Congressional Democrats yesterday blamed President Bush and his tax cut for the return of federal deficits, one day after the White House budget chief said he expected shortfalls for at least the next three years.
Mitchell Daniels, the administration’s budget director, blamed his prediction on the recession and the war against terrorism.
But Democrats said the real reason was the 10-year, $1.35 trillion tax cut that Mr. Bush helped push through Congress last spring, despite complaints by most Democrats that it would jeopardize federal surpluses.
“I’d love to be able to say, ‘I told you so,’” Senate Majority Leader Tom Daschle, South Dakota Democrat, told reporters.
Senate Budget Committee Chairman Kent Conrad, North Dakota Democrat, said that when Mr. Daniels blamed the deficits on the recession and terrorism, “He left out the biggest cause the tax cut this administration pushed and got passed.”
White House Press Secretary Ari Fleischer brushed aside the criticism. “I think that accusations like that will make Americans tired of how business is done in Washington.”
Mr. Fleischer said the tight budget may force Mr. Bush to take another look at pricey policy plans such as his prescription-drug initiative.
“Anything dealing with large spending increases has to be done with an eye toward what is achievable,” he said.
In his remarks Wednesday, Mr. Daniels defended the tax cut, calling it “a major reason why this recession, many are saying, may prove short and shallow.”
Mr. Daniel’s bleak prediction was the first public acknowledgment by the Bush administration that after a string of four consecutive annual surpluses under President Clinton, deficits are back. Until the $69 billion surplus of fiscal 1998, the last federal black ink had been seen in 1969.
“It is regrettably my conclusion that we are unlikely to return to balance in the federal accounts before possibly fiscal ‘05,” Mr. Daniels said in a speech at the National Press Club. “Things will have to break right for us to do that.”
With a war under way and an ongoing danger of domestic terrorism, Americans are less concerned, at least for now, about budget deficits.
Private and congressional analysts have been saying for weeks they expect a deficit in fiscal 2002, which began Oct. 1, well into the tens of billions of dollars. Mr. Daniels provided no figure.
Underlining the dramatic economic turnaround, fiscal 2000 saw a record $237 billion surplus that shrank to a $127 billion surplus in fiscal 2001. As recently as August, the Bush administration predicted a 2002 surplus of $173 billion, down from its $231 billion forecast made in April.
Until several months ago, most forecasters were envisioning an ever-growing string of budget surpluses for the next decade, fading only when the huge baby boom generation begins to retire.
But then the recession officially pegged as having started in March took hold, and the condition of the government’s books weakened. The September 11 attacks dealt a severe blow, staggering the economy and triggering tens of billions in spending for anti-terrorism, the war in Afghanistan and on economic recovery.