Bush Predicts Budget Deficit Will Shrink to $205 Billion
President George W. Bush predicted on Wednesday that strong tax receipts would cause the U.S. budget deficit to shrink to $205 billion this year, marking the third straight annual decline.
As he struggles with record-low approval ratings and criticism over the Iraq war, Bush was eager to tout what he viewed as a success for his domestic record and credited his tax cuts with reducing the budget gap.
But Democrats said the improvement in the annual deficit did not change the fact that Bush, who inherited a budget surplus when he came into office in 2001, has seen a sharp rise in accumulated debt on his watch.
The deficit hit an all-time high in 2004, in the middle of Bush's term, of $413 billion.
The deficit projection for fiscal year 2007, released in the administration's mid-year report on the budget, would mark an 18 percent decrease from last year's budget gap of $248 billion.
The mid-year report revised the 2007 forecast downward from the estimate of $244 billion made when Bush released his budget in February.
However, the new figure is still higher than many private forecasts, which have pegged the deficit at around $150 billion.
The White House report projected that the budget deficit would rise in 2008 to $258 billion but then decline again to reach surplus in 2012.
Hefty Spending Increases
Robust tax collections this spring, bolstered by bigger paychecks for individuals and capital gains from a strong stock market, have brought down deficits, even as the Iraq war has contributed to hefty spending increases in recent years.
Bush contends his 2001 and 2003 tax cuts set the stage for a better fiscal picture by spurring economic growth, but Democrats have labeled Bush's tax-cutting policies as fiscally reckless.
"The president's pro-growth policies have worked," the White House said in a statement released with the budget forecast. "Tax relief has been good for American taxpayers and the American economy, and the stronger economy has been good for the nation's treasury."
But Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, accused Bush of having a "failed fiscal record."
"He has increased spending by nearly 50 percent since taking office, while at the same time repeatedly cutting taxes primarily on the wealthiest," Conrad said. "Debt has exploded on his watch -- rising from $5.8 trillion in 2001 to approximately $9 trillion by the end of this year."
Sen. Charles Schumer, a New York Democrat, said the latest figures were "not proof that the Bush budget deficit is under control, in fact, it is proof-positive that it could not get any worse."
"The bottom line is that President Bush has pushed deficits and deficit spending to the max in the first seven years of his administration," Schumer said.
As Bush released his budget estimate, a big battle looms between the White House and the Democratic-led Congress over domestic spending.
Democrats have sketched out a discretionary spending plan for fiscal year 2008, which starts on Oct. 1, that exceeds by around $22 billion the $933 billion Bush sought. The president has said he will use his veto to enforce his limit.
In early June, the nonpartisan Congressional Budget Office estimated the fiscal 2007 deficit would come in between $150 billion and $200 billion.