-Caveat Lector- Budget chief says Bush will propose deficit for next year
By ALAN FRAM, Associated Press WASHINGTON (January 11, 2002 5:22 p.m. EST) - President Bush will propose a federal deficit for next year as the government focuses on defense, homeland security and shoring up the economy, the White House budget director said Friday. In an interview with The Associated Press, budget chief Mitchell Daniels used no dollar figure but said the shortfall would be less than 1 percent the size of the U.S. economy. Since the economy is about $10 trillion, that suggests a deficit of about $100 billion or less. "The budget we propose, because it fights a war, addresses our emergency and will propose a growth package to combat recession, will be very slightly in deficit," Daniels said. Bush said earlier this week that his election-year budget may not be balanced. Analysts of both parties have predicted red ink for months. Daniels' remark was the administration's clearest acknowledgment that deficits are back after four years of historically large surpluses. The reversal has already sparked a partisan blame game likely to run until the November elections for control of Congress. Daniels said Bush would propose big spending increases for the Pentagon and a roughly $15 billion boost - about double this year's total - for domestic security programs like public health, airline safety and local law enforcement. There will also be an economic stimulus package of tax cuts and unemployment aid similar to the GOP plan that died in the Senate last month, Daniels said. He said the rest of the budget will be tight, with particular aim taken at programs the administration considers inefficient. Though he provided few specifics, he said there are 48 "hopelessly disorganized and overlapping, redundant" federal job training programs that won't all get proposed spending boosts. "This will be a budget of big projects," Daniels said, adding, "The rest of government will need to step back and grow more slowly." Democrats have blamed the $1.35 trillion, 10-year tax cut that Bush pushed through Congress last spring for the budget's crashing return to deficits, while Republicans have pointed to the recession and the costs of battling terrorism. "This is a problem, and it's a problem that stems from gimmicks in the budget, from embracing much too enthusiastically and uncritically a blue sky forecast," Rep. John Spratt of South Carolina, top Democrat on the House Budget Committee, said Thursday. Bush will send his budget to Congress on Feb. 4. His fiscal 2003 spending plan, for the year starting next Oct. 1, will be the first to exceed $2 trillion, and the first to forecast a deficit since the budget President Clinton proposed in February 1998. Daniels also acknowledged a likely deficit for the current fiscal year, which is also widely expected. He said that depending on the economy - which influences federal revenue and spending - surpluses could return by 2005, with "a fighting chance" for black ink in 2004. Daniels said next year's deficit would be "historically very small" compared to the red ink's ratio to the size of the economy in recent recessions. Most analysts show little concern about budget deficits that are small compared to the economy, because such shortfalls can be more easily eliminated. Even so, the budget's plunge back into deficits has been breathtaking. Last January, the nonpartisan Congressional Budget Office projected surpluses of $313 billion this year and $359 billion in 2003. Daniels would not comment on whether, as congressional aides have said, Bush will propose limiting defense and most domestic programs to $730 billion next year, which would be 3.4 percent growth. This excludes automatic benefits like Medicare. "Where we find effectiveness, we'll propose reinforcing it," Daniels said. "Where we find clear evidence of ineffectiveness, we'll certainly propose to reduce or stop it." In his first budget as president last year, Bush proposed holding such programs to $661 billion, or 4 percent growth. After the Sept. 11 terrorist attacks, both parties sought to increase spending and the total reached $706 billion, an 11 percent enlargement. Daniels said Bush would renew his effort to reduce "earmarks," or home- district projects members of Congress insert into spending bills. Last year's budget proposed $16 billion in such savings, which lawmakers ignored. "When you come around and do your 'Mitch's greatest flops' story, we'll start with earmarks," Daniels said. ------------------------ "In little more than a year we have gone from enjoying peace and the most prosperous economy in our history, to a nation plunged into war, recession and fear. 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