Iraq raises deficit estimate to $427B
Expiring tax cuts and Social Security reform would affect the budget.
DALLAS MORNING NEWS
WASHINGTON -- When it comes to meeting its goal of halving the budget deficit by 2009, the Bush administration ran into a now-familiar obstacle Tuesday: Iraq.
President Bush proposed an additional $80 billion in spending, mostly for the Iraq war, putting the overall deficit at an estimated $427 billion -- the second consecutive year it has exceeded $400 billion.
"This supplemental budget request ... again makes clear to terrorists that our resolve is firm, and we will complete our mission," Bush said in a written statement.
The Congressional Budget Office, meanwhile, estimated a 2005 deficit of $368 billion, down from $412 billion last a year. But that projection did not include Iraq, Afghanistan, an overall war on terrorism, and or related expenses expected in the years ahead.
Assuming the new request will be phased in over the next several years, the CBO revised its deficit estimate to around $400 billion.
Analysts across the political spectrum and Bush critics said longer-range deficit projections, either by the CBO or the White House, are likely to be low because of possibly unattainable assumptions.
For one thing, the estimates assume that tax cuts passed during Bush's first term will expire in coming years, even as the administration prods Congress to make them permanent. Some members of Congress are amenable, fearing that voters would view their repeal as a tax increase.
The deficits re-emerged amid the tax cuts as well as war and recession. Budget estimates also do not take into account potential changes to the Social Security system, analysts said. Allowing recipients to invest some money in private accounts -- as Bush wants to do -- could entail massive transition costs.
The expense is needed, administration officials said, to sufficiently equip American troops and to fight the violent insurgency in Iraq, where elections are scheduled this weekend.
"We're going to do everything we can to support our troops as they work to win the war on terrorism," said White House press secretary Scott McClellan.
He added that, given good economic growth and new limits on domestic spending, the administration remains on track with its deficit cutting goals.
Congressional Democrats said they expect Congress to approve the new money, given the needs of the troops.
They served notice, however, they might use the debate to challenge Bush over both the conduct of the Iraq war and the re-emergence of the deficit on his watch.
Senate Democratic Leader Harry Reid, D-Nev., noted that annual deficits add to the overall federal debt.