White House announces record $374 billion deficit

The Bush administration Monday announced that the fiscal 2003 federal budget deficit was $374 billion, a decrease of about $81 billion from the $455 billion deficit forecast in July, but still a record high.

"Today's budget numbers reinforce the indications we have seen for some months now: that the economy is well on the path to recovery," said Treasury Secretary John Snow in a prepared statement. The report comes 10 days after the Congressional Budget Office reported its estimate of an identical $374 billion deficit. "As the economy grows, government revenues will go up, which will help keep the deficit under control."

Many Democrats, however, are unlikely to be impressed. The fiscal 2003 deficit is more than twice the fiscal 2002 tally of $158 billion. "The fact is, there's very little to cheer about," said Tom Kahn, Democratic staff director for the House Budget Committee. "This is still the biggest budget deficit in American history."

Bush aides are quick to point out, however, that while nominally a record, the deficit is not the highest ever when measured as a percentage of the economy.

Accounting for the difference from the previous forecast, total outlays for 2003 were $55 billion lower than expected in the July Office of Management and Budget Mid-Session Review. But, in what could be a sign of a quickening recovery, receipts were higher than expected, particularly with respect to corporate tax receipts, which at $132 billion were $6 billion greater than forecast in July.

But the lower final 2003 tally does not signal that the current era of large structural deficits is projected to end anytime soon. In fact, the deficit for the current fiscal year is likely to be ahead of last July's $485 billion forecast, coming in at above $500 billion, OMB Director Josh Bolten said in a prepared statement today.

In a meeting with reporters earlier this month, however, Bolten indicated that the administration remains on track to reach its target of cutting the deficit in half over five years if Congress retrains spending.

But Kahn noted that a Democratic Budget Committee forecast says deficits over the next 10 years will pile up to the tune of more than $3 trillion. The Democrats are including policy changes such new spending for Iraq and Afghanistan, an expensive "fix" for the alternative minimum tax-which many observers agree will have to scaled back-and assume that the 2001 tax cuts, which expire in 2011, are extended. "The long-term news is still very, very bad," Kahn said.