Congressional Budget Forecast Very Bleak, Predicts Huge DebtBy Edmund L. Andrews
The New York Times -- WASHINGTON
Even if the economy rebounds strongly over the next few years, the federal budget deficit could climb for the rest of the decade if Congress adopts proposals strongly supported by President Bush, the Congressional Budget Office said on Tuesday.
Offering sharp contrast to recent White House projections, which had said the budget deficit would hit $475 billion next year and decline significantly after that, the new congressional report warns that annual deficits could rise rather than fall.
The nonpartisan office said the deficit would be $480 billion next year but could reach a cumulative total of $5.8 trillion by 2013.
Administration officials quickly dismissed the Congressional projections as too speculative to take seriously, noting that long-term budget projections have been notoriously inaccurate.
But the new analysis is nonetheless based on fairly cautious assumptions. It assumes that economic growth will surge next year and remain solid for the rest of the decade. The biggest reason for potentially much higher deficits is the added cost of legislation that both the White House and the Republican majority in Congress support.
That agenda includes making almost all the tax cuts of the past three years permanent, which congressional analysts said would cost $1.5 trillion over 10 years. It also includes the cost of a major new prescription drug program for senior citizens, supported by both parties, that would cost $400 billion.
And it includes the cost of overhauling the Alternative Minimum Tax, which under current law is expected to force tens of millions of taxpayers to pay much higher taxes as their incomes rise with inflation. That change, supported by Republicans and Democrats alike, would cost an additional $400 billion.
Those adjustments alone would add about $2.7 trillion to the deficit over 10 years. If government spending continues to increase at anywhere near the rates of the past five years, the deficit would surge far higher.
That would be in sharp contrast to the Bush administration’s outlook. Last month, the White House Office of Management and Budget projected that the deficit would peak at $475 billion next year and decline to just $62 billion in 2008.
Democrats immediately pounced on today’s report to charge that Bush and his Republican congressional allies were leading the country into a fiscal catastrophe just as today’s baby-boom generation begins to approach retirement age and start drawing heavily on Social Security and Medicare entitlements.