Bush Budget brings record deficits

President George W. Bush on Monday sent Congress a Budget plan for next year that would expand the military, slash taxes for investors and o...

President George W. Bush on Monday sent Congress a Budget plan for next year that would expand the military, slash taxes for investors and overhaul medicare, racking up record deficits even without the cost of a possible war with Iraq.

‘A recession and a war we did not choose have led to the return of deficits,’ Bush said in a statement in his $2.23 trillion fiscal 2004 Budget, which forecasts a deficit of $304 billion for the current fiscal year, surpassing in dollar terms a 1992 record of $290 billion. Underscoring the dramatic erosion in the nation’s fiscal picture since a record surplus in 2000, the White House now expects deficits to total $1.084 trillion over the next five years. As recently as 2001, the government was forecasting 10-year Budget surpluses of $5.6 trillion.

Democrats point the finger at Bush for pursuing what they see as reckless tax cuts that will sharply increase the nation’s debt burden and accelerate its economic decline. White House officials blame the 2001 recession, the September 11 attacks on the World Trade Center the same year and the war on terrorism for the bigger-than-expected deficits, and insist the imbalance is manageable.

“Compared to the overall federal Budget and the $10.5trillion national economy, our Budget gap is small by historical standards,” said Bush, whose Budget forecasts a rebound in economic growth to 2.9 percent this calendar year and 3.6 per cent in 2004. While ramping up funding on homeland security to $41billion and the military to $379.9 billion in fiscal 2004, Bush is asking the Republican-controlled Congress to halve spending growth for other key programmes, fuelling a battle with Democrats over tax and spending priorities in the run-up to the 2004 presidential election. But several of the most ambitious initiatives in Bush’s Budget may stand little chance of passage in their current form, particularly proposals to slash taxes on corporate dividends and reform the medicare system which provides health care to seniors, Democrats and some moderate Republicans say.