Deficit Goes Up Fast in Year 6 of Bush 5-Year Plan

President Bush’s fiscal 2005 budget proposals would reduce the deficit over the next five years, the Congressional Budget Office said Friday, but at the expense of an enormous increase in red ink in the following five years.

Bush had pledged that his plan would cut the annual deficit in half in five years, and White House projections of the effects of his proposals suggested he would meet that goal. The CBO estimated that the Bush budget would fall slightly short of that 50% reduction.

And although the White House did not project what the deficit would be after five years, the CBO -- Congress’ nonpartisan fiscal analyst -- did. The CBO found that the annual deficit would remain greater than $200 billion through 2014. For the 10 years beginning in 2005, the cumulative deficit would total $2.75 trillion.

By contrast, the CBO said, the annual deficit would shrink nearly to zero if the current budget were put on autopilot for the decade and no changes were made to spending or tax policy. Under this approach, the cumulative 10-year deficit would be abut $2 trillion.

The report is expected to stoke a political debate on Capitol Hill and on the campaign trail over whether Bush and Congress are doing enough to rein in spending. It also likely will reopen debate over whether tax cuts already enacted but not yet in force should be blocked and whether those that have taken effect with expiration dates should be allowed to expire as scheduled.

Robert L. Bixby, head of the Concord Coalition, a budget watchdog group based in Arlington, Va., said the numbers portended “an ugly budget year.” The CBO report showed, he said, that the administration had failed to give a full picture of the country’s budget problems by presenting a five-year plan when “the overwhelming impact” of its proposals would come after five years.

“In short,” Bixby said, “these numbers do not support the administration’s assertion that it has a plan to cut the deficit in half over five years. Worse yet, even under this scenario, the deficit is beginning to rise at the end of the 10-year outlook -- just as the [baby] boomers begin their retirement.

“If we follow this path, we will have done nothing to prepare for the enormous fiscal challenge of the demographic tidal wave,” Bixby said. “In fact, the strategy behind this budget appears to be, ‘Here comes the tidal wave. Let’s all go for a swim.’ ”

At the White House budget office, spokesman Chad Kolton said the CBO report showed that “we can cut the deficit in half in five years if we continue to keep spending under control and grow the economy.” He asserted that if the deficit were viewed as a percentage of the gross domestic product, it would be cut in half -- to 1.6% of the gross domestic product -- in 2009, from 4.5% this year.

Kolton also said that any estimates beyond five years are “notoriously inaccurate.”

Senate Budget Committee Chairman Don Nickles (R-Okla) said he would begin deliberations next week, with the intent of cutting the deficit in half in five years.

The CBO predicted that the deficit for fiscal 2004, which runs through Sept. 30, would hit $478 billion, up from last year’s $374 billion. The White House has projected this year’s budget deficit at $521 billion.

The bleak report comes days after Federal Reserve Chairman Alan Greenspan urged Congress to consider cutting Social Security benefits for future retirees to cut government spending.

It also comes as Bush lobbies Congress to make his tax cuts permanent, at a cost of more than $1 trillion over 10 years.