Bush admin. projects record 2009 deficit
WASHINGTON (AP) - July 28, 2008 The official said the deficit was being driven to an all-time
high by the sagging economy and the stimulus payments being made to
130 million households in an effort to keep the country from
falling into a deep recession. A deficit approaching $490 billion
would easily surpass the record deficit of $413 billion set in
2004.
An administration official revealed the $490 billion figure
Monday on condition of anonymity because the new estimate had not
been formally released. Administration officials were scheduled to
do that at a news conference later in the day.
The new figure actually underestimates the deficit, since it
leaves out about $80 billion in war costs. In a break from
tradition - and in violation of new mandates from Congress - the
White House did not include its full estimate of war costs.
White House press secretary Dana Perino had no comment on the
$490 billion figure. But she told reporters that the White House
and lawmakers acknowledged months ago that they were going to
increase the deficit by approving a short-term boost for the
slumping economy.
"Both parties recognized that the deficit would increase, and
that that was going to be the price that we pay," Perino said.
In fact, the White House had included cost estimates for an
economic stimulus bill in its earlier projections, so the new
figures represent a considerable deterioration in the government's
fiscal health.
The White House had predicted in February that next year's
deficit at $407 billion, which means the increase in the
projections since then would approach $80 billion or so. Figures
for the 2008 budget year ending Sept. 30 may also set a record.
The numbers represent about 3 percent of the size of the
economy, which is the deficit measure seen as most relevant by
economists. That's considerably smaller than the deficits of the
1980s and early 1990s, when Congress and earlier administrations
cobbled together politically painful deficit-reduction packages.
Still, the new figures are so eye-popping in dollar terms that
it may restrain the appetite of the next president to add to it
with expensive spending programs or new tax cuts. In fact, pressure
may build to allow some tax cuts enacted in 2001 and 2003 to expire
as scheduled at the end of 2010, with Congress also feeling
pressure to curb spending growth.
The deficit for 2007 totaled $161.5 billion, which represented
the lowest amount of red ink since an imbalance of $159 billion in
2002. The 2002 performance marked the first budget deficit after
four consecutive years of budget surpluses.
That stretch of budget surpluses represented a period when the
country's finances had been bolstered by a 10-year period of
uninterrupted economic growth, the longest period of expansion in
U.S. history.
In his first year in office, helped considerably by projections
of continuing surpluses, Bush drove through a 10-year, $1.35
trillion package of tax cuts.
However, the country fell into a recession in March 2001 and
government spending to fight the war on terrorism contributed to
pushing the deficit to a record in dollar terms in 2004.
House Budget Committee Chairman John Spratt, D-S.C., said the
$490 billion figure confirms "the dismal legacy of the Bush
administration: under its policies, the largest surpluses in
history have been converted into the largest deficits in history."
The figures to be released later will paint a picture of the
financial health of the government that President Bush's successor
will inherit, as well as updated predictions of the health of the
economy.
White House budget director Jim Nussle and Edward Lazear,
chairman of the president's Council of Economic Advisors, were
scheduled to release the administration's updated forecasts at an
early afternoon news conference.