Bush Deficit Plan Draws Derision

Federal budget deficit AP

President Bush's goal of cutting in half a projected $500 billion federal deficit within five years is being dismissed as too timid by conservatives, unachievable by analysts and laughable by Democrats.

Mr. Bush will include the objective in the $2.3 trillion budget for 2005 he sends Congress in February, nine months away from the presidential and congressional elections. The goal is backed by many Republicans, but conservatives want a bolder move against the record deficits and big spending increases the administration has run up.

"It's a rather anemic goal, actually," said Stephen Moore, president of the conservative Club for Growth. "We should be talking about how to balance the budget."

Administration officials say their goal is a 2009 deficit that is half of this year's level, which White House budget chief Joshua Bolten has said he expects to hit $500 billion.

Achieving a $250 billion deficit in five years, however, could take hundreds of billions in savings, a difficult political task.

White House officials deny warnings circulating on Capitol Hill that they might define their goal as halving the 4.4 percent share of the U.S. economy that a $500 billion deficit would be next year to 2.2 percent in five years. That would make their target 2009 deficit about $320 billion, leaving their task $70 billion easier.

The deficit for the budget year that ended Sept. 30 was $374 billion, the highest ever in dollar terms. Administration officials say the more important measure is how the shortfall compares with the size of the economy, with last year's 3.5 percent share far below the 6 percent post-World War II peak of 1983.

White House officials say to achieve their goal, Mr. Bush will rely chiefly on two strategies. He will propose extending tax cuts that would otherwise expire, which they say will spur the economy, and limiting the growth of spending that Congress must approve each year, probably to 4 percent or less.

"We're working with Congress to hold the line on spending," Mr. Bush said Monday. "And we do have a plan to cut the deficit in half."

Democrats say that even if Mr. Bush achieves his objective, he would leave huge shortfalls because he has driven deficits so high. Mr. Bush took office when large surpluses were projected for the foreseeable future, a forecast since dashed by recession, the costs of fighting terrorism and wars, and tax cuts.

"It's like so much with this administration in respect to fiscal matters, it's all spin, all the time," said Sen. Kent Conrad of North Dakota, top Democrat on the Senate Budget Committee.

A $250 billion deficit would be the fifth highest on record in dollar terms. A $320 billion shortfall would be the second worst.

Thanks to projections that the economy will continue to strengthen, deficits are expected to gradually improve after this year.

The nonpartisan Congressional Budget Office projected last August that after peaking at $480 billion this year, the gap would drop to $170 billion by 2009 — if no new tax cuts are enacted and spending grows only at the rate of inflation.

Those assumptions have already proved untrue. Congress since August has enacted a Medicare expansion creating prescription drug coverage and improvements in veterans' benefits projected to add a combined $53 billion to the deficit in 2009.

Other costly proposals in the works include Mr. Bush's plan to extend expiring tax cuts; a revision of the alternative minimum tax to prevent middle-income earners from paying it; and energy legislation that has already passed the House.

If, along with those items, spending controlled by Congress grows at the average 7.7 percent annual rate seen since 1998, the resulting 2009 deficit would be $666 billion, G. William Hoagland, budget aide to Senate Majority Leader Bill Frist, R-Tenn., warned senators in a recent memo.

That would mean $416 billion in budget savings — an enormous amount — would be needed to reduce that year's red ink to $250 billion.

If congressionally approved spending grows only at the rate of inflation, the 2009 deficit would be $432 billion, Hoagland wrote.

Lawmakers have shown little taste for such a small increase. If they did — and that would mean no unforeseen expenses like new wars it would still require $182 billion in 2009 savings.

Acknowledges House Budget Committee Chairman Jim Nussle, R-Iowa, who supports Mr. Bush's goal, "It's not an easy lift."

That's an understatement, say many budget analysts. They say that considering the added tax cuts and spending increases Congress is likely to enact, it would take politically unthinkable tax increases and cuts in popular programs to achieve the savings needed to halve the projected deficit.

"Given the current makeup of Congress and the incumbent in the White House," halving the red ink in half is "fanciful," said Robert Reischauer, former Congressional Budget Office director and president of the Urban Institute.

"It's not a plan, it's a set of wildly optimistic assumptions," said Robert Bixby, executive director of the bipartisan Concord Coalition, which lobbies for balanced budgets.
  • Jaime Holguin

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