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U.S. Budget Office Deepens Fiscal Gloom for Bush
Reuters
Monday, January 26, 2004; 12:40 PM
By Andrew Clark
WASHINGTON (Reuters) - The Congressional Budget Office on Monday forecast a slight improvement in this year's record federal budget deficit, but new evidence of worsening deficits over the next decade will still pose political problems for President Bush in an election year.
In its bi-annual budget outlook, the nonpartisan agency predicted a deficit of $477 billion in 2004, $3 billion less than its last forecast made in August.
It said next year's deficit would total $362 billion, up from its previous forecast of $341 billion. And, based on current spending and tax policies, total deficits are now expected to reach almost $2.4 trillion between 2004 and 2013, up from a prior forecast of $1.4 trillion in the same period.
The added red ink comes despite the agency's forecasts for robust economic growth of 4.8 percent this year and 4.2 percent in 2005 -- with the benefits of economic recovery outweighed by increased spending, like the $400 billion Medicare drug benefit and $87 billion for Iraq recently approved by Congress.
The current record deficit of $374 billion, posted in fiscal year 2003, easily eclipsed the prior high of $290 billion in 1992. But the shortfall predicted for 2004 would still be less than levels seen in the early 1980s when viewed as a percentage of the size of the U.S. economy.
While the U.S. budget outlook may not have changed fundamentally over the past six months, the political situation has shifted significantly where fiscal matters are concerned.
Democrats have long slammed Bush and his big tax cuts for the steep slide in the government's finances since it booked a record surplus of $236 billion in 2000. But their criticism has not yet struck much of a chord outside Washington.
"CBO's projections confirm deficits loom far into the future," said South Carolina Rep. John Spratt, top Democrat on the House of Representatives Budget Committee. "It is clear the Bush administration has no plan to eliminate these deficits."
REPUBLICANS START TO PRESS WHITE HOUSE
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