- The Washington Times - Tuesday, September 7, 2004

The Congressional Budget Office yesterday lowered its estimated deficit for this year to $422 billion — a decrease of $56 billion from its March projections — but it would still be the largest shortfall in history.

Republicans in Congress said the new figures show that the economy is getting stronger and President Bush’s tax cuts and economic policies are working.

“This report underscores that our policies are working to create a stronger economy, more jobs and a lower deficit,” said House Budget Committee Chairman Jim Nussle, Iowa Republican.

The CBO, which had forecast a shortfall of more than $477 billion in March, attributed the change yesterday to a “sharp increase” in tax revenue over the past several months.

The Bush administration also said the new numbers represented a positive shift in the economy.

“The $56 billion decrease in the deficit projection today is a sign of the economic growth that is a result of President Bush’s leadership on tax relief,” said Tim Adams, policy director for the Bush-Cheney campaign.

Senate Budget Committee Chairman Don Nickles, Oklahoma Republican, said the 2003 tax bill is working and that Congress should build on its success by curbing spending and acting quickly to make the Bush tax cuts permanent.

But some Republicans, although not critical of their colleagues, balked at the good-news angle.

“It’s about $422 billion too high, and the best way to get out of it is to grow the economy, but not get caught in Herbert Hoover’s trap of cutting spending and raising taxes,” said Rep. Christopher Shays, Connecticut Republican.

Congressional Democrats said Republicans were involved in a “shell game” to mislead the American people into thinking that the “worst possible” fiscal news is actually good news.

“Only George W. Bush could celebrate over a record budget deficit of $422 billion. … Last week, the Bush administration said outsourcing was good, yesterday George Bush said the economy was great, and today George Bush is celebrating a record budget deficit,” said Democratic presidential nominee Sen. John Kerry of Massachusetts.

Sen. Kent Conrad, North Dakota Democrat, said in March that he believed the original $477 billion deficit projection from the CBO was overestimated.

“I said it then and I’ll say it again today, the president and his crew overestimated the deficit so they could claim improvement now.”

Rep. John M. Spratt Jr., South Carolina Democrat and ranking member of the House Budget Committee, said the country is becoming weaker as the deficit eats away at economic gains.

“The economy is expected to grow by 3 percent when you add it all up, but as the economy gets better, the deficit gets worse and worse, and that is what you call a structural deficit,” Mr. Spratt said.

He said the CBO’s prediction is far higher when other fiscal factors that are not included in its estimates are applied, such as the continuing costs of the wars in Iraq and Afghanistan, and natural disasters such as Hurricanes Charley and Frances.

“By law, the CBO must produce baseline estimates that do not reflect any changes in policy,” Mr. Spratt said. “And when you remove the Social Security Trust Fund, which I think we should because that’s not our money, the 2004 deficit number is actually $574 billion.”

He and Mr. Conrad said the real issue that should be driving tax and budget reforms is the debt level, which they view as more important, as foreign countries control more and more of the nation’s debt.

The country has borrowed more than $680 billion from Japan, $160 billion from China, and $60.5 billion from South Korea, according to Treasury reports.

“Interest rates have stayed down mainly because foreigners are buying our debt, but when they stop doing that, God help us,” Mr. Spratt said.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide