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. |
