Democrats, eager to hammer home their assertion that President Bush’s tax cuts are driving the country into a fiscal ditch, on Friday estimated government budget deficits will top $400 billion this year and approach $500 billion in 2004.
A new round of tax cuts, coupled with a continuing U.S. occupation of Iraq, could help drive up the federal debt by $3.6 trillion through 2011, according to forecasts by House Budget Committee Democrats.
The numbers, while compiled by partisan staff members, are in line with private sector estimates from Wall Street. They also reflect deteriorating fiscal conditions noted this month by the nonpartisan Congressional Budget Office, well before the tax cut was signed into law.
“Those are all sensible numbers,” said Douglas Holtz-Eakin, the CBO’s director and a former Bush administration economist.
The Democrats predict the deficit this year will top out at $416 billion, a figure that would shatter the $290-billion record set in 1992, even after it is adjusted for inflation. The deficit next year would be $489 billion.
In February, the White House forecast a $307-billion deficit for next year, even with all of Bush’s policy proposals included.
Republicans on Friday did not quibble with the forecasts, but they fired back at the forecasters.
“These are the same people who are not even willing to look for wasteful spending in the government,” said Kyle Downey, the House Budget Committee’s communications director. “They want to complain about a problem, but they don’t want to work for a solution.”
From 2002 to 2011, the government is forecast to accumulate $3.6 trillion in new debt. That is a swing of more than $9 trillion from the $5.6-trillion surplus predicted for that time period in 2001, when Bush pushed through a 10-year, $1.35-trillion tax cut in part to send that surplus out of Washington. By 2013, the Democrats say, the publicly held debt will have reached $7.9 trillion, just as the baby boom generation begins to retire.
“This is becoming more than a fiscal issue,” said Rep. John M. Spratt Jr. of South Carolina, the ranking Democrat on the House Budget Committee. “It’s become a moral issue.”
Independent analysts say the Democrats’ numbers do not appear excessive.
Last week, Goldman Sachs, the Wall Street investment bank, forecast a similar deficit of $416 billion for 2003, rising to $450 billion next year.
But William Dudley, a Goldman Sachs economist, said the firm probably will boost its 2004 deficit forecast to reflect a larger-than-expected tax cut for this year and next.