Posted on 07/30/2004 9:53:28 AM PDT by 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.
And which of the three- war, recession, or direct attack- is responsible for the $400 billion drug plan for seniors?
You are correct. In percentages it is NOT the highest deficit by far.
Actually, our deficit in % is just a little lower than that of France and Germany
You make my case.
There has been a remarkable turn-around.
The prescription benefit is to fulfill a campaign pledge to create something in that area. I didn't like that part of Pres. Bush's plan, but I voted for him knowing he was going to do something just like what he did.
So what you're saying is that by wasting our money, he's showing that it's okay to waste our money?
Sheesh....
No I'm saying that he told us in his campaign that he'd enact a medicare prescription benefit. If you voted for him, then he was fully above-board about it.
You made your choice.
If he hadn't fulfilled the promise, he'd have been skinned alive by the media and his hide sold to the AARP.
hey you gotta give em credit, they kept it under 450 !
Exactly. And he's dumping a trillion-dollar tab on us to buy Greedy Geezer votes with his "free" pill scam.
Or he could have said "I'm sorry, but in this time of war I can't implement all the social programs I said I would. We must all tighten our belts, and that means we'll have to wait a little while for this new program."
I would have respected that, and everyone who voted for him would have respected that. The only people who wouldn't have respected that are the ones who hate him anyway.
Instead, he went right along with this socialist boondoggle. Wasting our money in a time of war to create a new entitlement - what would we say about a Democrat who did that?
Michael Milliken would be proud!
well the democrats are saying why cut taxes while at war?
I agree. I thought it would take 10 years to recover from 911 and the results. It is amazing to me that we seem to be perking along and the tax cuts helped as did the confidence in GWB.
What is important is the size of the DEBT relative to the size of the economy (the GDP). It is the DEBT, not the DEFICIT, that we and our children will have to pay interest on forever (unless we pay it back).
As can be seen in the table at http://home.att.net/~rdavis2/debt05.html, the projected gross federal debt is projected to reach 71.1 percent of GDP in 2008, it's highest level since 1954. According to Bush's most recent budget, however, it gets much worse after the Boomers retire. As can be seen in the table at http://home.att.net/~rdavis2/pro2005.html, the public debt is projected to reach 432 percent of GDP by 2080. Of course, something will give long before we reach that point.
No he didn't. He anticipated a $300+ Billion a year defecit for 1999 even if he got his full tax increases. What happened was spending was somewhat limited, but revenue increased dramatically, and completely by surprise to his administration.
Remember back in 1994 when Republicans were "cutting" school lunch programs because they were increasing at a lower rate than had originally been planned?
Doesn't that mean that under the same definition we have somewhere between a $102 Billion and a $146 Billion surplus?
Oops... I did my math off the $375 billion from last year, not $445 Billion...
But still, it would be somewhere between a $32 billion and a $76 billion surplus, right? :-)
"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.)"
-- China and Japan are responsible for a ton FOREIGN debt purchasing, along with the UK, but the majority of our debt is bought by American citizens.
I'm very interested in this topic. Can you bump to me anything on this subject? Thanks
"CAP TOTAL SPENDING TO GROW NO FASTER THAN INFLATION. PERIOD. NO EXCEPTIONS .... That will end the deficit in 5-7 years."
-- Exactly. In fact, we could use this to naturally privatize social security and health care: cap SS and Medicare payment growth to the rate of inflation now, and then step-down from there until growth is COMPLETELY frozen by 2025. Here's an example:
2005 - rate of SS/Medicare growth limited to 100% of inflation rate.
2010 - rate of SS/Medicare growth limited to 75% of inflation rate.
2015 - rate of SS/Medicare growth limited to 50% of inflation rate.
2020 - rate of SS/Medicare growth limited to 25% of inflation rate.
2025 - SS/Medicare growth permanently frozen.
It would be annualized so it would drop 5% every year (95% of inflation rate in 2006 and 5% of inflation rate in 2024, for example).
What this would do (Greenspan hinted at this earlier this year and got hammered for it) is make government retirement funding less and less important over time. By making it gradual, it would allow people to save for anticipated lower payouts. by 2025 the economy will be 2 - 2.5 times larger, but SS and Medicare spending-to-GDP ratio will be AT LEAST 50% - 60% lower than it is now, depending on what the inflation rate is.
And what do we do with these savings? Gradually increase contribution limits on IRAs and Medical Savings Accounts!
What I want to know is when will we have a conservative leader with the balls to propose this idea...
Maybe we repeal/modify it after Dubya is re-elected...
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.