CBO projections that this election-year’s federal deficit are for $422 billion. These figures don’t include making permanent the recent tax cuts, or changing the impact of the alternative minimum tax on middle-class taxpayers. It also omits increased expenditures for Iraq or Afghanistan, or any additional spending for Homeland Defense.
click for larger chart
chart courtesy of WSJ
AP reported “The deficit would shrink to $348 billion in 2005, the third-largest ever in dollar terms. That would be $15 billion less than it projected last March, but $17 billion higher than the White House estimated in July.”
Congressional analysts long-term forecasts have expanded since March of this year. Their 10 years projections (2014) envision $2.3 trillion in total deficits — more than 10% higher than previous projections.
The report immediately provided political fodder for both parties now in the final two-month stretch of the presidential and congressional campaigns.
“This is by far the biggest deficit in American history,” said Thomas Kahn, Democratic staff director of the House Budget Committee. “There is no credible way Republicans can portray the record deficits they have created as good news.”
“Deficits are going down, jobs are going up, the economy continues to improve,” said Sean Spicer, Republican spokesman for the House Budget panel. “I don’t see how you can’t be happy with that news.”
After a fleeting four-year return to annual budget surpluses under President Bill Clinton, deficits have returned with a vengeance under Mr. Bush. Republicans who spent the 1980s and 1990s railing against budget shortfalls have argued that fighting wars in Iraq and Afghanistan, battling terrorism and righting the economy are higher priorities than balancing the government’s books. They also argue that today’s deficits are no reason for panic because, as a percentage of the overall economy, they are smaller than the largest shortfalls under President Ronald Reagan. Many economists consider that ratio the most significant measure of the harm deficits can cause.
Democrats say the shortfalls are forcing policy makers to restrain spending for schools, domestic security and other priorities, while driving up the government’s borrowing costs. And they say deficits have worsened because of the price tag of the tax cuts that Mr. Bush and the Republicans have pushed through Congress.
Isn’t that special . . .
Forecast Says U.S. Budget Deficit May Reach $422 Billion in 2004
September 7, 2004 4:07 p.m.