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$500 Billion Budget Deficit Expected
From CNN.com
Federal deficit expected to approach $500 billion next year
Democrats say analysis understates fiscal crunch
Monday, August 25, 2003 Posted: 5:38 PM EDT (2138 GMT)
A report by the Congressional Budget Office is expected to be released Tuesday.
WASHINGTON (AP) -- The federal deficit, already at record levels this year, will almost certainly get worse next year, congressional budget analysts are expected to say in a report Tuesday.
But House Democrats said Monday that the Congressional Budget Office analysis would understate the gravity of the fiscal crisis.
The nonpartisan CBO, which has estimated the federal deficit at $401 billion for the fiscal year ending September 30, is likely to project red ink approaching or even surpassing $500 billion next year, said Rep. John Spratt, D-South Carolina, top Democrat on the House Budget Committee.
But Spratt said the actual deficits next year and in the subsequent years could be substantially higher because the CBO generally does not take into account future policy changes such as increased defense costs or new tax cuts.
The CBO is expected to lay out various scenarios, including the added budgetary burden if the cost of the war in Iraq and the rebuilding of that country becomes a permanent fixture. The rebuilding of Iraq is not part of current budgetary projections.
The CBO in March, in its last long-range projection, predicted a 2003 deficit of $246 billion and an accumulated $891 billion surplus through 2013. The numbers this time are sure to be more pessimistic.
The Budget Committee Democrats said their analysis shows that the deficit will hit $495 billion in 2004, and will never go below $300 billion in the 2004-2013 period, reaching a total over the decade of $3.7 trillion.
If money from the Social Security surpluses now being used to pay for other federal programs is not factored in, the decade-long deficit will be $6.3 trillion, they said.
GOP blueprint
Sean Spicer, spokesman for House Budget Committee Chairman Jim Nussle, R-Iowa, disputed the Democratic conclusions, saying Republicans do have a blueprint for getting the budget back in balance. He said the keys were promoting a strong economic recovery and controlling federal spending and "we're trying to do both."
The Bush administration blamed the swift reversal from budget surpluses to perennial deficits to the faltering economy, the Sept. 11 attacks and the sharp rise in defense and homeland security costs. The White House says the fiscal situation will improve as the economy, bolstered by the Bush tax cuts, becomes more robust.
But Spratt contended that budget projections already assume strong growth of more than 3 percent a year over the next few years. "Even with growth we still have deep deficits getting even deeper," he said.
The CBO numbers, he said, do not take into account the $1.2 trillion that will be lost if tax cuts scheduled to expire over the next decade are made permanent, and another $878 billion in new tax cuts over the decade being sought by the White House.
Also not included is a $400 billion Medicare prescription drug benefit Congress is trying to pass this year, increased defense and anti-terrorism spending and addressing natural disasters.
This fiscal year's deficit has already exceeded the old record of $290.4 billion set in 1992 when President Bush's father was president. Republicans argue that the economy is much larger today than it was then, so the budget shortfall has less of an impact.
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