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The Bush Deficit Shell Game, 2006 Edition

January 13, 2006

Washington, DC - Since President Bush came into office in 2001, his reckless policies have created the largest deficits in American history. His failure to balance the budget combined with his stubborn decision to extend tax cuts for the wealthiest Americans is having immediate negative consequences for Americans. In President Bush's second term, things are only getting worse.

Yesterday, the White House announced that the deficit would increase in 2006, "erasing the brief improvement last year and complicating President Bush's vow to cut the deficit in half by 2009." And, "even though administration officials and lawmakers have known for months that the next year's deficit would be higher, Mr. Bush and Republican leaders in Congress are pushing hard to pass nearly $90 billion in tax cuts for the next five years." [New York Times, 1/13/06]

Over the years, President Bush has also played an intricate shell game with the deficit: underestimating projected deficits in 2001 and 2002 in order to gain support for his fiscally irresponsible tax cuts, and then underestimating future deficits every year since 2003 in order to lower expectations and paper over his out-of-control spending.

"President Bush has played fast and loose with our nation's fiscal security," said Democratic National Committee Press Secretary Josh Earnest. "Balanced budgets, which were achieved under Democratic leadership in the 1990s, have been replaced by more tax cuts for the wealthy, cuts to vital programs and record deficits. To make matters worse, President Bush has played a shell game with the budget numbers and has repeatedly tried to hide the true costs of his reckless economic policies. Americans deserve better. Democrats are committed to sound fiscal strategies that protect the interests of all Americans."

2001: Bush Deliberately Underestimated Future Deficits. In 2001, Bush predicted massive budget surpluses over the following four years, in order to make the case that we could afford his tax cut plan. Instead, each of those years will suffer an actual or likely deficit. In 2001, Bush predicted a $231 billion surplus in 2002 (reality: $158 billion deficit), $246 billion surplus in 2003 (reality: $375 billion deficit), $268 billion surplus in 2004 (reality: $422 billion projected deficit), and $273 billion surplus in 2005 (reality: $348 billion projected deficit). [Washington Post, 2/24/04; Office of Management and Budget, 1/01; Congressional Budget Office, 3/04, 9/04]

2002: Bush Continued To Underestimate Deficits. Bush has said that his optimism about budget deficits was based on the assumption that the economy would not hit a "trifecta" of trouble: recession, national emergency and war. But in February 2002-after the recession was declared, the terrorist attacks had occurred, and war had begun in Afghanistan-the administration continued to have upbeat predictions. Although it forecast a $106 billion deficit in 2002 (reality: $158 billion), it saw the deficit shrinking to $80 billion in 2003 (reality: $375 billion), $14 billion in 2004 (reality: $422 billion projected), and becoming a surplus of $61 billion in 2005 (reality: $348 billion projected deficit). [Washington Post, 2/24/04; Office of Management and Budget, 1/02; Congressional Budget Office, 3/04, 9/04]

• Bush Administration's 2002 Deficit Projections Were Worst In 21 Years. Figures released by the White House show that Bush's 2002 underestimate of the deficit was the largest miscalculation in at least 21 years. [Washington Post, 2/24/04]
  
  

2003: Bush Tried A Different Tack: Overestimating Deficits. In the July 2003 OMB budget forecast, Bush projected a considerably larger 2003 deficit than any other analysts were projecting at that time. When the actual deficit for 2003 turned out to be $81 billion lower than Bush's July estimate, the White House trumpeted the difference as good economic news and evidence that Bush's policies were working. Yet, most of the difference was unrelated to the economy: two-thirds of the $81 billion difference occurred because spending in 2003 was lower than Bush's OMB predicted in July. [Center on Budget and Policy Priorities, 2/2/04, 2/3/04; Office of Management and Budget, 7/03]

2004: Bush Again Overestimated The Deficit For Political Reasons. In February 2004, Bush projected a 2004 deficit of $521 billion, whereas the CBO projected a deficit of $477 billion-$44 billion less. Then, in July, the White House revised the number down from the unrealistic $521 billion to $445 billion; in September the CBO issued more realistic projections of $422 billion. [Office of Management and Budget, 2/04, 7/30/04; New York Times, 7/31/04; Washington Post, 7/31/04; CBO, The Budget And Economic Outlook: An Update, 9/04]