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Before we all become immersed in the minute details of the Bush administration's fiscal 2004 proposal, which was submitted to Congress on Monday, it is important to take a look at the big budget picture.

It's dismal.

Let's start with the bottom line. The Bush budget estimates that the fiscal 2003 deficit will be $304 billion - $14 billion more than the previous record of $290 billion in fiscal 1992 and almost double the $158 billion deficit from 2002.

But the $304 billion deficit does not include the cost of what appears to be an increasingly likely war with Iraq, which could easily add at least another $40 billion. And if, as many believe, the economy does not rebound quickly or robustly, the 2003 deficit could be closer to $400 billion.

Unfortunately, fiscal 2003 is just the beginning; a deficit in the $400 billion range is possible for fiscal 2004 as well. The administration's budget itself projects deficits of close to $200 billion every year through 2008.

This more or less permanent change in the deficit outlook is more likely because the caps on appropriations and pay-as-you-go limits on revenues and entitlements, which effectively limited what Congress and the White House did the last time there was a deficit, won't be reimposed any time soon.

Congress and the White House are also likely to rely more heavily on supplemental appropriations in the years ahead, and that almost certainly will provide additional opportunities to add things to the budget that otherwise would have a hard time being approved.

A large triple-digit deficit is also more likely to be the rule rather than the exception thanks to the huge increase in federal borrowing that will occur in the years ahead as a result of the budget policies likely to be put in place. The interest payments on the debt could easily account for half or more of the deficit for years to come.

Because of this, it is hard to see how the deficit will fall below $200 billion at any time during this decade unless the economy and stock market boom in a way that no one is currently expecting.

Even "fiscal discipline," which is currently defined as spending restraint, is not likely to have much of an impact unless the White House and Congress are willing to do things that so far have been completely unimaginable.

For example, about half of the approximately $820 billion that will be appropriated in fiscal 2004 will be for military and homeland security spending and so will be exempt from reductions. With the deficit approaching $400 billion, that means that all remaining spending would have to be cut to eliminate the deficit entirely. Even a 10 percent reduction in these programs, which is extremely unlikely, would barely make a dent in the total.

But the biggest reason the current big budget outlook is so discouraging is that the deteriorating deficit outlook is being matched by an unprecedented lack of interest in doing anything about it. Under the terms of the current debate, many of those Washington policy-makers who in the past have railed against federal red ink are now saying that a $300 billion deficit is acceptable, a $400 billion deficit is tolerable and the economy can handle a $500 billion deficit.

As has happened at various times in the past, it is certainly possible that the deficit will finally reach some number that will be unacceptable to Wall Street or to voters, and that will change the budget landscape. An unexpected nosedive in the economy or stock market could force Washington's hand, as happened in 1987. Or, as happened in 1992, a Ross Perot-like politician might be able to raise the budget issue in a way that forces otherwise unwilling lawmakers to deal with it.

In the absence of something like this, however, the overall dismal budget outlook is not likely to change anytime soon.

Question Of The Week

Previous Question. A surprisingly large number of readers thought that "camouflage" would be a good guess for the cover of the Bush fiscal 2004 budget. It turned out to be blue. The winner of the "I Won A 2003 Budget Battle" mouse pad is Kathryn Edgecomb, who works for the National Oceanic and Atmospheric Administration in Washington state and was selected at random from the handful of people who picked the right color.

This Week's Question. The Congressional Budget Office typically completes three major reports early each year. The first, The Economic and Budget Outlook, was released on Jan. 29. The question: What are the names of the other two reports? Send your response to scollender@nationaljournal.com by 5 p.m. PST on Saturday, Feb. 8, 2003. You must include your mailing address so the mouse pad can be sent if you win. If there is more than one correct entry, the winner will be selected at random from all those who got the answer right.