- The Washington Times - Thursday, January 24, 2002

The federal budget will run a deficit this year because of the recession, not because of President Bush's tax cut, Congressional Budget Office Director Dan L. Crippen told the House and Senate budget committees yesterday.
Considered over the next decade, though, the tax cut eats up 40 percent of the projected surplus, the CBO reported. When combined with new spending, the economic downturn and other adjustments, the CBO said, a January 2001 prediction of a $5.6 trillion surplus over 10 years has fallen by $4 trillion to the current projected 10-year surplus of $1.6 trillion.
Excluding money borrowed from the Medicare and Social Security trust funds, the government won't run a surplus until 2010, and the result is an additional $742 billion in debt over the next decade, Mr. Crippen testified.
Still, the top Democrats and Republicans on both the House and Senate committees said raising taxes this year isn't an option.
"We will do quite a bit over the next year, but raising taxes is not an option," said House committee chairman Jim Nussle, Iowa Republican.
Senate committee Chairman Kent Conrad, North Dakota Democrat, agreed: "I do not believe that raising taxes at a time of economic slowdown would be wise. I believe that would only deepen the downturn."
The two budget committees are charged with putting together a framework for how much money the government has to spend. But rather than dividing up a large long-term surplus the task they faced last year this year they will have to try to control spending while taking care of what they said were the highest priorities: winning the overseas war on terrorism, homeland defense and an economic stimulus package.
Mr. Crippen said the nonpartisan CBO's numbers don't take into account any new spending the White House yesterday said the president will submit a budget which will have a $106 billion deficit this year and an $80 billion deficit in fiscal 2003.
The good news, Mr. Crippen said, is that the economy is either at its lowest point now or already on the upswing. Still, he said, certain factors point to a slower recovery than the 1991-1992 recession. CBO predicts 2.5 percent growth in 2002.
One other factor in the disappearing surpluses are "technical" adjustments income-tax withholdings are slower than would be expected given the economy, and revenue from capital-gains taxes has fallen.
Among the other changes from last year's predictions:
The federal government will have to raise its debt ceiling some time this year. Last year's forecast said the ceiling wouldn't have to be raised until 2009.
In last year's forecast, the public debt would have been retired in 2008. In this year's forecast, the debt will stand at $2.8 trillion in 2008 and won't be completely retired any time in the next decade.
This year also will mark the end of four years of budget surpluses, Mr. Crippen said.
Democrats pointed to the tax cut as the reason for the overall fiscal picture.
"The president told us and told the American people that we could have it all," Mr. Conrad said. "Unfortunately, he was wrong, and he was wrong by a country mile. The consequences of those mistakes are enormous for the nation."
But Republicans objected, recalling that during last year's tax-cut debate many Democrats said there wouldn't be a surplus anyway.
"I hope the irony of lamenting the disappearance of something you never believed in is not lost," said Rep. John E. Sununu, New Hampshire Republican.


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