From Deseret News archives:

Bush's goal to slash federal deficit may be elusive

Published: Monday, Feb. 7, 2005 9:14 p.m. MST
 |  E-MAIL | PRINT | FONT + - 
Not counting money for the wars in Iraq and Afghanistan, the new budget envisions that expenses for salaries, weapons systems and other military costs will climb 4.6 percent this year to $419 billion.

By 2009, the budget is projecting only a 2 percent rise, but that would require the Pentagon to forgo some of its long-term modernization projects. As a practical matter, Pentagon officials are almost certain to push for the money and are likely to have the ear of Congress.

The administration's determination to cut the deficit was so intense this year that it did not request that some recent tax cuts be extended after they expire this year. The biggest of those was a tax break enacted last year that allows people in states with no income tax to deduct the state sales tax instead, a measure Congress is likely to want to renew.

As for the cost of fighting in Iraq and Afghanistan, the administration plans to ask Congress for $81 billion on top of the normal defense budget for this year, but it has not said what may be necessary in fiscal year 2006. Army commanders, however, are planning on the assumption that at least 120,000 troops will remain in Iraq through 2006.

Story continues below
The new budget also omits any cost estimate for dealing with the Alternative Minimum Tax. The alternative tax was designed to prevent high-income people from taking too much advantage of special tax breaks. But because it is not indexed for inflation, it is leading to tax increases for millions of additional families each year.

Administration officials have already said they want to prevent that, but the new budget still assumes that the Alternative Minimum Tax will produce a rising torrent of new tax revenue. Preventing that tax increase would cost $72 billion in 2009 and $500 billion over the next decade, according to the Congressional Budget Office.

Joshua B. Bolten, the White House budget director, said the administration did not include the cost of a tax fix because the Treasury Department plans to address the alternative minimum tax as part of a broader tax overhaul later this year.

Perhaps the biggest initiative not in the budget is Bush's plan to overhaul Social Security and let people divert some of their payroll taxes into private accounts.

Administration officials acknowledged that their plan would force the government to borrow about $774 billion of the next decade, and several trillion more in the decades that follow, because the government would still have to pay full benefits to people who are already 55 years or older. All this borrowing will show up in annual budget deficits.

Bolten reiterated the White House view on Monday that such "transition costs" are not an increase in government debt, because the government would get more than its money back many decades from now as future retirees depend more on their private accounts than on government-guaranteed benefits.

"Transition financing does not represent new debt," Bolten told reporters on Monday.

Comments

You can be the first to comment on this story.

Related content
previousnext

Latest comments

USU home-court streak ends

We'll be watching the AGGIES in the NIT. At least BYU will BE in the NCAA....

USU home-court streak ends

You're right, the REFs don't care...they laugh when they leave the...

Las Vegas- Wyoming v USC Poinsettia- Air Force v Cal Armed Forces- Utah v....

Just another mental lapse. This is the NBA, this isn't a regular high school...

T-Buck, ESPN's box has CJ Miles shooting 3-for-10. Not a great deal of...

Tiger Woods used the media build up and sponsorship $$$ to attract...

Hey fellow Aggies, quit whining. We lost to the better team tonight. BYU...

I am glad the Cougars won this one too. What was the score with AZ...

More Maynor, 10 min. of Fes, we get the win. Since Jerry's extension, Fes...

Ivan--thank you buddy. It's always good to get the input of a BYU fine...

Advertisements