President Bush is being undercut by his allies as he feverishly lobbies for a visionary plan. No, this isn't about Iraq, but about the administration's economic strategy. Two new analyses of the budget deficit show why the administration's proposals for tax shelters and further tax cuts are downright reckless.
The first danger sign comes from the Republican-controlled House Budget Committee, which has increased its forecast of this year's budget deficit by about $30 billion. This is 15% higher than the nonpartisan Congressional Budget Office's estimate of five weeks ago. Coupled with a war in Iraq, which the administration is desperately trying to keep off the books as a supplemental expenditure, the 2003 deficit could hit $400 billion or more. As oil prices rise and the economy remains weak, the government simply won't be taking in enough revenue to cover its expenditures.
The other analysis comes from the Committee for Economic Development, an independent organization of corporate chief executives and civic leaders. In somber, hard-hitting language, the committee report, "Exploding Deficits, Declining Growth," released Wednesday, offers a reminder that annual deficits of $300 billion to $400 billion loom as far as the eye can see. That's not including the administration's new tax proposals; the report estimates they would raise the 10-year deficit by $2.7 trillion.
The business executives also dismiss the administration's claims that deficits don't really matter because the economy can grow out of them. On the contrary, they warn that deficits will cripple the ability of future governments to invest in education and infrastructure. Moreover, new tax cuts would come at the very moment that baby boomers hit early retirement age. "Perhaps for the first time in this country's history," the executives state, "most Americans could no longer expect their children to have higher living standards than their own."
The Bush administration has pushed corporations to lobby for its tax plan in the Senate, but key CEOs are joining the other side. Opposition is stiffening in the Senate, where lawmakers such as John McCain (R-Ariz.) and George Voinovich (R-Ohio) are voicing their concern about massive deficits. Before the administration gets hit by any more friendly fire, it should beat a retreat.