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Forcast 400b deficits this year { July 14 2003 } Original Source Link: (May no longer be active)
http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2003/07/14/national1854EDT0673.DTLhttp://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2003/07/14/national1854EDT0673.DTL
White House expected to forecast $400 billion deficits this year, next
ALAN FRAM, Associated Press Writer
Monday, July 14, 2003
©2003 Associated Press
(07-14) 15:54 PDT WASHINGTON (AP) --
The Bush administration is expected to forecast record deficits for this year and next exceeding $400 billion, perhaps reaching $450 billion, congressional Republicans said on Monday.
The nonpartisan Congressional Budget Office, and many private analysts, have been expecting shortfalls of that magnitude, but Tuesday's projection by the White House would be the first time it has acknowledged that amount of red ink.
The sky-high numbers were certain to revive the political fight over the budget. Democrats say tax cuts pushed by President Bush have worsened the situation, especially in the long run. Republicans blame the weak economy and the costs of fighting terrorism, and say the bad deficit numbers underscore the need to restrain federal spending.
Until now, the record shortfall was $290 billion in 1992 under the first President Bush.
Republicans say the more important measure of red ink is how it compares to the size of the U.S. economy, because that illustrates the government's ability to afford carrying the debt.
Even gauged that way, a shortfall 4 percent as big as the economy -- as this year's and next's will probably be -- begins to approach the dimension of the deficits of the 1980s and early 1990s that both parties agreed were untenable.
Several GOP aides said they were expecting numbers surpassing $400 billion this year and next, perhaps in the $450 billion range. Asked about that, Senate Budget Committee Chairman Don Nickles, R-Okla., said he had heard the same thing.
"I think the economy can handle it. I think it's higher than I'd like it to be," he said in a brief interview.
South Carolina Rep. John Spratt, top Democrat on the House Budget Committee, said he believed actual deficit numbers may be worse.
In the short term, that is because the White House numbers are not expected to include the future costs of U.S. operations in Iraq and Afghanistan, which are approaching $5 billion per month. They are expected to include costs incurred there to date.
In the longer term, the administration figures will not count the hundreds of billions of dollars it would take to make permanent the tax cuts Congress enacted in 2001 and earlier this year. The White House's budget projections are expected to be for the next five years, but many of those tax cuts expire in 2010 -- leaving the costs of extending them outside that five-year window.
"There's no way OMB can make the budget a pretty picture," Spratt told reporters, using the acronym for the White House's Office of Management and Budget.
Only two years ago, the government ended its budget year with a $127 billion surplus. That was the fourth straight and the second largest ever.
Since then, the budget has careened through its most abrupt, steepest reversal ever. Last year, deficits returned with the red ink reaching $158 billion.
Until now, the most recent White House projection was the $304 billion it forecast in February for this year and $307 billion for 2004. The government's 2004 budget year begins Oct. 1.
But as the year has progressed, a revenue drop below expected levels has continued, causing forecasters to adjust their projections. In addition, the White House's initial projections excluded any costs for the war with Iraq, and Bush and Congress enacted a near $80 billion bill in April to pay for the Iraq fighting and other anti-terrorism operations.
The White House numbers to be released Tuesday were to include the $400 billion over 10 years that Bush included in his budget for creating a prescription drug benefit under Medicare. Such a measure is working its way through Congress.
The numbers will also include Bush's other spending and tax-cut proposals that have not yet become law.
©2003 Associated Press
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