Congressional office projects $200 billion deficit
Sending more bad news to Capitol Hill and igniting a new round of budget fights between Republicans and Democrats, the Congressional Budget Office Wednesday projected the government would run a deficit of about $199 billion in fiscal 2003 and $145 billion in fiscal 2004, and would not return to surplus until fiscal 2007.
Such projections are a marked contrast from CBO's fall estimates, which said the government should run a deficit of about $145 billion in fiscal 2003. Over the next decade, fiscal 2004-13, the cumulative surplus would run about $1.336 trillion, a far cry from the $5 trillion in projected surpluses just two years ago.
If Social Security revenues are not used to make up for government shortfalls-as lawmakers vowed to do during the last years of the Clinton administration-the deficit projections get progressively worse.
In fiscal 2003, the on-budget deficit would run $361 billion and $319 billion in fiscal 2004. The government would then not return to surplus until fiscal 2012, for a combined 10-year deficit of $1.23 trillion. Meanwhile, the amount of publicly held debt would grow steadily from fiscal 2003 through fiscal 2006, rising from $3.766 trillion to $4.045 trillion, but then declining to $2.565 trillion in fiscal 2013.
Hoping to use the new estimates to counter President Bush's economic policies, Democrats said there is an even gloomier picture under the surface because CBO bases its projections on already-enacted legislation and an increase in discretionary spending equal to the rate of inflation. They said making the president's $1.3 trillion tax cut permanent would further exacerbate the deficit, as would passage of Bush's new 10-year $674 billion tax cut plan. Moreover, Democrats contend Congress is also likely to pass a prescription drug benefit, provide relief for the alternative minimum tax and continue to increase the military and homeland defense budgets.
Once those are factored into the equation, Democrats said the $1.336 trillion surplus would, in fact, turn into a $2.067 trillion deficit, which would be $4.635 trillion if Social Security revenues are excluded. "This introduces the elephant in the room that [Bush] didn't talk about last night," said House Budget ranking member John Spratt, D-S.C., referring to the State of the Union address. Added his counterpart in the Senate, Budget ranking member Kent Conrad, D-N.D., "[Bush's] policies have plunged the nation back into deficits and debt, Social Security and Medicare are threatened, and the administration is shortchanging domestic priorities like education and health care to help pay for tax cuts that primarily benefit the wealthiest."
House Budget Chairman Jim Nussle, R-Iowa, tried to downplay the deficit projections, saying they were "pretty much close" to what was anticipated, and vowing to put together a budget resolution that would accommodate tax cuts while putting the brakes on discretionary spending. Nussle also said that "deficits are not the only measure" of fiscal responsibility, adding, "Just because your checkbook is balanced doesn't mean you're fiscally responsible."
Nussle, however, declined to give specifics of his budget resolution and its various tax and spending components.