Share this story
Close X
Switch to Desktop Site

Can we grow out of deficits this big?

Bush's budget goes $521 billion into the red. Behind that number is a long-term fiscal challenge for the US economy.

About these ads

An 11-pound federal budget arrived with a thud on Washington desks Monday morning, underscoring an increasingly tough fiscal environment.

Rising projections for the 2004 and 2005 federal deficits have apparently placed constraints on the Bush administration's policymaking options, and prompted a scaling back of programs on many domestic fronts.

The new numbers are already sharpening the debate about military spending versus domestic needs, the amount of economic damage done by budget deficits, and the realism of the president's plans to trim the deficit by half by 2009.

Beyond those questions looms a longer-term worry: Even if President Bush makes good on his deficit-cutting pledge, experts say it won't ease the burden of rising deficits as baby boomers retire.

"Our fiscal gap is too great to grow our way out of this problem. Tough choices are going to be required," says David Walker, the Comptroller General and head of Congress's nonpartisan General Accounting Office (GAO).

At a Monitor breakfast he outlined stark choices: Reform entitlement programs like Social Security. Cut the base of discretionary spending which Congress controls. Change tax policies. "We are going to have to look at all three," he said.

The entitlement challenge appears sure to color near-term policymaking, such as whether the president can win approval for making his tax cuts permanent. Already, Democrats are stepping up efforts to tag Bush as fiscally irresponsible.

But economists also generally agree that in the short run, more spending gives the economy a boost. The president highlighted this point, saying his budget was "a reflection of this nation's goals and purposes and advances our three highest priorities," including winning the war on terror, strengthening homeland defenses, and supporting the economic recovery.


Page:   1   |   2   |   3

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.