Budget deficit worse than previously thought

I’ve got good news and bad news when it comes to our federal budget deficit. The good news is the Bush administration’s forecast from earlier this year for a record-high deficit has been revised and it turns out they were wrong. The bad news is the deficit is much worse than predicted five months ago.

The White House will announce today that the administration is expecting a deficit of $450 billion this year, easily becoming the highest in American history. Remarkably, this will come just three years after President Clinton delivered the largest surplus in American history.

I don’t think anyone thought this was even possible. In 2000, there was a $236 billion surplus. Now there’s a $450 billion deficit. That’s a swing of about $700 billion in just three years. In fact, federal tax receipts have fallen each of the last three years, which hasn’t happened since the Great Depression.

And don’t forget, this is a projection. The $450 billion could, conceivably, be worse when all is said and done, since this figure may not fully account for the costs associated with occupying Iraq. The Congressional Budget Office is rumored to believe that the deficit will be $500 billion — that’s a half-trillion dollars — as early as next year.

Remember when Bush said in January 2002 that “our budget will run a deficit that will be small and short-term”? Yeah, it turns out he was off a little.

Or how about Bush’s first address to Congress in which he described deficits as “dangerous” and promised to pay down “an unprecedented amount of our national debt”?

Or how about the fact that Bush, while running for president, called for a balanced budget amendment to the Constitution because we “owe it to our children” to stay away from deficits?

Many believe that deficits will never be a winning campaign issue, and there’s some truth to this. People don’t like deficits, but they generally don’t see the immediate threat they pose. I think, however, that this can be a piece of a larger puzzle: Bush broke campaign promises, he promised fiscal success that he couldn’t deliver, he falsely claimed the deficits would be small and short-term, and he said he wouldn’t pass on our problems to future generations, yet that’s exactly what his record-high deficits are doing.

Update: When I originally wrote this post, I had relied on reports that the deficit would be $450 billion this year. I’ve since learned that the deficit is projected to be $455 billion this year. My mistake.