Groups forecast $5 trillion in deficits over next decade
Three prominent budget watchdog groups Monday released a study projecting $5 trillion in federal deficits over the next 10 years, fiscal 2004-2013, which is much more pessimistic than earlier Congressional Budget Office estimates of a $1.4 trillion deficit over the same period.
The report also forecasts a $4.4 billion deficit from fiscal 2002-2011, the same period in which CBO less than three years ago projected a $5.6 trillion surplus -- representing a $10 trillion swing in 32 months.
Issued by the Committee for Economic Development, the Concord Coalition and the Center on Budget and Policy Priorities, the report shows a deficit of $523 billion in 2004, followed by a string of annual deficits that never drop below $423 billion in any fiscal year and reach a high of $611 billion in 2013. It also projects annual interest payments on the national debt reaching $470 billion by 2013.
"If these projections are borne out, the coming decade is likely to be the most fiscally irresponsible in our nation's history," said Concord Coalition Executive Director Robert Bixby.
The report makes assumptions that by law CBO cannot-that expiring tax cuts will be extended, relief from the alternative minimum tax will be continued, a $400 billion Medicare prescription drug benefit will be enacted and defense and homeland security spending will grow faster than the rate of inflation.
In a veiled shot at Bush administration tax cut advocates, former Clinton administration Treasury Secretary Robert Rubin said "anyone who believes in market-based economics should be enormously concerned" since there is a direct link between deficits and rising interest rates. Rubin, who now serves as chairman of the Citigroup Inc. executive committee, said the deficits would cause markets to lose confidence by illustrating government mismanagement of the economy.
"We're going to need sacrifices on every front-the revenue front, the spending front and the entitlement front," added former CBO Director Robert Reischauer. He said that he is doubtful the current administration and Congress have the political will to either raise taxes, cut spending or reform entitlement programs such as Social Security, which is headed for a benefits explosion once the baby boomers begin retiring in about 2008.
NEXT STORY: Senate approves month-long funding measure