EEUU

La oficina de presupuesto pronostica un déficit récord en 2004

Autor: Edmund L. Andrews

Fecha: 27/1/2004

Traductor: Celeste Murillo, especial para P.I.

Fuente: New York Times

Budget Office Forecasts Record Deficit in '04

The Congressional Budget Office predicted on Monday that the federal budget deficit would hit a record $477 billion this year and that accumulated deficits over the next decade would total $1.9 trillion.

The nonpartisan budget office's outlook for the long term is significantly more pessimistic than it was just one year ago. It casts new doubt on the ability of President Bush to fulfill his promise of cutting the deficit in half over the next five years, particularly if he persuades Congress to make his tax cuts permanent, which he has vowed to do.

If Congress extends all tax breaks that are scheduled to expire, the agency predicted, the total cost would add up to more than $2 trillion in additional borrowing over the next decade.

And if Congress moves to stop an explosive rise in what is known as the alternative minimum tax, a provision that is expected to raise taxes on millions of families as their incomes rise, the Treasury would lose an additional $469 billion over 10 years.

Extending the tax cuts would increase the accumulated deficit more than $1.2 trillion above the agency's basic forecast. They are now scheduled to expire at various points between now and 2011.

Just a year ago, before the war in Iraq and before Congress passed a sweeping expansion of Medicare, Congressional forecasters predicted that the deficit could melt away by 2007 and that the government could rack up $1.3 trillion in accumulated surpluses within 10 years.

Democrats immediately pounced on the new report, saying it provided more evidence of Mr. Bush's fiscal recklessness.

"It is becoming clear that the Bush administration has no plan to eliminate these deficits," said Representative John M. Spratt Jr. of South Carolina, the senior Democrat on the House Budget Committee. "In the face of mounting deficits, the president proposes another round of tax cuts reducing revenues by more than $1 trillion and driving the budget further into the red."

Administration officials contend that today's deficits are "manageable," given the need for spending on domestic security and the war in Iraq as well as the need to help the economy rebound from the recession of 2001.

The federal deficit reached $374 billion in 2003, a record in dollar terms though not as a percentage of the total economy. The new forecast calls for the deficit to reach $477 billion in 2004, which is essentially what the White House predicted last summer.

But the new budget estimate painted a much gloomier picture for the long-term outlook, even though Congressional analysts are expecting rapid economic growth to lead to big increases in tax revenue for the next several years.

The agency predicts that the economy will grow at the extremely fast rate of 4.8 percent this year and 4.2 percent next year, which is slightly more optimistic than the consensus view among private economists.
The agency also expects tax revenues to surge even faster than the economy, after having fallen for three years in a row.

But the agency's long-term outlook is more subdued. The agency predicts that economic growth will slow to just 2.5 percent a year beginning in 2010. The expected slowdown reflects slower growth in the size of the labor force, but also to some extent the economic drag created by higher deficits.

Douglas Holtz-Eakin, director of the Congressional Budget Office and a former economist in the Bush White House, said on Thursday that making Mr. Bush's tax cuts permanent would most likely have a "modestly negative" impact on long-term economic growth.

Mr. Holtz-Eakin said the initial impact of Mr. Bush's tax cuts was positive, because the cuts lowered marginal tax rates and gave people more incentive to work and produce.

But to the extent the tax cuts lead to higher deficits and greater government borrowing, he warned, they could have a "cumulative corrosive effect on capital accumulation, on national saving and on productivity."

Economists prefer to look at budget deficits in relation to the size of the overall economy, rather than to the absolute dollar amounts.

If this year's deficit turns out as both Congressional and White House budget analysts have been predicting, it would equal about 4.5 percent of the nation's gross domestic product. That is high, but well short of the record set under President Ronald Reagan in 1983, when the deficit was equal to 6 percent of the economy.

Treasury Secretary John W. Snow, in a speech delivered by satellite to a business conference in London, said today's deficits were "not historically out of range" and said the deficit would be equal to less than 2 percent of gross domestic product by 2009.

To be sure, the Congressional report includes a few assumptions about spending that are unrealistically high. To comply with its own legal requirements, the agency assumed that the government would repeat last year's $87 billion in extra spending for Iraq and Afghanistan.

Most analysts assume that the costs of occupying those countries will decline in the next few years, though they are unlikely to disappear.

But if the Congressional Budget Office assumed an unrealistically high level of spending on Iraq, it may have been too optimistic about the willingness of either Mr. Bush or Congress to restrain the overall growth in spending.

The new report assumes that discretionary spending, which includes money for everything from military programs to education and environmental programs, will climb only at the rate of inflation — about 2.5 percent a year.

But White House officials have said they will propose to increase discretionary spending by 4 percent in 2005 and defense spending by 7 percent. Those costs will not include additional money for occupying or rebuilding Iraq, which the administration has thus far sought through supplementary budget requests to Congress.

Republicans took heart that the new report confirmed a strong rebound in the economy, which they said proved the value of Mr. Bush's tax cuts.

"I am pleased that our economic outlook has improved and the unemployment rate is projected to continue to fall," said Representative Jim Nussle, Republican of Iowa and chairman of the House Budget Committee. But Mr. Nussle also hinted at frustration about the administration's refusal to include cost estimates for Iraq in the budget plan for 2005 that is to be unveiled next Monday.

"At this point, the immediate, necessary spending we've had to do as a result of `emergency' circumstances is now largely known," Mr. Nussle said, "and can be worked into our regular budget planning."