[Peace-discuss] $1.3 Trillion in Deficits Forecast Over Decade

[Lisa Chason]

$1.3 Trillion in Deficits Forecast Over Decade 

Cumulative total is 60% more than the estimates of just four months ago.


By Joel Havemann 
Times Staff Writer 

January 25, 2005, 12:14 PM PST 

The budget deficit is becoming a knottier problem in the short term and
will be a potentially catastrophic one in the future, the Congressional
Budget Office reported today.

The report suggests that President Bush, in the budget he will deliver
to Congress in two weeks, will have a harder time keeping his promise to
cut the deficit in half during his presidency.

The CBO's annual report on the budget outlook foresees a deficit of $400
billion this year. It also forecast a cumulative deficit of $1.3
trillion from 2005 to 2014, an increase of nearly 60% from the CBO's
$861-billion estimate of just four months ago.

These figures take into account some of the administration's request
today for another $80 billion for the war in Iraq, but they do not
assume an extension. Nor do they assume the likely extension by Congress
of some major tax cuts that were enacted in 2001 and 2003 and are
scheduled to expire in 2009 and 2011.

The deterioration in the nonpartisan budget office's budget projection
comes despite a somewhat rosier economic outlook than the CBO used in
September. Economic assumptions actually shaved $41 billion from the
deficit estimates over the next 10 years.

The largest single cause of the rising deficit estimates was last year's
tax bill, which extended marriage penalty relief, the increase in the
child tax credit, and the taxation of some income at 10% instead of 15%.
Another factor was a bill providing disaster relief for hurricane
victims.

The near-term deficits pale beside the CBO's admittedly rough
projections for 2030, when all the baby boom generation will have
reached eligibility for Social Security and Medicare.

If they keep growing at current rates, those two programs plus Medicaid
for the poor will be nearly as large a share of the national economy as
the entire budget is now, the CBO said.

CBO Director Douglas Holtz-Eakin told reporters that the programs would
have to be reined in before that happened. Otherwise, he said, taxes
would have to rise to intolerable levels or the government would have to
borrow so much money that interest payments would spiral out of control.

"You can't borrow it forever," Holtz-Eakin said. "I don't think you can
say deficits don't matter. They matter a lot." 

Copyright C 2005, The Los Angeles Times <http://www.latimes.com/> 

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