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$1.8 Trillion in Deficits in Bush Plan, Study Says

Democrats contend the nonpartisan analysis proves the spending and tax proposal is flawed.

March 08, 2003|Peter G. Gosselin | Times Staff Writer

WASHINGTON — Congress' top fiscal analyst said Friday that President Bush's new fiscal 2004 budget would produce a steady stream of deficits over the next decade totaling $1.8 trillion -- a conclusion that seems certain to fuel new opposition to Bush's latest crop of tax cuts.

Absent the president's tax and spending plan, the nonpartisan Congressional Budget Office said Washington would run a surplus over 10 years of nearly $900 billion.

The budget office warned that neither figure includes money for a war with Iraq. The agency's updated estimate of war costs suggested that the tab for the conflict and its immediate aftermath could easily run the $80 billion to $100 billion that Defense Secretary Donald H. Rumsfeld has dismissed as outsized. Democrats pounced on the new analysis as evidence that the administration's new tax and spending plan is ill-conceived.

"The president's policies will add trillions to the national debt and saddle Americans with a 'debt tax' for decades to come," charged Rep. John M. Spratt Jr. of South Carolina, the ranking Democrat on the House Budget Committee. The White House responded by reiterating the president's call for new tax cuts -- to kick-start the stumbling U.S. economy.

"The only way to get out of the deficits is to get the economy moving," Office of Management and Budget communications director Trent Duffy said. "And that's why Congress must pass the president's jobs and growth plan." Administration officials have never denied that their new budget would produce deficits. In fact, the White House's deficit estimate for this fiscal year is higher than the budget office's -- $304 billion compared with the congressional agency's $287 billion.

But White House aides have gone out of their way to play down the deficits' significance by suggesting they have been forced on the administration by a weak economy and the 2001 terrorist attacks, and by implying that the deficits would begin to decline after the next fiscal year. Friday's budget report seems likely to make the administration's position harder to maintain.

For starters, congressional analysts concluded that the government's fiscal position has deteriorated in recent months, making it harder to pay for Bush's new proposals. The budget office's 10-year budget projections have worsened by $450 billion just since January, mostly because Congress and the White House agreed to a larger-than-expected fiscal 2003 spending plan and because tax revenues are continuing to fall as a result of the weak economy.

The congressional agency's analysis suggests the extent to which the president's plan is open to the charge of being a "guns and butter" budget, one that tries to give voters appealing tax cuts even as it boosts spending on defense.

The analysis concludes that the costs of Bush's planned tax cuts would be an additional $1.45 trillion over the next decade, even as he boosts spending by $1.25 trillion.

The tax cuts would come on top of those already enacted in 2001. The budget analysts said they were unable to estimate the costs of some of the administration's most sweeping measures because the White House had not provided details. Among them: a prescription drug benefit for recipients of Medicare, the huge government health insurance program for the elderly, and a plan to let states convert Medicaid, the state-federal health program for low-income Americans, from an "entitlement" that qualified individuals automatically receive to a fixed amount of money, or block grant, that would go to state governments.

The analysts also suggested that they have doubts about the White House's cost estimates. In the case of Medicaid, for example, they tentatively fixed the 10-year cost at $72 billion. The White House said it would cost nothing.

Finally, the congressional analysis did not support what has been one of the administration's strongest arguments when it comes to deficits, namely that the lion's share of them will be caused by the weak economy and tumbling stock market, not Bush's tax cuts.

"About two-thirds of the increase in deficits under the president's budget ... would be caused by reductions in revenues" or tax cuts, the analysis concluded. House Budget Committee Chairman Jim Nussle (R-Iowa) told reporters Friday that he would draw up a budget blueprint that comes into balance within 10 years. Senate Budget Committee Chairman Don Nickles (R-Okla.) has said he would like to do the same thing.

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