January 4, 2007 in Nation/World

Bush plans cuts to erase deficit

Joel Havemann Los Angeles Times
 

WASHINGTON – President Bush, boasting that it took only two years to cut in half the record budget deficit from early in his tenure, said Wednesday that he would propose wiping out the other half by 2012 – a goal that could tie the hands of the Democrats as they take control of Congress today.

Bush said he could put the budget on a course toward balance and still win the war on terrorism and make permanent the tax cuts of his first term that are set to expire after 2010. That would leave the Democrats little or no room to maneuver their priorities through Congress.

Bush would concentrate his cuts on the giant government benefit programs – Social Security, Medicare and Medicaid – that constitute more than 40 percent of federal spending. He also called on the new Congress to cut by half the growing use of “earmarks” to provide funds for pet projects in lawmakers’ home states and districts.

Bush’s proposal to balance the budget in five years could make it difficult for the Democrats to use their new majority in the House and the Senate to enact their program. House Speaker-designate Nancy Pelosi, of San Francisco, has included only one spending item – beefed-up college student loans – in her agenda for the first 100 hours of the new Congress, but other Democrats are likely to advance their own plans.

Rep. John M. Spratt Jr., D-S.C., who will chair the House Budget Committee, said he was “wary” of Bush’s plan to balance the budget by 2012: How, he wondered, could Bush balance the budget while the conflicts in Afghanistan and Iraq are costing upward of $100 billion a year? And what about the cost of maintaining relief from the alternative minimum tax, which was supposed to hit only the rich but would ensnare as many as 30 million taxpayers for $100 billion a year in 2012 if Congress does not act?

Sen. Kent Conrad, D-N.D., the incoming chairman of the Senate Budget Committee, said Congress would not take the tough steps to control the budget until Bush convinces the American people that the country is headed for a fiscal crisis when the baby boom generation retires and qualifies for government benefits – starting next year for Social Security and 2011 for Medicare.

Bush, reading a statement in the Rose Garden after meeting with his Cabinet, said, “It’s time to set aside politics and focus on the future.” Referring to the Democrats, he added: “Together, we have important things to do.”

Bush’s goal of a balanced budget by 2012 – which would be realized three years after he left office – won almost universal acclaim. But feuding broke out immediately about how to get there.

Republicans said higher taxes were the wrong way to go. “We do not have a revenue problem; we have a spending problem,” said Rep. Paul Ryan, of Wisconsin, the top Republican on the House Budget Committee.

Democrats said the problem could not be solved only on the spending side of the equation. Conrad said he favored a combination of spending discipline, benefit program revisions and revenue enhancers, starting with tougher enforcement of the tax laws.

The White House says the deficit was cut in half between 2004, when it was projected before the year began to be 4.5 percent of the nation’s economic output, and 2006, when it turned out to be 1.9 percent. Spratt noted that the budget for 2000, the year before Bush took office, achieved a surplus of 2.4 percent.


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