WASHINGTON – U.S. Rep. John Spratt (D-SC) issued the following statement on today’s new budget forecast by the Congressional Budget Office (CBO).
“CBO’s projections show that deficits loom far into the future, and cast grave doubts on the Bush Administration’s claim that it will cut the deficit in half over five years.
“CBO forecasts a budget deficit for fiscal year 2004 of $477 billion, the largest in history, larger even than the 2003 deficit of $375 billion. The $5.6 trillion ten-year surplus (2002-2011) projected three years ago has vanished; over the same period, CBO now projects a deficit of $2.9 trillion. Since last January, the deficit has worsened considerably, with the projected deficit for 2004 growing $332 billion worse and the ten-year deficit (2002-2011) growing $2.9 trillion worse. These deficits result despite strong economic growth assumed in CBO’s forecast.
“Because CBO’s projections assume no policy changes relative to current law, they understate the severity of the budget deficit. When one adds CBO’s estimate of policies on the Republican agenda — like making permanent expiring tax cuts — deficit projections grow much larger, by $2.9 trillion over 2005-14.
“While Republicans suggest that these record-breaking deficits are ‘manageable,’ there is growing anxiety over the dangers these deficits pose to the economy. Recent reports decrying the deficit have been come from the International Monetary Fund, the Concord Coalition, and even investment banking firms like Goldman Sachs. Chronic deficits crowd out private investment, shove up interest rates, and slow down economic growth. Meanwhile, increasing debt service leaves less and less in the budget for priorities like education, health care, and retirement security.
“It is becoming clear that the Bush Administration has no plan to eliminate these deficits. 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. The President’s proposal to hold domestic appropriations to one percent growth in this year’s budget — even if enacted — would do virtually nothing to reverse the growing deficit. Domestic appropriations in the current budget cycle increased by only two percent, and the deficit still went up by $102 billion.”