Bush Budget Said to Cause $2.75T Deficits
Fri Feb 27, 6:18 PM ET
story.news.yahoo.com
By ALAN FRAM, Associated Press Writer
WASHINGTON - President Bush 's budget would
produce deficits totaling $2.75 trillion over the next decade, the
Congressional Budget Office projected Friday in the
first authoritative look at the plan's longer-range implications.
The nonpartisan budget office said Bush's tax
and spending plans would, if enacted, add
$737 billion to shortfalls otherwise expected
over the period. Its massive numbers are sure
to factor into this year's presidential and
congressional campaigns.
Just two years ago, the budget office and
Bush envisioned surpluses totaling $5.6
trillion for the decade ending in 2011. The
projections released Friday cover a slightly
different period, the 10 years running through 2014, but the contrast is
striking.
On Feb. 2, Bush sent lawmakers a 2005 budget that would spend $2.4
trillion next year, but it projected outward for only five years. The White
House argues that longer-range forecasts are guesswork, but Democrats
say the administration wants to hide future deficits that will career out of
control as baby boomers begin to retire.
The nonpartisan budget office also forecast that Bush's fiscal plans
would produce deficits of $478 billion this year and $356 billion in 2005.
Both figures are smaller than the shortfalls Bush has projected, $521
billion for this year and $364 billion for 2005. The White House uses
more pessimistic assumptions about the economy than the
congressional analysts do.
For the decade ending in 2014, however, annual shortfalls never would be
smaller than $242 billion, which would occur in 2007, the congressional
report said. After that, they would bounce as high as $289 billion in
2014.
"It shows the debt going up, up and away," Sen. Kent Conrad of North
Dakota, top Democrat on the Senate Budget Committee, said about the
congressional estimates. "It's further confirmation he's on an utterly
reckless course."
Last year's shortfall, which exceeded $374 billion, was the largest ever in
dollar terms.
White House budget spokesman Chad Kolton said there frequently are
major differences when two organizations make long-range forecasts of
entities as huge as the federal budget and the U.S. economy. Even so,
he acknowledged, "We recognize the need to address long-term fiscal
issues."
But, he said, "Looking at the first five years of CBO's forecast, it shows
we cut the deficit in half within five years" - one of Bush's budget goals.
The congressional numbers show Bush falling short of that goal in dollar
terms but not when the shortfall is compared to the size of the economy.
That comparison, the White House says, is a more important measure
of the deficit's impact.
In one ominous note, however, the budget office's deficit estimate for the
decade has grown by $119 billion since only January, chiefly due to
increased estimates of the costs of the Medicare and Medicaid
health-insurance programs.
Two days ago, Federal Reserve (news - web sites) Chairman Alan
Greenspan (news - web sites) focused attention on the government's
long-term fiscal problems by suggesting cuts in Social Security (news -
web sites) benefits to ease cascading red ink. Members of both parties
quickly disavowed benefit reductions.
Democrats, though, hope to use the prospect of massive, unrelenting
shortfalls as a symbol of what they say is Bush's mismanagement of the
economy. Republicans blame the red ink on recession and the costs of
war and fighting terror and say Bush has focused his attention on those
problems instead of balancing the government's books.
Yet underlining their sensitivity to the deficit problem, six conservative
senators sent a letter this week asking Senate Budget Committee
Chairman Don Nickles, R-Okla., to produce a fiscal blueprint for
balancing the budget in seven years. That would exceed Bush's goal of
halving shortfalls in five years.
One major Bush proposal that his five-year numbers did not reflect, but
Friday's congressional projections did, was the cost of making tax cuts
permanent that otherwise would expire in 2010. Bush's tax plans would
add more than $1.3 trillion to deficits over the decade, the budget office
said.
Wary of the impact on deficits, Republican
congressional leaders already have said they will not
move this year on Bush's proposal to extend the tax
cuts, which is the pillar of his plan for strengthening
the economy.
The top two Democratic presidential contenders,
Sens. John Kerry (news - web sites) of Massachusetts
and John Edwards (news - web sites) of North
Carolina, have said they would roll back the
reductions for the wealthiest Americans.
At the same time, Bush's fiscal plans would reduce
expected spending by about $700 billion over that
period, Friday's analysis said. The savings come
chiefly from Bush's omitting the costs of any U.S.
activities in Iraq (news - web sites) after this year and
proposing to curb domestic spending, the budget
office said.
Underlining the long-term costs of Bush's budget, its
enactment would make deficits $99 billion smaller
over the next five years. Over the entire decade,
however, it would add $737 billion in red ink.
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On the Net:
Congressional Budget Office: cbo.gov |
