The U.S. Congressional Budget Office (CBO) Tuesday released its budgetary and economic forecast, and its predictions were not substantially different from those of the Bush administration. The U.S. fiscal deficit this year will also be larger than it has ever been.
The U.S. deficit is projected to be a record $422 billion this year, an amount equal to 3.6 percent of national output (GDP). Congressional Budget Office director Douglas Holtz-Eakin says the deficit is likely to narrow in 2005 and 2006 and then begin to widen again if current policies remain in place.
Mr. Holtz-Eakin says he is doubtful that the Bush administration will be able to meet its goal of reducing the deficit by half within five years.
"To cut it in half as a percent of gross domestic product you'd have to get to 1.9 percent," he said. "We're not too far from that five years out. We're at 2.3 percent in this baseline. But then baselines are funny animals [hard to predict]," he noted.
Mr. Holtz-Eakin says the budgetary projections can only be estimates since so much depends on what the Congress decides to spend. Unlike the Bush administration, the CBO figures include indefinite $115 billion annual projections for U.S. military operations in Iraq and Afghanistan.
Opposition Democrats were quick to interpret the CBO projections as evidence that the Bush administration's economic policies have disastrous long-term consequences. Kent Conrad is a Democratic Senator from North Dakota.
"There has got to be an understanding that we are on a course that is utterly unsustainable. And the consequences for our nation are enormous because of our failure to address this issue. [The deficit] means we're going to have a weaker economy in the future," said Mr. Conrad.
Most economists believe the high U.S. fiscal deficits are due to large tax cuts, increased government spending and slower than expected economic growth.