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Can Use CBO Projects Record Deficit
Figure Could Reach $3.5 Trillion in the Next Decade if Tax Cuts Are Made Permanent
By Jonathan Weisman
Washington Post Staff Writer
Monday,
January 26, 2004; 1:50 PM The federal government will run a record $477
billion budget deficit this year and could accumulate nearly $1.9 trillion in
additional debt through 2014, the non-partisan Congressional Budget Office said
Monday.
If President Bush succeeds in making his 2001 and 2003 tax cuts permanent,
the deficit could reach nearly $3.5 trillion over the next decade, with the tax
cuts alone costing the Treasury $295 billion a year by 2014, CBO said. Even
without that change, the government's long-term finances have worsened considerably
in the past six months, largely due to the war in Iraq and passage of the $400
billion law adding a prescription drug benefit to Medicare. In August, congressional
forecasters predicted a 10-year deficit of $1.4 trillion through 2013. That figure
has jumped nearly a trillion dollars since then. "CBO's projections confirm
that deficits loom far into the future," warned Rep. John M. Spratt Jr. (S.C.),
the ranking Democrat on the House Budget Committee. Treasury Secretary
John W. Snow, in a speech delivered via satellite to a conference in London, said
the administration remains committed to cutting the deficit in half over the next
five years. "Make no mistake; President Bush is serious about the deficit,"
Snow said. White House officials cautioned that the CBO may have inflated
its long-term deficit figure. By law, the agency had to assume that this year's
$87 billion spending in Iraq and Afghanistan would continue at that level through
the next 10 years. Indeed, CBO officials acknowledged that the deficit would be
$880 billion smaller if all spending in Iraq and Afghanistan were to end this
year. But by most measures, the prospects appear bleak. CBO does anticipate
the deficit falling steadily. The $477 billion deficit of 2004 would reach $268
billion in 2009, not quite half the 2004 level. The budget would reach a small,
$13 billion surplus in 2014. But that improvement would happen only if
all of the Bush tax cuts are allowed to expire after 2010, something Bush has
vowed to prevent. Instead, the president has said he will tackle the deficit
by controlling spending of programs not related to defense or homeland security.
But even if all spending at Congress's discretion were to be frozen at this year's
levels, the government would still run a $776 billion deficit over the next 10
years. If spending was frozen and the tax cuts were extended, that deficit would
top $2.4 trillion. The deficit has already become a major theme of Democratic
candidates on the campaign trail. The $5.6 trillion in budget surpluses projected
between 2002 and 2011 that Bush inherited in 2001 has become a $2.9 trillion deficit.
Bush has blamed the sluggish economy, the Sept. 11, 2001, attacks and the
wars in Iraq and Afghanistan for the dramatic turnaround. But CBO's new forecasts
come as the economy is turning around, and deficits continue even without war
spending. Continue with: | 
