The New Federal Budget Sets a Record Deficit
Rep. Benjamin L. Cardin

President Bush’s recently unveiled FY 2005 budget seriously jeopardizes our economic future. It projects an astronomical $521 billion deficit for this year alone, while calling for $1.1 trillion in permanent tax cuts.

The deficit projection is the largest in our nation’s history and it threatens to mortgage our future, and our children’s future, under a mountain of debt.

In proposing his budget, the President claims the deficit can be cut in half in five years. Unfortunately, that is not a realistic expectation. We shouldn’t forget that this year’s deficit is a whopping $146 billion more than last year’s. Even if we hold down domestic appropriations below a 1% increase, it would make only a small dent in such a large deficit.

When President Bush came into office in 2001, we had a $5.6 trillion 10-year surplus. In three years -- after several tax cuts, a War on Terrorism and increased funding for homeland security -- those surpluses have disappeared. There is no doubt that we must fund the War on Terrorism and make our nation more secure, but the President’s commitment to making the tax cuts permanent threatens our economy as we face these important challenges.

Economists warn that chronic deficits of this magnitude threaten our economic strength by crowding out private investment, driving up interest rates and slowing economic growth. We currently have a $7 trillion national debt and servicing that debt also squeezes the money supply. Even more worrisome is an estimate by the Congressional Budget Office that in the next 10 years our $7 trillion national debt is likely to grow by an additional $2.4 trillion.

The President’s budget will create real difficulties for American families. According to the Brookings Institution, by 2014 the average family’s income will be $1,800 lower because of slower economic growth caused by budget deficits. A family with a 30-year $250,000 mortgage will be paying $2,000 more per year in interest payments alone.

In deciding to make more than $1.1 trillion in tax cuts permanent, the President has chosen to ignore other important budget realities. He has omitted from his budget two very costly items: the wars in Iraq and Afghanistan. It is expected that he will submit $50 billion in extra budget requests to Congress after the 2004 Election, exacerbating our already soaring $521 billion deficit.

I cannot stress the danger of such high deficits and their accumulated effect on our economy. It is projected that in a decade, our publicly held debt will be almost half of our Gross Domestic Product (GDP).

These deficits are a burden on future generations and on our economy. Tomorrow’s taxpayers will have to pay interest on this new and added debt in perpetuity. It will be money that cannot be used for national security, education, health care or the environment.

Furthermore, these deficits will take a toll on our economy. Budget deficits drain our national savings, money that could otherwise be used for domestic business investment to increase productivity and create new jobs.

This budget is seriously flawed. It’s reliance on permanent tax cuts jeopardizes our future and ties our hands just when we need all the resources we can muster to fight a War on Terrorism and keep our homeland safe. Congress should reject the President’s budget and pass a budget that is fiscally responsible and meets the priorities of our nation.






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