White House predicts record 2009 deficit
$482 billion gap could worsen as costs mount
WASHINGTON - The White House predicted yesterday that President Bush would leave a record $482 billion deficit to his successor, a sobering turnabout in the nation's fiscal condition from 2001, when Bush took office after three consecutive years of budget surpluses.
The worst may be yet to come. The deficit announced by Jim Nussle, the White House budget director, does not reflect the full cost of military operations in Iraq and Afghanistan, the potential $50 billion cost of another economic stimulus package, or the possibility of steeper losses in tax revenues if individual income or corporate profits decline.
The new deficit numbers also do not account for any drains on the national treasury that might result from further declines in the housing market.
The White House forecast was prepared before passage of the huge housing assistance package that Bush has promised to sign. That legislation would put taxpayer money at risk in numerous ways, especially if housing prices continue to decline.
Nussle predicted yesterday that the deficit would more than double in the current fiscal year - to $389 billion, from $162 billion in 2007 - before shooting up to $482 billion in fiscal 2009, which begins in about two months.
The deficit projected for 2009 would be the largest in absolute terms, easily surpassing the record of $413 billion in 2004. The White House and many economists prefer to measure the deficit as a share of the economy. The projected 2009 deficit would be 3.3 percent of the economy. That is the largest share since 2004, but well below the percentages recorded in the 1980s and early 1990s. In 1983, the deficit was 6 percent of the overall economy.
The bleak outlook for the budget will crimp the ability of the next president to carry out ambitious spending plans. And it adds to fiscal pressures that were already building because of the growth of Medicare and Social Security.
The new estimate of the 2009 deficit was $74 billion higher than Bush and Nussle had predicted in the president's budget six months ago.
Nussle said the deterioration of the fiscal outlook resulted from "a softening of the economy," and a reduction in anticipated revenue. He attacked congressional Democrats, saying they had allowed spending to grow out of control.
Representative John M. Spratt Jr., Democrat of South Carolina, the chairman of the House Budget Committee, said the new deficit figures confirmed "the dismal legacy of the Bush administration."
