but maybe not in the way he wanted
CBO Deficit Forecast Worsens in '03, '04
January 29, 2003 11:03 AM EST
WASHINGTON - The Congressional Budget Office on Wednesday projected deficits of $199 billion this year and $145 billion in 2004 if no new tax cuts or spending increases are enacted, worsening the government's fiscal outlook and enflaming a budget battle between President Bush and Democrats.
The new figures, obtained by The Associated Press, marked the latest decline in what has been two years of steady decay in the government's economic expectations. In August, the nonpartisan agency envisioned shortfalls of $145 billion in 2003 and $111 billion in 2004.
Some private economists have projected that including tax cuts, potential war with Iraq and other costs that could be incurred this year, the 2003 deficit will hit or surpass $300 billion. The worst ever was the $290 billion in red ink the government recorded in 1992, when Bush's father was president.
Without any tax or spending changes, CBO said a string of annual deficits would turn back to surpluses in 2007 with $26 billion in black ink. In August, the budget office envisioned a return to balance a year earlier.
The budget agency also forecast a cumulative surplus of $629 billion over the decade beginning in 2003. That, too, was a retreat from August, when CBO foresaw a cumulative surplus of $1 trillion over the same 10 years.
Rep. John Spratt of South Carolina, top Democrat on the House Budget Committee, said the numbers showed that Bush's call for more tax cuts and other initiatives in the State of the Union address would produce deep deficits that "drop into oblivion" for years.
"The question he avoided was, 'How would he do all the things he's talking about in the State of the Union and have any kind of bottom line left in the budget,'" Spratt said in an interview.
But House Budget Committee Chairman Jim Nussle, R-Iowa, said the government must remain focused on priorities that have contributed to deficits - strengthening the economy and battling terror.
"Our budgets need to look beyond the next election and towards the next generation," he said in a written statement.
In his speech Tuesday, Bush said the best way to eliminate deficits "is to encourage economic growth and to show some spending discipline in Washington, D.C."
Though gloomier than five months ago, the CBO figures almost certainly understate the shortfalls because they are intended to present the fiscal outlook at the start of this year's budget process before Congress starts working on tax and spending changes.
As a result, the CBO estimates omit the costs of Bush's proposed $674 billion, 10-year economic growth package; a possible war with Iraq, estimated to cost at least tens of billions of dollars; and billions in other spending increases that Bush and Congress are likely to approve.
The figures also do not include the hundreds of billions of dollars it would cost to make permanent the $1.35 trillion, 10-year tax cut enacted in 2001 that would otherwise expire in 2011. Bush and many Republicans want to make those tax reductions permanent.
Underlining the rapid deterioration in the government's books, CBO just two years ago projected a $5 trillion surplus for the next decade. At that time, the new Bush administration envisioned $5.6 trillion in surpluses - a forecast it pared down to an $827 billion surplus this past August.
The president and congressional Republicans blame the continued bad news on the limp economy and repercussions of the Sept. 11, 2001, terrorist attacks. They argue that buttressing the economy and fighting terror are higher priorities than balancing the budget, and say that deficits of this size are manageable compared to the $10.5 trillion size of the U.S. economy.
Democrats say Republicans omit another cause of the problem - the $1.35 trillion, 10-year tax cut that Bush and predominantly GOP lawmakers pushed through Congress in 2001. They say Bush's economic plan - all but $4 billion of which are tax cuts - would only make the deficit worse, and argue that higher deficits risk pushing interest rates higher and squeeze funds for other budget needs.
The red ink has become a sensitive issue for the Bush administration because of the abrupt turnabout in the government's financial picture. After four decades of annual deficits, there were four consecutive annual surpluses in the final years of the Clinton administration that ended with a $159 billion shortfall last year under Bush.
The deficits Bush will forecast in the budget he releases on Monday will be even worse than CBO's because the White House forecast will factor in the price tag of his proposed economic package and some additional spending. It will not include the costs of a possible war with Iraq.
Congress, gridlocked during last fall's midterm elections, still is working on spending bills for the budget year that began Oct. 1.
By voice vote Tuesday, the House approved a bill that keeps agencies open through Feb. 7 while budget negotiations continue. Without the bill, spending authority will expire Jan. 31, and quick Senate passage is expected.
CBO Deficit Forecast Worsens in '03, '04
January 29, 2003 11:03 AM EST
WASHINGTON - The Congressional Budget Office on Wednesday projected deficits of $199 billion this year and $145 billion in 2004 if no new tax cuts or spending increases are enacted, worsening the government's fiscal outlook and enflaming a budget battle between President Bush and Democrats.
The new figures, obtained by The Associated Press, marked the latest decline in what has been two years of steady decay in the government's economic expectations. In August, the nonpartisan agency envisioned shortfalls of $145 billion in 2003 and $111 billion in 2004.
Some private economists have projected that including tax cuts, potential war with Iraq and other costs that could be incurred this year, the 2003 deficit will hit or surpass $300 billion. The worst ever was the $290 billion in red ink the government recorded in 1992, when Bush's father was president.
Without any tax or spending changes, CBO said a string of annual deficits would turn back to surpluses in 2007 with $26 billion in black ink. In August, the budget office envisioned a return to balance a year earlier.
The budget agency also forecast a cumulative surplus of $629 billion over the decade beginning in 2003. That, too, was a retreat from August, when CBO foresaw a cumulative surplus of $1 trillion over the same 10 years.
Rep. John Spratt of South Carolina, top Democrat on the House Budget Committee, said the numbers showed that Bush's call for more tax cuts and other initiatives in the State of the Union address would produce deep deficits that "drop into oblivion" for years.
"The question he avoided was, 'How would he do all the things he's talking about in the State of the Union and have any kind of bottom line left in the budget,'" Spratt said in an interview.
But House Budget Committee Chairman Jim Nussle, R-Iowa, said the government must remain focused on priorities that have contributed to deficits - strengthening the economy and battling terror.
"Our budgets need to look beyond the next election and towards the next generation," he said in a written statement.
In his speech Tuesday, Bush said the best way to eliminate deficits "is to encourage economic growth and to show some spending discipline in Washington, D.C."
Though gloomier than five months ago, the CBO figures almost certainly understate the shortfalls because they are intended to present the fiscal outlook at the start of this year's budget process before Congress starts working on tax and spending changes.
As a result, the CBO estimates omit the costs of Bush's proposed $674 billion, 10-year economic growth package; a possible war with Iraq, estimated to cost at least tens of billions of dollars; and billions in other spending increases that Bush and Congress are likely to approve.
The figures also do not include the hundreds of billions of dollars it would cost to make permanent the $1.35 trillion, 10-year tax cut enacted in 2001 that would otherwise expire in 2011. Bush and many Republicans want to make those tax reductions permanent.
Underlining the rapid deterioration in the government's books, CBO just two years ago projected a $5 trillion surplus for the next decade. At that time, the new Bush administration envisioned $5.6 trillion in surpluses - a forecast it pared down to an $827 billion surplus this past August.
The president and congressional Republicans blame the continued bad news on the limp economy and repercussions of the Sept. 11, 2001, terrorist attacks. They argue that buttressing the economy and fighting terror are higher priorities than balancing the budget, and say that deficits of this size are manageable compared to the $10.5 trillion size of the U.S. economy.
Democrats say Republicans omit another cause of the problem - the $1.35 trillion, 10-year tax cut that Bush and predominantly GOP lawmakers pushed through Congress in 2001. They say Bush's economic plan - all but $4 billion of which are tax cuts - would only make the deficit worse, and argue that higher deficits risk pushing interest rates higher and squeeze funds for other budget needs.
The red ink has become a sensitive issue for the Bush administration because of the abrupt turnabout in the government's financial picture. After four decades of annual deficits, there were four consecutive annual surpluses in the final years of the Clinton administration that ended with a $159 billion shortfall last year under Bush.
The deficits Bush will forecast in the budget he releases on Monday will be even worse than CBO's because the White House forecast will factor in the price tag of his proposed economic package and some additional spending. It will not include the costs of a possible war with Iraq.
Congress, gridlocked during last fall's midterm elections, still is working on spending bills for the budget year that began Oct. 1.
By voice vote Tuesday, the House approved a bill that keeps agencies open through Feb. 7 while budget negotiations continue. Without the bill, spending authority will expire Jan. 31, and quick Senate passage is expected.