Federal Deficit Is Expected to Reach $477 Billion For '04 ( 1/2 a Trillion dollars !

[MORTARDUDE]

http://news.yahoo.com/news?tmpl=stor...1152&printer=1

Federal Deficit Is Expected to Reach $477 Billion For '04



WASHINGTON -- The Congressional Budget Office (news - web sites) said it expects the federal government to run a $477 billion deficit in fiscal year 2004 -- the largest ever in terms of dollars.


The CBO also warned Monday that the cumulative deficit that will accrue between 2005 and 2014 will hit $1.9 trillion, and this figure doesn't include President Bush (news - web sites)'s proposal to make his tax cuts permanent.


The fiscal picture from 2004 through 2013 has worsened by $986 billion since CBO last released deficit projections in August.


Of that increase, $681 billion is attributable to legislation enacted by Congress last year, including a $400 billion plan to add a prescription-drug benefit to Medicare and increase financial incentives to private insurers to enter the Medicare market.


Another $134 billion of the increased deficit is because of technical adjustments.


The CBO projected a $171 billion increase in the deficit over the next decade because of economic factors.


Ahead of the report's official release, House Budget Committee ranking Democrat John Spratt (D., S.C.), said the CBO projections "cast grave doubts about the Bush Administration's claim to cut the deficit in half over five years."


The CBO estimates also show the deficit for fiscal 2005 falling from fiscal 2004 to $362 billion.


In August, the CBO estimated deficits of $480 billion in 2004 and $341 billion in 2005.


The CBO estimates assume that Congress will allow discretionary spending to grow only at the rate of inflation and that Congress won't enact any further increase in entitlement programs.


Also, the estimates don't include the cost of making the 2001, 2002, and 2003 tax cuts permanent.


CBO estimates that making the tax cuts permanent will cost $1.87 trillion from 2004 through 2015. Extra interest paid on the debt attributable to those cuts will bring the total cost to about $2.23 trillion.


Revising the alternative minimum tax to allow middle- and upper-income families to take full advantage of the tax cuts will cost another $660 billion over the decade, including added interest costs, CBO says.


While the White House has said consistently that the AMT is a problem that should be addressed, President Bush hasn't said he wants to provide AMT relief in this year's budget.


Making the tax cuts permanent and providing AMT relief would cost about $2.89 trillion through 2015, the CBO says.


"While Republicans suggest these record-breaking deficits are manageable, there is growing awareness of the dangers these deficits pose to the economy," Mr. Spratt said.


The Bush administration said Monday the budget deficit is manageable. White House spokesman Scott McClellan said the deficit should be viewed as a percentage of gross domestic product and, taken from this perspective, the deficit wasn't that large.

"The best way to look at it is to look at it in terms of GDP (news - web sites), and as a percentage of GDP, it still remains relatively low by historical standards. But, again, the President has a plan to cut the deficit in half over the next five years and that's what we intend to do," Mr. McClellan said.

Mr. McClellan didn't say exactly how big the deficit was in terms of a percentage of GDP.

Mr. Bush will submit his fiscal year 2005 budget to the Congress next Monday.

Meanwhile, the president repeated his call to keep his tax cuts in place.

"They ought to make this tax relief permanent, let people keep more of their own money to keep driving this economy forward," Mr. Bush said during a speech in Little Rock, Ark. "Small businesses need to keep more money."

"Congress needs to act," the president added.

Mr. Bush said his main concern revolved around the level of taxation the Americans face.

"Much of the tax relief we passed is set to expire, and it's set to expire right about the time the economy gets going," Mr. Bush said. "It makes no sense to have a tax increase on the American people at this stage or any stage as far as I'm concerned, and therefore we need to make the tax relief permanent."

-- Alex Keto and John Godfrey of Dow Jones Newswires contributed to this article.

[HARDCORE]

Interesting data there!

VERITAS

[HARDCORE]

As this could severely effect most, I am surprised that it has not yet garnered more attention?!

VERITAS

[kmetz]

It certainly has gotten my attention. If you put aside the affects of this huge deficit on individual US citizens, the consequences this will bring about in our national security is looming LARGE! Interest on the debt is approaching the amount spent on the military--looks to me like the interest will exceed military expenditures in the near future. I also believe that the projections of the deficit does not reflect the true numbers because the Social Security Trust Fund is included as an offset against the negative numbers.

Kmetz

[HARDCORE]

TO ALL

"This deficit is getting to a point of critical mass!!" And if it doesn't stop soon, we may all suffer a "Financial Hiroshima!" We can not keep supporting foreign entities and huge business lavishly!!

The ongoing cost of the war is one thing, but for some in business and politics to profit beyond any and all reason from the sacrifices of the patriotic, is unacceptable!!

VERITAS

[Gimpy]

February 1, 2004
OP-ED COLUMNIST
Budgets of Mass Destruction



It should be clear to all by now that what we have in the Bush team is a faith-based administration. It launched a faith-based war in Iraq, on the basis of faith-based intelligence, with a faith-based plan for Iraqi reconstruction, supported by faith-based tax cuts to generate faith-based revenues. This group believes that what matters in politics and economics are conviction and will ? not facts, social science or history.

Personally, I don't believe the Bush team will pay a long-term political price for its faith-based intelligence about weapons of mass destruction in Iraq. Even though they WERE wrong.

The Bush team's real vulnerability is its B.M.D. ? Budgets of Mass Destruction, which have recklessly imperiled the nation's future, with crazy tax-cutting and out-of-control spending. The latest report from the Congressional Budget Office says the deficit is expected to total some $2.4 trillion over the next decade ? almost $1 trillion more than the prediction of just five months ago. That is a failure of intelligence and common sense that threatens to make us all insecure ? and people also feel that in their guts.

As Peter Peterson, the former Nixon commerce secretary and a longtime courageous advocate of fiscal responsibility, puts it in "Running on Empty," his forthcoming book: "In the 1980 election, Ronald Reagan galvanized the American electorate with that famous riff: `I want to ask every American: Are you better off now than you were four years ago?'

Perhaps some future-oriented presidential candidate should rephrase this line as follows: `I want to ask every American, young people especially: Is your future better off now than it was four years ago ? now that you are saddled with these large new liabilities and the higher taxes that must eventually accompany them?' "

While in his book Mr. Peterson equally indicts Democrats and Republicans as co-conspirators in the fiscal follies of our times, the Democrats should still follow his lead and make this their campaign mantra: "Is your future better off now than it was four years ago?" That's what's on people's minds. It should be coupled with the bumper sticker: "Read My Lips: No New Services. Bush Gave All the Money Away." And it should be backed up with a responsible Democratic alternative on both taxes and spending.

That is the only way to expose what the shameful coalition of Karl Rove-led cynics, who care only about winning the next election; voodoo economists preaching supply-side economics; and libertarian nuts who think that by cutting tax revenues you'll shrink the government ? when all you do is balloon the deficit ? is doing to our future. And please don't tell me the tax cuts are working. Of course they're working! If you put this much stimulus into our economy ? three tax cuts, loose monetary policy and out-of-control spending ? it will produce a boom. Eat 10 chocolate bars at once and you'll also get a rush. But at what long-term cost?

"Quite simply," argues Mr. Peterson, "those bell-bottomed young boomers of the 1960's have fully matured. The oldest of them, born in 1946, are only six years away from the median age of retirement on Social Security (63). As a result, our large pension and health care benefit programs will soon experience rapidly accelerating benefit outlays. . . . Thus, at a time when the federal government should be building up surpluses to prepare for the aging of the baby boom generation, it is engaged in another reckless experiment with large and permanent tax cuts.

America cannot grow its way out of the kinds of long-term deficits we now face. . . . The odds are growing that today's ballooning trade and fiscal deficits, the so-called twin deficits, will someday trigger an explosion that causes the economy to sink ? not rise."

The same Bush folks who assured us Saddam had W.M.D. now assure us these budgets of mass destruction don't matter.

Sure. "During the Vietnam War," notes Mr. Peterson, "conservatives relentlessly pilloried Lyndon Johnson for his fiscal irresponsibility. But he only wanted guns and butter. Today, so-called conservatives are out-pandering L.B.J. They must have it all: guns, butter and tax cuts."

This is so irresponsible and it will end in tears. Remember, says Mr. Peterson, long-term tax cuts without long-term spending cuts are not tax cuts. They are "tax deferrals" ? with the burden to be borne by your future or your kid's future.

If this isn't the election issue, I don't know what is.

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NO $HIT!