Resisting the NWO

Northeast USA
3907 posts, Sep 2002

posted 02-02-2003 05:14 PM            

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HIGHER THAN ANY PRESIDENT IN 80 YEARS

Bush Budget Will Project
Record Deficits
By Adam Entous
2-1-3

WASHINGTON (Reuters) - President Bush's budget for fiscal 2004 will project record deficits this fiscal year and next, even without the cost of a possible war with Iraq, administration officials said on Saturday.

Bush's $2.2 trillion budget blueprint, scheduled for release on Monday, will estimate the deficit for fiscal 2003 at $307 billion, surpassing a 1992 record of $290 billion. The budget shortfall in fiscal 2004 would ease slightly to $304 billion, officials said.

The new estimates -- at nearly triple the $109 billion shortfall for 2003 forecast by the White House in July -- underscore a dramatic deterioration in the nation's fiscal picture since a record surplus in 2000. As recently as 2001, the government was forecasting 10-year budget surpluses of $5.6 trillion.

But 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.

Trent Duffy, a spokesman for the White House Office of Management and Budget, said deficits of this size, as a share of the economy, would be "better than 12 of the last 20 years."

"This is nowhere near a record," Duffy said. "President Bush wants to reduce the deficit by growing the economy and holding government spending to the growth in family paychecks."

Bush's new budget will call for slowing spending growth to 4 percent, though the administration's top two priorities -- homeland security and the military -- will get far more.

But the 2004 budget does not include the budgetary effects of a possible war with Iraq. While the cost will depend on the length of a war and other factors, White House officials say it could be close to the $61 billion expended on the 1991 Gulf War.

DEMOCRATS ATTACK

Democrats accused Bush of pursuing economic policies that will dramatically increase the nation's debt burden and accelerate economic decline.

"Our national debt, once headed for a zero balance, will rise to about $5 trillion in five years," said Sen. Kent Conrad of North Dakota, the top Democrat on the Senate Budget Committee. "The dead weight of that debt will drag down our economy for years to come."

He said it will lead to higher interest rates that will slow growth and argued that the debt was being financed by the Social Security trust fund.

"It's not a tax cut, it's a tax increase on future generations," Conrad added.

Bush has proposed a $670 billion 10-year tax cut that would slash investors' dividend taxes and accelerate scheduled income tax cuts. Republicans say the plan will give the lackluster economy a boost.

Democrats argue it will benefit mostly the wealthy and add to long-term budget deficits.

Bush's budget director, Mitch Daniels, acknowledged that the federal government would post deficits for the "foreseeable future." Though he said the deficits would begin to shrink starting in fiscal 2005, he expects the government to run a cumulative budget shortfall over the next five years.

The White House insists that deficits of this size are manageable and has put the onus on Congress to restrain government spending except in the areas of homeland security and defense.

Of $41.3 billion earmarked for domestic homeland security, Bush's 2004 budget will include $36.2 billion for the newly created Department of Homeland Security. That compares to an overall homeland security budget of $37.7 billion in 2003, $33 billion of which was earmarked for the department.

Under Bush's budget, defense spending would rise to roughly $380 billion -- from $364.6 billion in 2003 -- or to nearly $400 billion including spending through the Energy Department to maintain and oversee the nation's nuclear weapons.

But the six-year Pentagon spending proposal would also include increases of $20 billion a year in each of the subsequent five years, pushing the military budget as high as $484 billion in 2009.

White House officials say growth in the rest of government should be kept down to 3 to 4 percent -- the amount the White House expects family incomes to grow.

But some non-defense programs will get a bigger boost. For example, the Treasury Department announced on Saturday that the president's budget would increase the Internal Revenue Service's budget by 5.25 percent to $10.4 billion. Included in that will be $133 million to increase audits of businesses and wealthy taxpayers.