White House Projecting Record $445 Billion Deficit

NBC4.com ^ | 30 July 2004 | NBC

[COBOL2Java]

POSTED: 11:45 am EDT July 30, 2004
UPDATED: 12:40 pm EDT July 30, 2004

WASHINGTON -- The White House projected Friday that this year's deficit will hit a record $445 billion, further fueling a campaign-season dispute over President Bush's handling of the economy.

The figure easily surpassed last year's $375 billion, making it the largest-ever in dollar terms. That gave ammunition to Democrats who say Bush's tax cuts and failure to prevent a loss of jobs during his term has worsened the outlook for the budget and the economy.

But in a political plus for Republicans, the new projection was also an improvement over forecasters' expectations of earlier this year. In February, the administration projected a $521 billion shortfall for 2004, while the nonpartisan Congressional Budget Office estimated a month earlier that the deficit would be $477 billion.

The White House was attributing the improvement to the collection of $82 billion more in revenue than had been anticipated, which generally reflects more vigorous economic activity. That was partly offset by $6 billion more in spending than was expected, mostly for Medicaid and Medicare.

"We are meeting our national priorities and by showing spending restraint elsewhere in the budget we are on track to meet the president's commitment to cutting deficits in half" over the next five years, White House spokesman Scott McClellan told reporters aboard Air Force One as Bush flew to campaign stops in the Midwest.

Democrats argue the report underscores the decline of the government's fiscal health under Bush, who has seen three straight years of worsening annual shortfalls following four consecutive surpluses under President Clinton.

"Anyway you slice it, a deficit exceeding $400 billion this year alone is bad news for the country," said Thomas Kahn, Democratic staff director for the House Budget Committee. "Republicans' failed budget policies have converted record surpluses into the biggest deficits in American history."

The White House was also boosting its estimate of Medicare spending by $67 billion over the next five years. Administration officials attributed the increase to added expenditures under last year's bill expanding Medicare coverage and to changes in long-range technical estimates about the program.

Medicare, the government's health insurance program for the elderly and disabled, spends about $300 billion a year. Extra Medicare spending could further heighten concerns about the program's solvency, already in jeopardy over the next two decades with the impending retirement of the huge baby-boom generation.

Medicare's anticipated rapid growth in coming years is expected to be a major engine keeping the budget in the red.

The federal budget year runs through Sept. 30. That means the final deficit figure will be available shortly before the Nov. 2 election, further shining a spotlight on the issue.

[Texan5]

Why, oh why do these idiot people assume that everyone just lives to do nothing but run around the country in a motor home after a certain age and run to doctors all the time? I don't even know anyone who is "retired" in the rural area we live in-they all have businesses or jobs. But, hey, it works so well for Germany and France (not)...

[BrooklynGOP]

Hah! The key is The figure easily surpassed last year's $375 billion, making it the largest-ever in dollar terms.. What about %?

[Moonman62]

Good point, but we clearly have a president who overspends with a "no veto" record.

[ItsOurTimeNow]

'Cuz if they compared it to GDP %, they'd have no "itsbushsfault!" story.

[twigs]

I have heard though that excluding the military budget, Pres. Bush has slowed the growth rate of the budget. I think Michael Medved said that. If true, then that's signficant. Clinton supposedly closed the deficit, but he decimated the military in doing so. He really left a time bomb for the following president. Pres. Bush has had to clean up all of Clinton's messes.

[TheDon]

You win the prize!

[snowsislander]

Actually, the percentages are bad. The GDP for last year was roughly 10 trillion dollars, and I believe that the projected growth is around 3%-4% for the year, or 300-400 billion dollars.

Taking the federal deficit as a rough 400-500 billion dollars for 2004, it means that our debt is growing more rapidly than the GDP. Here's the relevant graph that is so frightening:

Source: Federal Reserve

Our net external debt is now above 25% of our GDP, and that graph says "screaming upward" since 1965, having crossed the net debtor line in 1985.

The question is will Japan and China continue to finance us? (Most of the funding for our massive federal debt growth came from Japan and China last year.) They have had had to do so in the last year in order to control the yen and the yuan (we should be thankful that we are the world's reserve currency at least for now, that lets the currency manipulation work cleanly into dollars which are then turned into debt), but Japan has bought done zero currency intervention in the last 30 days.

(If you need cites (I notice most Freepers don't bother with them), I have posted all of this several times before except for the last fact about no currency intervention in the last 30 days, which comes from the Japanese Ministry of Finance website at www.mof.go.jp.)

[OldFriend]

All commenary is spinning this UP......but no one mention that it billions of dollars LESS than predicted.

[mastequilla]

Good point, but we clearly have a president who overspends with a "no veto" record.

No, we have a president who spends what is needed to protect our country and to liberate Iraq, as well as provide tax cuts that have stimulated the economy.

Perhaps you actually believed the tripe coming out of Boston this week?

[WOSG]

The White House was attributing the improvement to the collection of $82 billion more in revenue than had been anticipated, which generally reflects more vigorous economic activity

The tax cuts worked!!!

As for cutting the deficit, here is a simply plan: CAP TOTAL SPENDING TO GROW NO FASTER THAN INFLATION. PERIOD. NO EXCEPTIONS .... That will end the deficit in 5-7 years.

[Moonman62]

No, we have a president who spends what is needed to protect our country and to liberate Iraq, as well as provide tax cuts that have stimulated the economy.

Please break it down for me. How much of the extra $600 billion a year is going to the military? The miltary budget alone is alittle over $400 billion.

[Moonman62]

I have heard though that excluding the military budget, Pres. Bush has slowed the growth rate of the budget.

That's if you use the Enron numbers. The plan this year is to take the spending increase out of the military budget, and then do a special appropriations bill after the election to make up the difference. Last year the spending increase was hidden by predating the checks to the previous year.

[mastequilla]

Please break it down for me. How much of the extra $600 billion a year is going to the military? The miltary budget alone is alittle over $400 billion.

Might I suggest that if your goal is to attack the President's record, you should consider taking it elsewhere (DU?).

Look at the numbers yourself, the President is fixing the economy, cutting taxes, and fighting a war on terror. Short term deficits that are historicaly low as a percentage of GDP are insignifican to all except those who for some odd reason find the need to attack the President in the midst of a reelection campaign.

[Fury]

Ping to Post# 8

[q_an_a]

how much money did they take in? was it more than in previous years? are we spending too much on education, the military and medical research? have we repaired too many highways?

did we go to war and liberate 2 countries and 40 million people? did we uncover a vast nuclear arms selling group and disarm Libya? what does all of this cost? which one should we ahve stopped? did we have a debt at the end of WWII? did all of the countries we saved in WWII pay off that debt in two years or less?

the cost of being America is more than dollars in the world of the weak.

[Moonman62]

Might I suggest that if your goal is to attack the President's record, you should consider taking it elsewhere (DU?).

Why should I go to DU when people here can't handle the truth either?

[taxed2death]

"we have a president who spends what is needed to protect the country...."



We have a president who gives too much money away to other countries (financial aid) as well as letting hundreds of thousands slip in through our porous borders, thus costing the taxpayer billions.

He seriously needs to tighten the federal Gub-mints belt a few notches. The money saved could go to actually securing our borders, thus really "protecting our country".

[xzins]

What were the deficits during the democratic controlled congresses of the past? Anyone know.

Isn't the real issue what percentage they are of the GNP?

Also, it has always been EXPECTED....I remember studying it in economics classes in college...that a nation will run dificits during times of war, recession, or direct attack on the economic system itself.

All three of those happened at the beginning of the Bush presidency. I think it's a miracle that we've endured it and are even on the way back after 2.5 short years.

[arielb]

compare to John Howard's record in Australia which cut taxes, increased spending on the military and repaid most of the debt:
http://www.liberal.org.au/default.cfm?action=hga