Even his fellow Republicans are finally saying 'enough is enough'. U.S. Budget Office Deepens Fiscal Gloom for Bush 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 Just as the White House prepares to roll out its 2005 budget on Feb. 2, Bush has also begun taking fire from conservatives within his own party for not laying out concrete plans to cut government spending and reduce the deficit. That has led administration officials to promise an effective freeze on federal discretionary spending not connected to defense or homeland security, calling that the foundation of a push to halve the deficit over five years. Congressional and private-sector budget analysts, however, note the move would save the government only around $8 billion dollars out of a $2 trillion-plus federal budget -- even if Congress can be made to swallow the cuts it would require. "It's more like an effort to get through the next 10 days," said Stan Collender, a veteran budget watcher at public relations firm Fleishman-Hillard. "It isn't going to happen." Both Democratic and Republican analysts also note the CBO's forecasts may actually understate the scale of the government's fiscal problems, because of the way they are drawn up. "It's going to be a challenge to cut the deficit in half by 2009," said Bill Hoagland, senior budget adviser to Senate Republican leader Bill Frist of Tennessee. The CBO currently forecasts a deficit of $268 billion in that fiscal year. The agency's long-term forecast assumes, for example, that Bush's tax cuts will be allowed to expire as scheduled toward the end of the decade, something the White House and congressional Republicans have vowed to prevent. It also does not factor in even a modest reform of the ever-expanding reach of the Alternative Minimum Tax, which both parties concede will become politically imperative and which is expected to cost a minimum of $400 billion. http://story.news.yahoo.com/news?tmpl=story&cid=568&e=3&u=/nm/20040126/bs_nm/budget_congress_dc
US budget deficit to hit half trillion dollars this year: Congress President George W. Bush's administration says he is determined to trim the budget shortfall as he gears up for a reelection bid in the November presidential election. But Bush, while calling on lawmakers to be prudent spenders, is also pressing Congress to make permanent a 10-year, 1.7-trillion-dollar list of tax cuts, some of which begin to expire this year. He argues the tax cuts are providing a necessary boost to the world's biggest economy. A black hole in the budget is looming, however, as the country struggles to pay for the health and pensions of an increasing number of elderly people, the CBO said. In the decade from 2004 to 2013, the budget shortfall would expand to a total 2.38 trillion dollars -- one trillion dollars more than the CBO had predicted just five months ago, it said. Laws enacted since August had boosted spending by 681 billion dollars, it said. Economic factors and technical adjustments accounted for the rest of the deterioration. Bush's Medicare legislation alone, offering a partial refund for prescription drugs, would jack up government outlays by nearly 400 billion dollars in the 2004-2013 period, the CBO said. http://story.news.yahoo.com/news?tmpl=story&cid=1519&ncid=749&e=6&u=/afp/20040126/bs_afp/us_economy_budget
President George W. Bush's administration says he is determined to trim the budget shortfall as he gears up for a reelection bid in the November presidential election. But Bush, while calling on lawmakers to be prudent spenders, is also pressing Congress to make permanent a 10-year, 1.7-trillion-dollar list of tax cuts, some of which begin to expire this year. As usual tax breaks for his richest campaign contributors. Tax expenditures to his other contibutors like his Carlyle defense industry buddies, or to Halliburton and Cheney's buddies. However, let's be "prudent spenders" when it comes to veteran's benefits and social spending like education as the contributors don't make a buck off it. Sadly tution hikes and health care premium increases for the middle class dittoheads, who alas have no big campaign contributions, but only their votes to give Bush-Cheney.
"People ask me what great new ideas did you bring to Washington. I say, `Arithmetic.' '' --Bill Clinton
Red Ink Realities By PAUL KRUGMAN Even conservatives are starting to admit that George Bush isn't serious when he claims to be doing something about the exploding budget deficit. At best — to borrow the already classic language of the State of the Union address — his administration is engaged in deficit reduction-related program activities. But these admissions have been accompanied by an urban legend about what went wrong. According to cleverly misleading reports from the Heritage Foundation and other like-minded sources, the deficit is growing because Mr. Bush isn't sufficiently conservative: he's allowing runaway growth in domestic spending. This myth is intended to divert attention from the real culprit: sharply reduced tax collections, mainly from corporations and the wealthy. Is domestic spending really exploding? Think about it: farm subsidies aside, which domestic programs have received lavish budget increases over the last three years? Education? Don't be silly: No Child Left Behind is rapidly turning into a sick joke. In fact, many government agencies are severely underfinanced. For example, last month the head of the National Park Service's police admitted to reporters that her force faced serious budget and staff shortages, and was promptly suspended. A recent study by the Center on Budget and Policy Priorities does the math. While overall government spending has risen rapidly since 2001, the great bulk of that increase can be attributed either to outlays on defense and homeland security, or to types of government spending, like unemployment insurance, that automatically rise when the economy is depressed. Why, then, do we face the prospect of huge deficits as far as the eye can see? Part of the answer is the surge in defense and homeland security spending. The main reason for deficits, however, is that revenues have plunged. Federal tax receipts as a share of national income are now at their lowest level since 1950. Of course, most people don't feel that their taxes have fallen sharply. And they're right: taxes that fall mainly on middle-income Americans, like the payroll tax, are still near historic highs. The decline in revenue has come almost entirely from taxes that are mostly paid by the richest 5 percent of families: the personal income tax and the corporate profits tax. These taxes combined now take a smaller share of national income than in any year since World War II. This decline in tax collections from the wealthy is partly the result of the Bush tax cuts, which account for more than half of this year's projected deficit. But it also probably reflects an epidemic of tax avoidance and evasion. Everyone who wants to understand what's happening to the tax system should read "Perfectly Legal," the new book by David Cay Johnston, The Times's tax reporter, who shows how ideologues have made America safe for wealthy people who don't feel like paying taxes. I was particularly struck by Mr. Johnston's description of the carefully staged Senate Finance Committee hearings in 1997-1998. Senators Trent Lott and Frank Murkowski accused the I.R.S. of "Gestapo"-like tactics, and Congress passed new rules that severely restricted the I.R.S.'s ability to investigate suspected tax evaders. Only later, when the cameras were no longer rolling, did it become clear that the whole thing was a con. Most of the charges weren't true, and there was good reason to believe that the star witness, who dramatically described how I.R.S. agents had humiliated him, really was engaged in major-league tax evasion (he eventually paid $23 million, insisting he had done no wrong). And this was part of a larger con. What's playing out in America right now is the bait-and-switch strategy known on the right as "starve the beast." The ultimate goal is to slash government programs that help the poor and the middle class, and use the savings to cut taxes for the rich. But the public would never vote for that. So the right has used deceptive salesmanship to undermine tax enforcement and push through upper-income tax cuts. And now that deficits have emerged, the right insists that they are the result of runaway spending, which must be curbed. While this strategy has been remarkably successful so far, it also offers a big opportunity to the opposition. So here's a test for the Democratic contenders: details of your proposals aside, which of you can do the best job explaining the ongoing budget con to the American people?
