Budget deficits are back, White House says

By Alan Fram

Associated Press

WASHINGTON – Congressional Democrats blamed President Bush and his tax cut today for the return of federal deficits, a day after the White House budget chief said he expects shortfalls for at least the next three years.

Mitchell Daniels, the administration’s budget director, blamed his prediction on the recession and the war against terrorism.

But Democrats said the real culprit was the 10-year, $1.35 trillion tax cut Bush helped muscle through Congress last spring, over complaints by most Democrats that it would jeopardize federal surpluses.

“I’d love to be able to say, ‘I told you so,’ ” Senate Majority Leader Tom Daschle, S.D., told reporters.

The Senate Budget Committee chairman, Sen. Kent Conrad, D-N.D., said that when Daniels blamed the recession and terrorism, “He left out the biggest cause – the tax cut this administration pushed and got passed.”

In his remarks Wednesday, Daniels defended the tax cut, calling it “a major reason why this recession, many are saying, may prove short and shallow.”

Daniel’s bleak prediction was the first public acknowledgment by the Bush administration that after a string of four consecutive annual surpluses under President Clinton, deficits are back. Prior to the $69 billion surplus rung up in fiscal 1998, the last federal black ink had been in 1969.

“It is regrettably my conclusion that we are unlikely to return to balance in the federal accounts before possibly fiscal ‘05,” Daniels said in a speech at the National Press Club. He added, “Things will have to break right for us to do that.”

With a war under way and an ongoing danger of domestic terrorism, Americans are less concerned, at least for now, about budget deficits than they once were.

Even so, a reversion to the deficits that long dominated the capital’s fiscal wars seems to present Bush with a significant political liability that now seems likely to haunt him right up to his 2004 re-election campaign. And it augurs a likely return to the annual partisan fights over where spending should be cut to balance the budget.

Private and congressional analysts have been saying for weeks that they expect a deficit in fiscal 2002, which began Oct. 1, well into the tens of billions of dollars. Daniels provided no figure.

Underlining the dramatic economic turnaround, fiscal 2000 saw a record $237 billion surplus that shrank to a $127 billion surplus in fiscal 2001. As recently as August, the Bush administration predicted a 2002 surplus of $173 billion, down from its $231 billion forecast made in April.

In fact, until several months ago, most forecasters were envisioning an ever-growing string of budget surpluses for the next decade, fading only when the huge baby boom generation begins to retire.

But then the recession – now officially pegged as having started in March – took hold, and the condition of the government’s books weakened. The $1.35 trillion, 10-year tax cut Bush pushed through Congress last spring further eroded the projected black ink.

The Sept. 11 terrorist attacks dealt a severe blow, staggering the economy and triggering tens of billions in spending for anti-terrorism, the war in Afghanistan and economic recovery.

Daniels acknowledged that as a result, the administration would lower its long-term growth estimates, which means the government would expect to collect less revenue than it would with stronger growth.

“This has profound effects, when compounded out over time, on the amount of money that we can expect to have available in the federal treasury,” Daniels said.

To try to force a return to surpluses, Daniels said the administration would propose a fiscal 2003 budget early next year that is generous toward defense, anti-terrorism and other high-priority programs, but seeks to trim programs that seem less necessary.

He cited the National Science Foundation and food aid for women, infants and children as important and effective programs. He said the government has too many job-training programs and seemed to suggest that border protection programs could be made more efficient.

He also said the budget would propose taking some automatically paid benefits and changing their status so they must be approved annually by Congress or the money would not be spent.

Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

More in Local News

Mel Jennings sits in his structure during a point-in-time count of people facing homelessness in Everett, Washington on Tuesday, Jan. 24, 2023. Mel has had a brain and spinal surgery, and currently has been homeless for a year. (Annie Barker / The Herald)
Annual homeless count aims to give snapshot of housing crisis

Volunteers set out into the rain Tuesday to count all the people facing homelessness in central Everett.

Catherine Berwicks loads ballots into a tray after scanning them at the Snohomish County Elections Ballot Processing Center on Tuesday, Aug. 4, 2020 in Everett, Wa.  (Andy Bronson / The Herald)
Lawmakers push to boost voting in county jails across the state

A House bill envisions an approach similar to what’s been happening in the Snohomish County Jail for several years.

Vandalism at Seaview Park on Jan. 21, 2023 in Edmonds, Washington. (Edmonds Police Department)
Police seek suspects in repeated vandalism at Edmonds parks

Vandals have done over $10,000 of damage to parks across the city, including suspected arson and graffiti with hate speech.

One worker looks up from the cargo area as another works in what will be the passenger compartment on one of the first Boeing 787 jets as it stands near completion at the front of the assembly line, Monday, May 19, 2008, in Everett, Wash. The plane, the first new Boeing jet in 14 years, is targeted for power on in June followed by an anticipated first flight sometime late in 2008.  (AP Photo/Elaine Thompson)
Boeing workers long-exposed to carcinogen far above legal limits

The company confirmed in depositions that parts of its Everett plant still don’t meet 2010 standards.

CarlaRae Arneson, of Lynnwood, grabs a tea press full of fresh tea from Peanut the server robot while dining with her 12-year-old son Levi at Sushi Hana on Thursday, Jan. 5, 2023, in Lynnwood, Washington. CarlaRae said she and her son used to visit the previous restaurant at Sushi Hana’s location and were excited to try the new business’s food. (Ryan Berry / The Herald)
Peanut the robot waitress is on a roll at Lynnwood’s Sushi Hana

She’s less RoboCop and more Rosey as she patrols the restaurant, making sure everyone has a drink and good time.

K-9 Hobbs and Sgt. Jason Robinson pose for a photo after Hobbs’ retirement ceremony at the Edmonds Police Department in Edmonds, Washington on Thursday Jan. 26, 2023. (Annie Barker / The Herald)
Police dog Hobbs retires after nearly 10 years on the Edmonds force

The German shepherd had 520 deployments, 166 arrests and 113 evidence finds with his handler, Sgt. Jason Robinson.

U.S. Attorney Nick Brown and the victim of a brutal attack in 2018 answer questions from reporters on Jan. 27, 2023 in Seattle, Washington. (Jake Goldstein-Street / The Herald)
White supremacists sentenced for racist beating at Lynnwood bar

A federal judge handed out stiffer sentences than prosecutors had asked for in a series of sentencing hearings Friday.

Marysville Mayor Jon Nehring is this year's winner of the Henry M. Jackson Award given by Economic Alliance Snohomish County. Photographed in Marysville, Washington on April 25, 2022. (Kevin Clark / The Herald)
Marysville State of the City address set for Feb. 1

Mayor Jon Nehring will highlight 2022 accomplishments and look to the future. Questions from the audience will follow.

NO CAPTION NECESSARY: Logo for the Cornfield Report by Jerry Cornfield. 20200112
A move to require voting and a bicameral chasm on vehicle pursuits

It’s Day 19 and the mood is heating up as the third week of the 2023 legislative session comes to an end.

Most Read