-Caveat Lector- http://story.news.yahoo.com/news?tmpl=story2&cid=676&ncid=716&e=19&u=/usatoday/20030124/ts _usatoday/4808157
Budget expected to show record deficit Fri Jan 24, 7:18 AM ET William M. Welch USA TODAY WASHINGTON -- In his 2002 State of the Union address, President Bush (news - web sites) declared that the federal budget deficit ''will be small and short-term.'' A year later, the administration admits the government's return to borrowing will be neither small nor short-term. ''We are looking at (a deficit) for the foreseeable future,'' White House Budget Director Mitch Daniels said last week. The reasons are many. The economy's slowdown and Wall Street's decline curbed the growth of tax collections. The Sept. 11 attacks and the battle against terrorism sent defense and homeland security costs soaring. Bush's tax cuts in 2001 reduced anticipated federal revenue by $1.35 trillion over a decade; his latest proposal would cut future revenue by $674 billion more. And the government must spend more to cover the escalating costs of Medicare and Medicaid programs for the elderly, disabled and poor. Bush will release on Feb. 4 his budget proposal for 2004. Daniels said it would show a deficit of $300 billion or more. That would be the largest deficit in U.S. history, surpassing the $290 billion reached in Bush's father's administration in 1992. As a percentage of the $10 trillion national economy, however, it would be less than in the 1980s and early 1990s. A new forecast is due from the Congressional Budget Office (news - web sites) (CBO) next week that will show much bigger deficits than were projected last year. The turnaround from heady talk of trillions of dollars in surpluses has been rapid. In 2001, when Bush won tax cuts of $1.35 trillion over a decade, Congress and the White House forecast more than $5 trillion in budget surpluses over the same period. Nearly a decade of spending restraints and tax increases during the early 1990s, combined with a bull market that boosted capital gains, had turned deficits to surpluses beginning in 1999. But by 2001, as terrorist attacks rocked the nation, the surplus began falling. In 2002, the government ran a $157 billion deficit. And by last August, the Congressional Budget Office had reduced its estimate of the surplus to a fraction of its previous forecast -- $336 billion over 10 years. Some Republicans have grown alarmed at the rising deficit. They are voicing caution about Bush's tax-cut plans. Sen. George Voinovich, R-Ohio, commissioned projections that show the deficit could total $2.89 trillion over 10 years if spending continues to rise at current levels and the 2001 tax cuts are made permanent. Tom Kahn, Democratic staff director for the House Budget Committee, says he expects the new CBO forecast will show a deficit every year for the next decade. Last summer, surpluses were predicted by 2006. ''The biggest fiscal switch-around in U.S. history,'' Kahn says. ''Going from a $5.6 trillion surplus to a $2 trillion deficit is just mind- boggling.'' The new projection won't include the cost of a potential war with Iraq, which could add tens of billions of dollars to the deficit. Congressional experts say the cost of occupying Iraq after a war, also not in the CBO forecast, could be even larger. Demands for services, such as a prescription-drug benefit for seniors, could add more. In a symbol of how things have changed, Republicans who made a balanced federal budget one of the tenets of their ''Contract With America'' in 1994 have dropped talk of the dangers of debt. Now they say more federal borrowing won't drive up long-term interest rates and harm the economy, as they once argued. ''Definitely, it's a big turnaround, and definitely, it's bad news. Having money is better than not having money,'' says Kevin Hassett, an economist at the conservative American Enterprise Institute who favors Bush's tax policies. But ''in terms of economic impact of the deficits, for me there's no compelling evidence that they affect interest rates.'' Democrats are eager to blame Bush and his 2001 tax cuts. They say his latest tax cuts would add $900 billion to the deficit over the next decade because of increased interest payments on the debt. ''Instead of being virtually debt-free, the president's policies are exploding the debt,'' says Sen. Kent Conrad, D-N.D., former chairman of the Senate Budget Committee. -------------------------------------- Steve Wingate ANOMALOUS IMAGES AND UFO FILES http://www.anomalous-images.com <A HREF="http://www.ctrl.org/";>www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! 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