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Bush Budget Said to Cause $2.75T (that's TRILLION) Deficits
By ALAN FRAM, Associated Press Writer

>> don't miss last paragraph...

WASHINGTON - President Bush (news - web sites)'s budget would produce deficits totaling $2.75 trillion over the next decade, the Congressional Budget Office (news - web sites) projected Friday in the first authoritative look at the plan's longer-range implications.

The forecast — $737 billion worse than the budget office expects should Congress ignore Bush's tax and spending plans — is sure to factor into this year's presidential and congressional campaigns.

Bush sent lawmakers a $2.4 trillion budget for 2005 on Feb. 2, but it projected outward only for five years. The White House argues that longer-range forecasts are guesswork, but Democrats say the administration wants to hide future deficits that will career out of control as baby boomers begin to retire.

The nonpartisan budget office also forecast that Bush's fiscal plans would produce deficits of $478 billion this year and $356 billion in 2005. Both figures are smaller than the shortfalls Bush has projected for those years.

For the decade ending in 2014, however, annual shortfalls never would be smaller than $242 billion, which would occur in 2007, the budget office said. After that, they would bounce as high as $289 billion in 2014.

Last year's shortfall, which exceeded $374 billion, was the largest ever in dollar terms.

"These are permanent, structural deficits we will never dig our way out of if we follow in the president's path," said Thomas Kahn, Democratic staff director of the House Budget Committee.

White House budget spokesman Chad Kolton said there frequently are major differences when two organizations make long-range forecasts of entities as huge as the federal budget and the U.S. economy.

But, he said, "Looking at the first five years of CBO's forecast, it shows we cut the deficit in half within five years" — one of Bush's budget goals.

Two days ago, Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) focused attention on the government's long-term fiscal problems by suggesting cuts in Social Security (news - web sites) benefits to ease cascading red ink. Members of both parties quickly disavowed benefit reductions.

Democrats, though, hope to use the prospect of massive, unrelenting shortfalls as a symbol of what they say is Bush's mismanagement of the economy. Republicans blame the red ink on recession and the costs of war and terror and say Bush has focused his attention on those problems instead of balancing the government's books.

Yet underlining their sensitivity to the deficit problem, six conservative senators sent a letter this week asking Senate Budget Committee Chairman Don Nickles, R-Okla., to produce a fiscal blueprint for balancing the budget in seven years. That would exceed Bush's goal of halving shortfalls in five years.

One major item omitted by Bush's budget but included in Friday's projections was the cost of his proposal to make tax cuts permanent that otherwise would expire in 2010. Bush's tax plans would add more than $1.3 trillion to deficits over the decade, although his plans to curb domestic spending would save $700 billion over that same period, the budget office said.

Wary of the impact on deficits, Republican congressional leaders already have said they will not move this year on Bush's proposal to extend the tax cuts, which is the pillar of his plan for strengthening the economy.

The top two Democratic presidential contenders, Sens. John Kerry (news - web sites) of Massachusetts and John Edwards (news - web sites) of North Carolina, have said they would roll back the reductions for the wealthiest Americans.

Just two years ago, the budget office and Bush envisioned surpluses totaling $5.6 trillion for the decade ending in 2011. The projections released Friday cover a slightly different period, the 10 years running through 2014. Even so, the contrast is striking.

http://story.news.yahoo.com/news?tmpl=story&cid=514&e=5&u=/ap/20040227/ap_on_go_pr_wh/bu...