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How the war tab may shift agenda in Washington

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Since those estimates have not materialized, adjustments must be made to the size of the federal budget deficit. Even before this week's emergency request, the Office of Management and Budget had been projecting a deficit of a record $455 billion for this fiscal year ending Oct. 1, and another $475 billion for fiscal year 2004.

White House spokesmen say that deficits of this magnitude are still "manageable," even with a big bump up from the new emergency request, so long as Congress holds the line on spending in 2004 and does not back off the president's "pro-growth" tax cuts.

"It is not spending we expect would go into the base [of the permanent budget]. It is for the most part overwhelmingly one-time spending," said a senior administration official, who added that the administration is not proposing any offsets for the new spending, which they say will push the deficit past half a trillion dollars.

That could force the Bush administration to adjust its own wish list. Democrats are targeting Bush tax cuts, especially those for upper-bracket taxpayers. "If this is war and American lives are at stake, it's fair to ask: Are we going to share the sacrifice or charge the cost to the national debt and pass it on to our children?" says Rep. John Spratt (D) of South Carolina, the ranking Democrat on the House Budget Committee.

Robert Reischauer, a former director of the Congressional Budget Office, says the $87 billion addition to federal spending proposed by Bush "in and of itself is not cataclysmic. It is bearable." A resulting deficit of $550 billion in fiscal 2004 starting in October will amount to 4.7 percent of the nation's gross domestic product - its total output of goods and services. That is less than the peak of 6 percent of GDP reached in 1983 during President Reagan's first term in office. But at that time, Mr. Reischauer, now president of the Urban Institute in Washington, notes, some of the 1981 tax cuts had already been reversed.

In the long term, some economists worry, more borrowing by the government could push up interest rates for the nation at large, and harm the economy.

If "realistic assumptions" are made of congressional spending and tax actions, the deficit will grow to $700 billion to $800 billion over the next 10 years, says Reischauer. That's "even with a strong economy."

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