Bush Likely to Project Record Budget Deficits

Reuters ^ | January 28, 2003 | By Adam Entous

[Uncle Bill]

Bush Likely to Project Record Budget Deficits

Reuters
By Adam Entous
January 28, 2003

WASHINGTON (Reuters) - President Bush is likely to project record U.S. budget deficits this fiscal year and next, even without the cost of a possible war with Iraq, White House budget director Mitch Daniels said on Tuesday.

Previewing Bush's budget blueprint for fiscal 2004, scheduled for release on Monday, Daniels told Reuters spending on homeland security would increase from this year's level by nearly 8 percent to around $40 billion.

Bush is also expected to propose spending nearly $400 billion over 10 years to modernize Medicare and provide prescription drug benefits to seniors.

The projections, with deficits growing to $300 billion or more in fiscal 2003 and 2004, underscored the dramatic deterioration in the budget since the federal government recorded a surplus of $236 billion in 2000.

But Daniels said the projected deficits were manageable, noting that they would be about half the size of shortfalls recorded in the 1980s as a proportion of the economy.

He said budget deficits would begin to shrink starting in fiscal 2005, but the federal government would nonetheless run a cumulative budget deficit over five years. Bush is forgoing 10-year projections in his 2004 budget.

Daniels blamed what he called a "triple whammy" -- the recession, the Sept. 11, 2001 attacks on the United States and the war on terrorism -- for ballooning deficits.

Democrats blame sweeping tax cuts proposed by Bush.

Daniels said the White House's estimate for economic growth in 2003 was "right in the neighborhood" of the closely-watched Blue Chip survey of economists, or nearly 2.8 percent, while inflation would come in "well under" 2 percent.

Defense spending would rise between 4 percent and 5 percent in 2004 -- a roughly $16 billion boost over 2003 -- while growth in the rest of government would be kept to 3-4 percent. The budget will also provide a 9 percent increase in federal aid to states, bringing the total to nearly $400 billion.

DEFENDING BUSH'S PRIORITIES

Daniels defended Bush's budget priorities, brushing aside criticism from Democrats that he is spending too much on tax cuts for the rich and too little on homeland security.

"There is not enough money in the galaxy to protect every square inch of America against every threat that every hateful person might bring against us," Daniels said.

"This really has to be about how smart are we about what we're doing and there's an enormous amount of money being made available."

Daniels said Bush's budget would project deficits of nearly 3 percent of gross domestic product in both fiscal 2003 and 2004. He estimated the size of the U.S. economy at $10.4 trillion to $10.5 trillion.

Based on an economy of that size, budget deficits this fiscal year and next would approach $315 billion, well above the 1992 record of $290 billion.

However, when viewed in proportion to the size of the economy, the projected deficits would still remain well below the record level of 6 percent of gross domestic product during the Reagan administration in 1983.

"The economy that pays the bills is much much larger so it has to be seen in that perspective," said Daniels, who serves as director of the Office of Management and Budget.

He said Bush could balance the budget in short order, but added: "The president has to balance all the priorities facing the nation, and he's chosen to act on the economy, on the war, (and) on the homeland."

The bigger-than-expected deficits assume passage of Bush's legislative priorities, including his 10-year $670 billion tax cut package. Top Democrats in the Senate have declared the centerpiece of package -- eliminating most taxes paid by shareholders on corporate dividends -- dead on arrival.

Daniels said it is conceivable that surpluses could reemerge within the next five years, though Bush's budget does not make that assumption.

"I think we've all learned to be careful about projections beyond a couple years," he said, noting that as recently as 2001 the Congressional Budget Office was forecasting the government could book 10-year cumulative surpluses of up to $5.6 trillion.

"So who's to say we couldn't have a surplus. It could come on as suddenly as the last one did. But it won't be in this forecast," Daniels said.

Bush's 2004 budget does not include the cost of a possible war with Iraq. But the administration is drawing up plans to pay for a military campaign that could cost close to the $61 billion spent on the 1991 Gulf War.

Daniels' budget estimates contrast sharply with last year's projections. The White House had expected deficits of $109 billion in fiscal 2003 and $48 billion in 2004 followed by a $53 billion surplus in 2005.

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MEDICAL MARXISM

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Sen. Charles Grassley, Chairman, Senate Finance Committee:

Oct. 1, 1997:

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March 25, 2002:

• "I'm amazed at the creativity of those who like being Americans but dislike their American tax obligation. Since tax cheats are endlessly creative, the IRS has to be just as creative to catch the crooks."

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"President Bush served for six years as the 46th Governor of the State of Texas, where he earned a reputation as a compassionate conservative who shaped public policy based on the principles of limited government.."
http://www.whitehouse.gov/president/gwbbio.html

[Uncle Bill]

The state of the mess.

[Joe Hadenuf]

Someone is playing nasty little games.....Leftist type games....

[TLBSHOW]

BTTT

[Karsus]

The numbers are from White House budget director Mitch Daniels!

So now members of the GWB Admin are Leftists if they speak the truth?

[Joe Hadenuf]

You idiot, I was referring to the keywords that were hacked onto this thread, now removed. A real leftist move......

[Joe Hadenuf]

Or should I say, added to the thread, now removed......

[Karsus]

Perhaps you should make that clear next time, because your original post "Someone is playing nasty little games.....Leftist type games...." didn't not say A WORD about the keywords. It was a rather safe assumption that you were talking about the article.

And, as you point out in your next message, those keywords have been removed...

Was it necessary to call someone an idiot because you were not clear in your post?

[Joe Hadenuf]

I never post to you in the first place........

[Karsus]

You made an unclear post in a public forum and when I responded to you, you called me an idiot. Who is the idiot? The one that makes an unclear post or those that respond to said post?

[Joe Hadenuf]

Next time instead of assuming what the meaning is to a post not directed at you, try asking what they mean or for a definition or explanation..

In any event, I do offer my apologies for calling you an idiot.