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WASHINGTON Deficit forecast spirals higher



Published: Sat, March 8, 2003 @ 12:00 a.m.



Democrats continue to slam Bush's tax-cut plan.

WASHINGTON (AP) -- President Bush's budget would produce unyielding deficits through the next decade totaling $1.82 trillion, Congress' top budget analyst said in a report that could help lawmakers trying to shrink Bush's plan for fresh tax cuts.

The analysis Friday by the nonpartisan Congressional Budget Office accentuated how abruptly the government's fiscal fortunes are declining. Just two years ago, forecasters envisioned an unprecedented $5.6 trillion in surpluses for the next decade.

Just since January, the budget office's cumulative projections for the next 10 years have worsened by nearly $450 billion. That mostly reflects higher governmentwide spending that lawmakers approved last month and a continued drop in revenue caused by the weak economy.

Democrats were eager to use the new figures as ammunition against Bush's budget plans, which include a proposal to cut taxes by $1.57 trillion over the next decade while boosting defense and national security spending and restraining most other programs.

"These deficit increases are continued evidence of the complete failure of the president's economic game plan," said Sen. Kent Conrad, D-N.D., top Democrat on the Senate Budget Committee.

Administration officials and congressional Republicans said the worsening figures proved just the opposite: That tax reductions were needed to spur economic growth, which in turn would produce more federal revenue.

"The only way to get out of the deficits is to get the economy moving," said Trent Duffy, spokesman for the White House budget office. "And that's why Congress must pass the president's jobs and growth plan."

The numbers

The report projected that Bush's budget would produce a deficit this year of $287 billion, rising to $338 billion in 2004. From there, the shortfalls would shrink gradually to $102 billion in 2013.

Bush had estimated that his budget would result in deficits of $304 billion this year and $307 billion in 2004. Congressional analysts envision slightly higher tax collections than Bush does this year, and lower revenue and higher spending than Bush next year.

The near-term figures could well end up worse because, like Bush's budget, they omit projections for a possible war with Iraq and its aftermath, which analysts and government officials have said might exceed $100 billion.

Budget committees

The new numbers were produced less than a week before the Republican-controlled House and Senate Budget committees plan to produce their own tax and spending outlines for 2004.

House Budget Committee Chairman Jim Nussle, R-Iowa, said Friday he will write a blueprint that will come to balance within 10 years. Senate Budget Committee Chairman Don Nickles, R-Okla., has said he would like to do the same thing, but Friday's figures underlined how difficult that job will be.

Democrats say almost unanimously that Bush's tax-cut plan, which is highlighted by a $726 billion package aimed at energizing the economy, is far too big. Many moderate Republicans agree, especially in the Senate, where a group of moderates from both parties are starting to coalesce around an economic package about half the size Bush wants.

Friday's figures could help those moderates argue that the Bush tax plan is too large.

Neither Nickles nor Nussle have said how large their tax cuts will be, but each said his top priority will be the economic growth portion of Bush's plan.

When Bush released his $2.23 trillion budget for 2004 in February, he projected ahead only five years. He estimated that over that period, deficits would total $1.08 trillion.

Administration officials said their numbers only extended five years because longer projections tend to be wildly inaccurate, while Democrats said the White House was trying to avoid showing how bad the red ink would be in later years.

Placing blame

Democrats have placed blame for the revival of deficits -- after four years of surplus under President Clinton -- on Bush's $1.35 trillion, 10-year tax cut that Congress approved in 2001. Republicans blame the faltering economy and an expensive fight against terrorism, saying that dealing with both is more important than balancing the budget.

The White House and congressional Republicans also argue that the projected deficits are affordable because they are a small percentage of the country's $10.5 trillion economy.

"This demonstrates to me two things. We need growth in the economy and more spending restraint than the president has shown in his budget," Nussle said.

"Events have borne out our warnings. The president's policies will add trillions to the national debt and saddle American families with a debt tax for decades to come" in the form of higher government-borrowing costs, said Rep. John Spratt, D-S.C., the House budget panel's top Democrat.




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