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WORLD> America
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US deficit zooming to half-trillion as Bush leaves
(Agencies)
Updated: 2008-07-29 08:07
"The nation's economy has continued to expand and remains fundamentally resilient," said the budget office report. A $482 billion deficit would easily surpass the record deficit of $413 billion set in 2004. The White House in February had forecast that next year's deficit would be $407 billion. The deficit numbers for 2008 and 2009 represent about 3 percent of the size of the US economy, which is the measure seen as most relevant by economists. By that measure, the 2008 and 2009 deficits would be smaller than the deficits of the 1980s and early 1990s that led Congress and earlier administrations to cobble together politically painful deficit-reduction packages. Still, the new figures are so eye-popping in dollar terms that they may restrain the appetite of the next US president to add to the deficit 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, with US Congress also feeling pressure to curb spending growth. The administration 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. On a slightly brighter note, the deficit for the 2008 budget year ending Sept. 30 will actually drop from an earlier projection of $410 billion to $389 billion, the report said. McCain used the new 2009 estimates to slam both the Bush White House for its "profligate spending" and Democratic rival Obama, who has declined to endorse the goal of McCain -- and congressional Democrats -- to balance the budget. "I have an unmatched record in fighting wasteful earmarks and unnecessary spending in the US Senate, and I have the determination and experience to do the same as president," McCain said in a statement. McCain again called for a full plate of multi-trillion dollar tax cuts, though campaign adviser Douglas Holtz-Eakin said some modifications could be made to McCain's economic plan to try to reach balance. Obama's campaign used the new numbers to assail McCain for embracing Bush's tax cuts. As for Obama's plans, campaign adviser Furman said the candidate would cut wasteful spending, close corporate loopholes and roll back the Bush tax cuts on upper brackets while still promising to make "health care affordable and putting a middle class tax cut in the pocket of 95 percent of workers and their families." Monday's figures capped a remarkable deterioration in the United States' budgetary health under Bush's time in office. He inherited a budget seen as producing endless huge surpluses after four straight years in positive territory. That stretch of surpluses represented a period when the country's finances had been bolstered by a 10-year period of uninterrupted economic growth, the longest expansion in US history. In his first year in office, helped by projections of continuing surpluses, Bush drove through a 10-year, $1.35 trillion package of tax cuts. However, faulty estimates, 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. There had been progress since then, with a $161.5 billion deficit for 2007 representing the lowest amount of red ink since an imbalance of $159 billion in 2002. |
