Bush Budget Said to Cause $2.75T Deficits
By ALAN FRAM, Associated Press Writer
WASHINGTON - President Bush (news - web sites)'s budget would produce deficits totaling $2.75 trillion over the next decade, the Congressional Budget Office (news - web sites) 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 |
