WASHINGTON — With federal budget deficits already growing at a rate unseen since the Reagan era, President Bush today will unveil a budget proposal that would plunge the government much deeper into the red.
He’ll then cross his fingers, knock on wood and hope the economy rebounds quickly, creating a tide of revenue that eventually would sweep the government back into the black and also cover some ambitious long-term expenses.
“He may need Harry Potter to make it all work,” said Robert Bixby, the executive director of the Concord Coalition, a bipartisan group that advocates balanced federal budgets.
Doubters worry that if it doesn’t all work, federal deficits will extend well into the next decade, making it more expensive for Americans to borrow, forcing cuts in popular government programs and imperiling Social Security and Medicare just as the baby-boom generation begins to retire.
“The long-term consequence is you increase interest rates and make it harder for the government to respond to anything new because you have to increase the budget,” said Stan Collender, the author of Guide to the Federal Budget and a managing director of lobbying firm Fleishman-Hillard’s Federal Budget Consulting Group.
In his budget, Bush will lay out a huge and expensive agenda, both for the near term and for the long haul. It will include a big tax cut — $674 billion over 10 years — that’s popular with many Republicans. Defense spending will get a big boost, as well. Bush will also call for big spending popular with Democrats, such as a 10-year $400 billion prescription-drug plan for the elderly and medicines to combat AIDS epidemics in Africa and the Caribbean.
All this will likely expand a budget deficit that Mitchell Daniels, the head of the White House Office of Management and Budget, is predicting will grow to a record-setting $300 billion this year. Giddily in surplus from 1998 to 2001, the federal budget has taken the steepest deficit dive in history since the Sept. 11 terrorist attacks.
Bush’s budget takes no account of a possible war in Iraq. That could boost spending in the short term and cost billions more in the long run to help Iraq rebuild.
Bush’s advisers predict that the larger deficits will be short-lived, reversed by tax cuts that will jump-start the economy, boost productivity and create new jobs that fill government coffers with new tax revenue.
Bush is also calling for spending restraints. Though he is recommending billions more for defense, new anti-AIDS assistance and $1.2 billion for research into hydrogen-powered vehicles, he wants to hold overall spending increases to 4 percent. That means cutting other programs and setting up a confrontation with both Democrats and Republicans in Congress.
