WASHINGTON — White House officials on Tuesday called this year's projected $455-billion federal budget deficit manageable and fleeting, brushing aside charges that the record amount of red ink was an indictment of President Bush's economic and fiscal policies.
Joshua Bolten, director of the White House Office of Management and Budget, also predicted that the sweeping tax cuts enacted since Bush took office would help spur an economic recovery that would halve the deficit by 2006.
Still, the new deficit projection -- more than 50% higher than the OMB estimated in February -- may complicate prospects for a Medicare prescription drug benefit or an expansion of tax relief for low-income families.
It is the latest in a series of worsening forecasts that have led Bush and his fellow Republicans to shelve past campaign promises to keep the budget in balance. The new report poses a fresh test of the GOP's willingness to put aside conservative orthodoxy and argue that reducing the deficit should take a back seat to other priorities at a time of war and economic slowdown.
There were some signs that Republicans were finding it more difficult to sustain that argument. "It is significantly higher than we anticipated," Senate Majority Leader Bill Frist (R-Tenn.) said of the deficit. "It is high. It is too high."
And it is likely to go even higher. The forecast does not include the ongoing costs of U.S. operations in Iraq beyond what already has been appropriated. Even without those costs, the OMB said, the deficit would rise to $475 billion next year.
Yet neither the White House nor Republicans in Congress have proposed any major change in fiscal course to cut the deficit. Rolling back recent tax cuts is a nonstarter. The year's appropriations bills are expected to continue moving through Congress at previously set levels.
Still, the growing deficit could make the climate less favorable to Bush's plan to establish a prescription drug benefit under Medicare. "It doesn't come at a good time," a senior House GOP aide said of the deficit report. "There is some consternation about how these numbers will play out in Medicare."
The deficit could aid Republicans who object to the cost of a Medicare prescription benefit. A small but influential group of conservatives turned last month's House vote on its Medicare bill from a party-line certainty into a one-vote cliffhanger. "It's going to be harder," said House Budget Committee Chairman Jim Nussle (R-Iowa). "This should give everybody pause with respect to spending."
