2003 federal deficit projected at $455 billion
The projected federal budget deficit of $455 billion is $150 billion higher than the administration predicted just five months ago and is cause for alarm on both a short-term and long-term basis.
It represents 4.2 percent of the gross domestic product, the largest percentage since 1983 under President Reagan, when the deficit represented 6 percent of the GDP. According to the Office of Management and Budget, the deficit will rise to $475 billion in 2004.
In just two years, the nation's financial condition has gone from a surplus of $334 billion to a deficit of $455 billion -- a decline of $789 billion.
; One cause for concern is that the deficit figure does not include the costs of future military spending for troops in Iraq and Afghanistan. The war in Iraq so far has cost $48 billion.
ADVERTISEMENT
A significant part of the deficit was caused by the tax cuts pushed by President George W. Bush. According to the budget office, 23 percent of the deficit -- or $104.7 billion -- was caused by the tax cuts, 53 percent by the declining economy and 24 percent by spending on war, domestic security and other purposes.
Spending has increased by 18 percent in the two years Bush has been in office and revenue has declined by 12 percent in that period.
There are a number of causes for long-term concern:
1. It is impossible to estimate how long major American forces will stay in Iraq and there's no way to estimate the cost of reconstructing that country, even allowing for the possibility of using some Iraqi oil income for that purpose.
2. The baby boom generation will begin retiring around 2010, putting more demands on the Social Security system.
3. Continued deficits will make it impossible to reduce the national debt, which now stands at $6.7 trillion.
4. The United States paid $333 billion in interest on the national debt in fiscal 2002 -- compared with $14 billion spent on the National Aeronautics and Space Agency, $32 billion spent on education and $51 billion on the Department of Transportation. That $333 billion represents a waste of people's hard-earned money.
The current discussions of the deficit reveal a curious reversal in the two major political parties' positions. Republicans traditionally have been more conservative on fiscal matters and more eager to cut spending and reduce the national debt while Democrats have more often focused on the need to spend money to cure social ills. In 1997, the Republicans supported a Balanced Budget Amendment to the Constitution that would have required the government to keep its budget in balance annually.
ADVERTISEMENT
The Democrats opposed that amendment, and some argued that deficits can even be useful when the economy needs a stimulus. Now those positions are virtually reversed.
Unfortunately, the size of the deficit and the national debt -- in the hundreds of billions and in the trillions, respectively -- is too large for most of us to grasp in a practical way. Columnist David Broder of the Washington Post has proposed a national commission to conduct a campaign to inform the public about the consequences of the debt.
He has suggested Warren Rudman, a former Republican senator from New Hampshire and co-chairman of the Concord Coalition, and Leon Panetta, a former Democratic House member from California and a former U.S. budget director, as possible leaders of such a group.
A well-financed and sustained information campaign could do much to bring home to American voters the dangers of deficits that are out of control.
