Historical Newspapers of South Carolina

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Democrats, White House joust over record $374 billion deficit BY ALAN FRAM the Associated press WASHINGTON - New Bush ad ministration figures that show a record $374.2 billion deficit for the federal budget year that just ended prove that the president’s eco nomic policies have shoved the country in the wrong direction, Democrats say. White House officials and their Republican congressional allies counter that the numbers show just the opposite: The economy is | on the mend, even as deficit still has further up to go. The political fencing, barely a year before the next presidential and congressional elections, came as the White House’s Office of Management and Budget an nounced the final 2003 deficit fig ure Monday. Because the figures were lower than the White House’s July pro jection of $455 billion, adminis tration officials cited it as evi dence that their attempts to fortify the weak, economy were working. "The improvement in our bud get picture since our forecast last July is an encouraging sign tnat the economic recovery is gaining momentum,” said Joshua Bolten, President Bush’s budget director. I Echoing that, Treasury * Secretary John Snow said, "Today’s budget numbers rein force the indications we have seen for some months now that the economy is well on the path to re covery.” Bolten conceded, however, that worse fiscal numbers are on the horizon, estimating the gap for the new year "will likely exceed $500 billion, even with the strengthen ing economy.” That could become a political hazard for Bush and congressional Republicans. With federal budget years running through Sept. 30, next year’s figure will be ready just weeks before Election Day 2004. Democrats mocked the admin istration’s sunny interpretation. They noted that last year’s red ink t was more than twice 2002’s $158 billion, and surpassed the $290 bil lion record set in 1992. "I’m somewhat amused to see them say they thought that was good news,” said Sen. Kent Conrad of North Dakota, top Democrat on the Senate Budget Committee. Some Democrats have accused the White House of purposely padding its deficit forecast last July to lay the groundwork for casting the final budget numbers as good news. Sen. Ernest Hollings, D-S.C., raised that ques tion anew on Monday. ‘ ’We need to find out what kind of shenanigans caused the esti mate to be so off, whether OMB de liberately estimated high numbers so everybody could jump for joy this week,” Hollings wrote in a let ter to Senate Budget Committee Chairman Don Nickles, R-Okla., requesting hearings on the inac curacy of the administration’s July projection. Republicans have blamed the deficits on the recession and on the costs of opposing internation al terror. On Monday, Nickles called the new numbers encour aging, ”a sign that the president’s economic plan is beginning to have an impact.” About one-third of the im provemem since uie juiy esimiaie was because the government col lected $26 billion more than the White House projected, for a total of $1,782 trillion. The White House in July had assumed a $15 billion drop in tax collections because of "revenue uncertainty.” The drop never oc curred. Most of the rest was due to bet ter-than-expected individual and corporate income tax collections, which could mean that a stronger economy is raising incomes. That translates to higher tax liability. Spending for 2003 ended at $2,157 trillion, or $55 billion low er than the White House’s July projection. Though defense spending rose over 2002, its increase was $20 bil lion less than the White House es timated in July. Much of this was because the government spent its Iraq money more slowly than an ticipated, Monday’s report said. Though that slower spending made 2003 look better, many of the rtlU I U bUUKItbl T Ur l\f\ I OAMKUS Deputy Secretary of Defense Paul Wolfowitz, right, looks on as President George W. Bush speaks during a Cabinet meeting at the White House. SURFYOURSELF Read more about the budget at: www.omb.gov expenditures will occur in 2004, making that year’s shortfall worse. Spending also was below White House expectations for a wide range of other programs, including interest on the federal debt, farm payments and homeland security. Even Osama bin Laden jumped into the discussion, based on last July’s White House estimate. In an audiotape broadcast Saturday by the al-Jazeera televi sion network, the al-Qaida leader lauded reversals he said the United States had suffered since the hi jacking attacks of Sept. 11,2001. "They also witnessed a budget deficit for the third consecutive year,” bin Laden said, erroneous ly referring to the two straight shortfalls now recorded. 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