White House scrapped deficit study
Administration-commissioned study showing 'chronic deficit' of $44 trillion cut from budget report.
May 29, 2003: 11:14 AM EDT
LONDON (Reuters) - The Bush administration shelved a report it commissioned that called for sharp tax rises to head off deep future federal budget deficits, according to a published report Thursday.
President Bush's administration chose to keep the findings out of February's budget report as the White House lobbied for a $350 billion package of tax cuts -- the opposite of what the report recommended, Britain's Financial Times reported.
Bush signed the cuts into law Wednesday.
The study outlined how the United States is in danger of being overwhelmed by the future health-care and retirement costs of the "baby boomer" generation. It measured the present value of the federal deficit at over $44 trillion.
The study estimated that closing the budget gap would take an immediate and permanent across-the-board tax increase of 66 percent, the paper reported.
Under the law signed by Bush, the public debt limit will grow to $7.38 trillion from $6.4 trillion.
However, an administration official told the FT the study was designed as a thought piece and was one among many left every year on the cutting room floor.
The study does not represent the views of the Bush Administration, Rob Nichols, Treasury's spokesman, told CNNfn. "It is not endorsed by us," said Nichols. "This paper was not prepared at Treasury, by Treasury, or at the request of anyone at Treasury."
Nichols added, "It was prepared after the individuals in question went back to the private sector."
The report was commissioned by former Treasury Secretary Paul O'Neill and completed early this year, the FT said. It was spearheaded by Kent Smetters, former Treasury deputy assistant secretary for economic policy, and Jagdessh Gokhale, then a consultant to the U.S. Treasury. O'Neill left the administration in December.
The newspaper's Web site carried a transcript of FT interviews with both Smetters and Gokhale.
Smetters said the report was "never meant to be a Treasury study. It was meant to be some internal thinking...on how to reform the budget."
But Gokhale told the Web site: "When we were conducting the study my impression was that it was slated to appear [in the budget]."
Gokhale also told the Web site that other U.S. administrations since the early 1990s had ignored similar accounting works based on "generational accounting analyses," and which pointed at much larger deficits than the official government figures recognized. |
