Deficit numbers take turn for the better
WASHINGTON – Year by year, the deficit numbers have been getting worse for President Bush. A $127 billion surplus the year he took office turned into $159 billion in red ink. Then came deficits of $377 billion and $412 billion, both records.
The direction seems to be turning, though the numbers still are huge. Congressional forecasters said Monday the federal deficit should be about $331 billion this year and $314 billion next year.
That’s the good news. The bad news is the report from the nonpartisan Congressional Budget Office contains plenty of signs that the fiscal outlook remains troubled for years to come.
In the short term, the White House had predicted in February that this year’s deficit would set yet another record: $427 billion. The projected improvement is attributed to an $84 billion surge in estimated tax receipts, including a 42 percent increase in revenues from corporate profits.
But unlike a competing White House estimate last month, CBO warned that the revenue improvements probably will not be sustained.
“Although the deficit for 2005 is lower than previously expected, the fiscal outlook for the coming decade remains about the same,” said the report.
Still, the White House cheered the news. Until this summer, virtually every budget analysis issued by either CBO or the White House over the past four years has contained bad news for the president, who, in 2001, inherited inflated estimates predicting $5.6 trillion in surpluses over 10 years. He promptly muscled a $1.35 trillion tax cut through Congress.
But the economy hit a recession, the stock market tumbled and a surge in homeland security spending after the Sept. 11, 2001, terrorist attacks combined with the tax cuts to produce a return to deficits.
Finally, the deficit news is getting a little better.
“This report confirms the dramatic improvement in the 2005 deficit picture that the administration reported last month,” said Scott Milburn, a spokesman for the White House budget office. “The president is committed to the combination of strong economic growth and spending restraint that will keep us on track to cut the deficit in half by 2009.”
But the CBO report calls that promise – to halve a $521 deficit projected for last year to $260 billion – into question because it projects a $321 billion deficit for 2009. That figure may be inflated because it assumes the war in Iraq will continue to require cash infusions like the $82 billion passed by Congress in May.
Still, even with a phaseout in Iraq and Afghanistan, the deficit would exceed $300 billion the way CBO estimates the cost of Bush’s budget.
The White House foresees a $333 billion deficit for the year that’s about to end and a $341 billion deficit for next year.
Democrats on Capitol Hill were quick to warn about the long-term deficit.
“While this year’s deficit will be lower than last year’s record shortfall, the improvement is likely to be short-lived. Declarations of victory over budget deficits only distract from the disturbing long-term budget outlook,” said Kent Conrad of North Dakota, top Democrat on the Senate Budget Committee.