WASHINGTON — President Bush can balance the budget within five years, or he can get Congress to extend his tax cuts beyond their scheduled expiration, the Congressional Budget Office reported Wednesday -- but probably not both.
Bush has said otherwise, committing himself in Tuesday's State of the Union address, as he did earlier this month, to providing Congress on Feb. 5 with spending and tax proposals for fiscal 2008 that would put the budget on a path toward balance by 2012.
"We must balance the federal budget," Bush said Tuesday night. "We can do so without raising taxes."
The nonpartisan CBO, in its annual report on where current spending and tax policies would take the budget over the next 10 years, did not contradict Bush in so many words. But its tables painted an unmistakable picture of a budget that needed an extra infusion of cash or a sharp reduction in outlays if revenue were ever to exceed spending.
And even if the budget could be balanced by 2012, said Peter R. Orszag, the CBO's director, the retirement of the baby-boom generation could quickly unbalance it: Not only would the wave of retirees force the government to spend more for Social Security, Medicare and other benefit programs, he said, but it would drain the population of taxpaying wage-earners.
Republicans in Congress saw the report as portraying a potentially bright budgetary future.
"Congress is within reach of balancing the budget without raising taxes if significant entitlement reforms are enacted within the next five years," said Rep. Paul D. Ryan of Wisconsin, the top Republican on the House Budget Committee
Rep. Roy Blunt of Missouri, who ranks second in the House GOP leadership, was more enthusiastic. "Tax relief has spurred unprecedented economic growth," he said, "and these results prove that we can balance our budget without raising taxes."
To Democrats, the fiscal outlook was much gloomier. Senate Budget Committee Chairman Kent Conrad of North Dakota said the CBO must base its projections on current spending and tax law, without regard to likely changes. And currently, he said, the Iraq war is underfunded -- the administration is expected soon to ask for an additional $100 billion for this year -- and the tax cuts that Bush wants made permanent are due to expire at the end of 2010.
