Sun, Feb 29, 2004 page12

• Bush budget could cause explosion in national deficit, Democrats say

  • NY TIMES NEWS SERVICE
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  US President George W. Bush's new tax and spending plan would produce deficits of US$2.75 trillion over the next decade, the Congressional Budget Office (CBO) reported on Friday in the first detailed analysis of the White House budget.

  If there were no changes in taxes and if spending increased only at the rate of inflation, the deficit would be about US$2 trillion over the next 10 years, the budget office reported on Friday. But the new estimate is US$737 billion higher, primarily reflecting Bush's desire to make permanent the tax cuts due to expire by 2011.

  Three years ago, the budget office forecast budget surpluses totaling US$5.6 trillion for the 10-year period ending in 2011.

  The budget office predicts that this year's deficit will be US$478 billion, lower than Bush's estimate of US$521 billion, and it estimates that the deficit will be cut almost in half in three years, to US$242 billion.

  The forecasts by the budget office, a nonpartisan arm of Congress, indicate, however, that deficits will begin rising again toward the end of the coming decade, after the Bush tax cuts take full effect.

  And like the administration's budget, the budget office estimates exclude some large expenses like the cost of operations in Iraq and other issues that both parties say must be dealt with, including reducing the number of people forced to pay the alternative minimum tax.

  The most revealing part of the office's projection is the outlook from 2010 to 2014.

  Deficits would total almost US$1.4 trillion over that period, and the annual deficit will be US$289 billion, and growing larger, as the nation heads into a tidal wave of soaring costs from Social Security payouts and Medicare claims as more baby boomers reach retirement age.

  Republicans argue that 10-year projections are flawed and unreliable and that the tax cuts were needed to get the economy going in the short-term while encouraging job growth and new business investment in later years.

  Democrats contend that the White House wants to use five-year numbers to hide the huge and continuing deficits in later years.

  They argue that the tax cuts will squander resources needed to address a multitude of problems facing the country, including domestic security and the growing number of Social Security claims.

  "As bad as these numbers are, they are actually worse because they omit significant costs that the president has omitted from his budget," said Representative John Spratt of South Carolina, the ranking Democrat on the House Budget Committee.

  In addition to operations in Iraq and Afghanistan, which could cost US$50 billion next year, the budget does not include a provision for fixing the alternative minimum tax, a change that will probably drain US$600 billion from the budget over the next decade, Spratt said.

  By making only five-year projections, Spratt said, the Bush plan "left most people thinking we will cut the deficit in half and it will keep on declining. But in truth, we see in the CBO projections that the deficit gets worse over the long term. We simply don't have a plan to eradicate it."

  Chad Kolton, spokesman for the Office of Management and Budget at the White House, said that administration officials are pleased that the CBO endorsed White House forecasts of a halved deficit within five years. But he dismissed concerns about the large deficits predicted for later years.

  "Once you get beyond that five-year window, the numbers, even by the CBO's account, become notoriously inaccurate," Kolton said. "Even CBO would admit we don't honestly know what these numbers will look like 10 years from now."
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