- WASHINGTON (Reuters) -- The
U.S. budget deficit will balloon to a cumulative $2.29 trillion over the
next decade, congressional analysts said on Tuesday, a worse outlook than
previously forecast and one likely to stir election-year debate about President
Bush's economic policies.
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- The nonpartisan Congressional Budget Office also confirmed
a preliminary forecast made in August for a $422 billion deficit for the
2004 fiscal year. That number was better than earlier expectations but
still sets a new record.
-
- "The outlook in terms of the deficits in 2004 and
2005 has improved, but the projection of the cumulative deficit over the
2005-2014 period has worsened," the CBO said in a summer update to
its budget outlook.
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- CBO is expecting the deficit to decline to $348 billion
in 2005, if current laws and policies do not change.
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- Earlier this year, CBO was looking for a cumulative deficit
of $20.1 trillion for 2005-1014 and a shortfall of $477 billion this year.
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- The White House's latest deficit outlook is for $445
billion this year. It no longer provides a 10-year forecast.
-
- The economy, particularly the deficit, has become a key
theme between the two presidential candidates and this latest report provides
ammunition for both sides.
-
-
- The Bush campaign said the more modest forecast for this
year was a sign his tax-cutting policies are working while Kerry seized
on the expected record red ink to accuse Bush of fiscal recklessness.
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- "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, Bush-Cheney '04 policy
director.
-
- Democratic presidential candidate "John Kerry's
plans for $2 trillion in new spending means higher taxes on all Americansor
a budget deficit that is completely out of control," he added.
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- Bush blames the 2001 recession and the costs of the aftermath
of the Sept. 11 attacks and the war on terror for the increase in red ink.
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- But Democrats say his tax cuts are responsible for squandering
the surplus he inherited into a deficit they say threatens the future of
Social Security and the Medicare health care program for the elderly.
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- "Only George W. Bush could celebrate over a record
budget deficit of $422 billion," Kerry said in a statement on Tuesday.
Kerry said he has a plan to restore fiscal discipline, rein in "out
of control" spending, and cut the deficit in half in four years.
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- CBO warned that even if the economy grows more rapidly
than projected, "significant long-term strains" on the budget
will get worse within the next decade as the baby-boomers begin to retire.
-
- The report projects economic growth of 4.5 percent in
2004 and a slightly slower 4.1 percent next year.
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- CBO also forecasts that the federal government will reach
its $7.384 trillion debt limit in October. The U.S. Treasury has asked
Congress to raise the borrowing ceiling for the third time in three years,
a sensitive vote Republicans would like to avoid ahead of the election.
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