The budget deficit will rise to at least $337 billion this year and may well approach or exceed $400 billion because of tax cuts and new spending for hurricane relief and the war in Iraq, congressional budget analysts said Thursday.
The latest Congressional Budget Office data also suggest President Bush is unlikely to be able to keep his promise to cut the federal deficit in half by the end of his term.
Even assuming a phasing-down of the war in Iraq and the costs of hurricane relief, implementing tax cuts sought by Bush and Congress would produce deficits exceeding $300 billion through the end of the decade, the nonpartisan office said.
The report and Bush’s annual budget submission kick off a partisan election-year debate over the budget, which will play out against the backdrop of rising deficits and record spending.
Bush promised in 2004 to close the deficit from a then-estimate of $521 billion to $260 billion by 2009, and he promised again Thursday to meet that goal when he sends an austere fiscal 2007 budget to Congress on Feb. 6.
“We can cut our deficit in half by 2009 and make sure the American people still get their tax relief,” Bush told reporters.
Bush critics say he routinely plays games with the budget by leaving out the long-term costs of the war in Iraq and redrawing the tax code so more middle-class taxpayers won’t get hit by the alternative minimum tax.
The budget office’s official baseline shows the deficit dropping to $241 billion by 2009 and to $114 billion by 2011. Those estimates assume Bush’s tax cuts expire and the alternative minimum tax is left alone. That tax, designed to stop the wealthy from avoiding taxation, threatens more middle-class taxpayers every year because of inflation.