Bush's Budget Projects Deficits

President Bush discusses the 2009 budget following a cabinet meeting Monday at the White House.Video by AP
By Michael Abramowitz and Jonathan Weisman
Washington Post Staff Writers
Tuesday, February 5, 2008

President Bush yesterday unveiled a $3.1 trillion budget plan for fiscal 2009 that will leave deficits of more than $400 billion this year and next, forcing his successor to grapple with a range of unpalatable choices to close the gap, according to lawmakers and budget experts.

Under the budget sent to Congress yesterday, Bush would freeze most domestic spending and limit payments to hospitals and other providers as part of an effort to slow the growth of Medicare. Because of plans to send tax rebates to most Americans under an economic stimulus program, the deficit would grow in the short term but would fall to zero by 2012 if Congress adopts the spending restraints Bush is calling for, according to projections in the new budget.

Lawmakers said they are unlikely to go along with much of the president's final-year agenda, and Bush's plan omits several costly features, including tens of billions of dollars of the cost of the wars in Iraq and Afghanistan, that could drive the deficit even higher than the president's estimates. That would effectively delay until 2009 decisions on how to cope with short- and long-term financial problems, lawmakers and others said.

The new deficit projections "clearly make a problem not only for the next Congress but also the next couple of Congresses, and the next president, too," said G. William Hoagland, a longtime GOP Senate aide and budget expert who is now a health-care lobbyist.

"A whole bunch of things they were putting off and hiding under the rug all these years are starting to pop back up," said Austan Goolsbee, an economist at the University of Chicago and chief economic adviser to Sen. Barack Obama (D-Ill.). "It's clear they're trying to shove as much of this as possible on to the next guy."

White House officials reject such criticism, saying they have tried to put forward ideas for confronting the long-term costs of Medicare and Social Security but repeatedly have been stymied by Democrats in Congress. White House budget director Jim Nussle told reporters yesterday that he remains hopeful there can be bipartisan progress on budget issues this year, noting that Democrats and Republicans have cooperated recently on the economic stimulus plan.

"You might be surprised," he said. "I think that there are many in Congress that believe rather than waiting until the last minute in 2008, maybe we ought to have some of those conversations a little bit earlier."

The budget deficit has not figured recently as a major issue in Washington or on the campaign trail, as it did in the 1980s and '90s. Bush inherited a surplus in 2001, but his tax cuts, the slowing economy early in his administration and a massive defense buildup turned the surplus into red ink, with the deficit hitting a record $413 billion in 2004. In recent years, the deficit has fallen as tax revenues jumped with the improving economy.

Nussle acknowledged that the deficit will grow to $410 billion in the current fiscal year. But he cast that largely as a result of the stimulus plan, which is expected to cost about $146 billion, and he noted that the deficit is low in historical terms, as a proportion of the economy.

"We believe that this uptick is temporary and is also a manageable budget deficit if we keep taxes low, if we can keep the economy growing and if we can keep spending in check," he said.

But while the deficit measured against the size of the economy will be far from a record, it will come after six straight years of red ink. The federal debt will have climbed to $9.7 trillion by the time Bush leaves office, a rise of $4 trillion during his administration, according to the budget.

Interest on the debt next year will total $260 billion, about what will be spent by the departments of Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, and Justice combined.

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