The Hindu Business Line : Can Bush keep promise on halving fiscal deficit?

EVEN as the Republican administration rolled out its emergency-spending request of an additional $80 billion for operations in Iraq and Afghanistan, the federal deficit is soaring to a record $427 billion for fiscal 2005 or $15 billion higher than what it was for fiscal 2004 that ended on September 30, 2004.

The rising budget deficit effectively questions the President George W. Bush's pledge to cut budget deficits to half by 2009. The White House maintains that this is a promise that can be kept, but given the fiscal "health" of the country, serious questions are being raised. Even prominent Republicans are stressing that the financial house must be brought in order, both from a short and long-term point of view.

What is being pointed out is that spending for the military operations in Iraq and Afghanistan has been steadily increasing from 2003 — from about $79 billion to $88 billion in 2004 and to $105 billion for 2005. This would include the latest supplemental request of $80 billion along with the already approved emergency allocation of $25 billion last year.

According to the non-partisan Congressional Budget Office (CBO), the total cost of all war efforts since the terrorist attacks of September 11, 2001 is $277 billion or well above the inflation-adjusted cost of World War One at $200 billion and fast approaching the $350-billion cost of the Korean War. These figures have been quoted in The Washington Post, which also makes the point that administration officials have refused to detail how the $80 billion in new funding for operations is going to be divided.

Unnamed administration officials have been quoted as saying that the President will show in his February 7 Budget that his Government is on track to cut the deficit to half from the initial deficit projection for 2004. But the CBO has serious misgivings about this and is putting out the argument that the Government will take on an additional $855 billion in debt between 2006 and 2015. Even here, the point is made that the total figure assumes that there will be no additional funds spent in Iraq and Afghanistan over the next decade — a highly unlikely proposition.

The Budget proposals of Mr Bush will merit the serious attention of law makers and analysts for a lot of trimming of the deficit ideas and will revolve around how optimistic the Government sees the economy growing in the next few years. The CBO also takes the position that the tax picture — that is receipts — is pegged to improvements in economy, but a lot of apprehension is also there on the spending by the Government.

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