pass Congress,
• The $70 billion estimated cost of Iraq/Afghanistan will be at least twice that.

Some of those assumptions are ridiculous. In fact the only assumption mentioned in the article which seems correct is that we will dramatically increase our military spending. When you consider that our military budget is already larger than the total military budgets of the rest of the world’s nations combined, I begin to wonder why we’re running up a half-trillion dollar deficit to increase it.

Investment News concludes:

A more realistic figure for the likely fiscal-2009 deficit will be in excess of $550 billion. A more realistic budget, even if the news on the deficit is bad, might trigger a serious debate about national priorities and realistic ways to achieve them… [For example] how much does the country need for defense? What are the true costs for the wars in Iraq and Afghanistan?

Instead, a budget based on unrealistic assumptions is declared “dead on arrival” and bogs down the debate in a lengthy discussion on the validity of the overall assumptions. It leaves all taxpayers without even a hint as to the effect of the budget on their financial well-being. Consequently, none of us can plan for the future. This may be one of the invisible drags on economic activity.

On the plus side, $550 billion today is only $300 billion in 2002 dollars. And a half-trillion dollar deficit will devalue our currency even more, making the $500 billion increasingly irrelevant. So at least we’ve got that going for us.