U.S. Revenue Increases While Deficit Heads for Record
WASHINGTON — Despite a larger-than-expected increase in tax revenue, the federal budget deficit has grown by about $70 billion and will hit a record $445 billion this year, the White House projected Friday.
The Bush administration put the new numbers in a positive light, saying its tax cuts had strengthened the economy and resulted in a deficit significantly lower than the $521 billion it projected in February.
"Because the president's economic policies are working, we are ahead of the pace to meet the goal of cutting the deficit in half within five years," said Joshua B. Bolten, director of the Office of Management and Budget.
But deficit hawks strongly disputed that interpretation. They said the administration's previous deficit projection was inflated. In addition, its budget projection for the next five years is suspect because it did not include several major spending items, such as funding for the military conflicts in Iraq and Afghanistan.
"The deficit has just gone up by a huge amount," said Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates balanced budgets. "That is what policymakers and the public need to concentrate on."
The presidential campaign of Democrat John F. Kerry used the report to criticize President Bush's handling of the federal budget and the economy.
"Even worse than this record deficit is the record deterioration George Bush has caused for the long-term fiscal health of the country and his lack of any plan to restore fiscal discipline," said Kerry economic advisor Gene Sperling.
But budget analysts faulted the budget proposals of both presidential candidates, saying the Republican and Democratic approaches were based on unrealistic and incomplete assumptions about government spending and tax policies.
"It looks unlikely to us that the deficit would be cut in half under either the Kerry or the Bush administration proposals," said Robert Greenstein, executive director of the liberal Center for Budget and Policy Priorities.
OMB director Bolten said the administration's fiscal 2005 budget estimate includes Bush's request for an additional $25 billion for emergency spending in Iraq.
"We will need additional money in Iraq and Afghanistan, certainly in '05, maybe even in '06," Bolten told reporters. "And so as you look at these numbers, you have to
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