Bush's $80-billion
request for Iraq and Afghanistan would result in a shortfall of $427
billion. Analysts say the gap will worsen.
By Joel Havemann, Mark Mazzetti and Maura Reynolds
Times Staff Writers
January 26, 2005
WASHINGTON — White House officials said Tuesday that this year's budget
deficit would reach a high of $427 billion, propelled by President
Bush's request for an additional $80 billion for war costs in Iraq and
Afghanistan.
Separately, congressional analysts forecast a generally worsening
budget outlook, saying the federal deficit would become a knottier
problem in the next 10 years.
Together, the developments
suggested Bush would have a harder time than previously thought in
keeping his promise to cut the deficit in half by the end of his
presidency. White House officials said, however, that they would still
meet that goal.
On Capitol Hill, the news caused Republicans and Democrats to wring their hands.
"Difficult debates and choices are at our doorstep," said Sen. Judd
Gregg (R-N.H.), chairman of the Senate Budget Committee and an
administration ally who has called for new controls on entitlement
spending. "If we do nothing, our kids and grandkids will be overwhelmed
by the cost of our inaction."
Bush on Feb. 7 will send Congress
his proposed budget for the fiscal year that begins in October —
setting off a debate among Republican lawmakers on how to balance the
competing goals of deficit reduction, extending the president's tax
cuts and approving an overhaul of Social Security that could cost more
than $1 trillion.
In July, the administration had projected
this year's budget deficit would hit $331 billion. The deficit last
year was $412 billion, a record.
As U.S. troops fight deadly,
rear-guard insurgencies in Afghanistan and Iraq, the cost of the
conflicts has far exceeded initial predictions from senior Bush
administration officials.
The president's request for
additional war funding — if approved as expected — would bring the
total authorized for the current fiscal year to $105 billion, compared
to $87 billion last year for military operations and reconstruction aid
in Iraq and Afghanistan.
The new request also would raise the
total cost of military operations since Sept. 11, 2001, to about $280
billion, far exceeding many initial estimates.
Larry Lindsey,
then-director of the president's National Economic Council, estimated
before the Iraq war began that its total cost would be $100 billion to
$200 billion.
The estimates were dismissed by other administration officials as too high, and Lindsey was fired shortly afterward.
In spring 2003, top administration officials, including Deputy Defense
Secretary Paul D. Wolfowitz, said that Iraq's vast oil reserves would
help defray the costs of an extended U.S. occupation. Nearly two years
later, the Iraqi government is able to pay for only a small fraction of
its reconstruction, let alone the U.S. forces.
Of the administration's new $80-billion request for Iraq and Afghanistan, about $75 billion would go to the Pentagon.
Military operations in Iraq are costing on average $4.3 billion a
month, and in Afghanistan, $900 million, a senior official said.
Although officials revealed few specifics about how the new money would
be spent, one senior administration official said much of it would be
devoted to refurbishing and replacing Army equipment and to training
Iraqi security forces — which the U.S. hoped would bring about a
reduction of American troops in Iraq.
Another chunk of the
money would go toward combat brigades that the Army is developing to
ease the strain of overseas deployments on its soldiers. The
supplemental request also would help fund the additional 30,000
soldiers Congress authorized for the Army last year, a senior official
said.
In addition to the $75 billion for the Pentagon, $5
billion would go to State Department projects, such as building a new
embassy in Baghdad, providing relief to the stricken Darfur region of
Sudan and fostering peace between Israel and the Palestinians.
"Most of these funds will support American troops on the ground by
continuing to provide them with the equipment and other supplies they
need," Bush said in a statement.
"And resources are included
to accelerate efforts to train and equip Iraqi and Afghan forces, so
they can assume greater responsibility for their own security."
The administration's request for supplemental war funding comes months
later in the budget process than it did last year, leading to
speculation that the White House purposefully delayed announcing the
total figure until after November's presidential election.
Although the budget request no doubt will bring fresh criticism from
Democrats about the course of the Iraq war, the money is expected to be
approved relatively swiftly, because lawmakers hesitate to cast votes
against money earmarked for U.S. troops in harm's way.
"There
may be a lot of debate about whether or not the effort [in Iraq] is
successful … but there will not be any debate about whether we support
the troops," said Sen. Ben Nelson (D-Neb.).
"If we want the
American troops to come home, we have to do what we can to buy that
ticket. Eighty-billion dollars is part of it."
In its forecast
Tuesday of a rising deficit in the coming decade, the nonpartisan
Congressional Budget Office did not include the new request for war
funding. The budget analysts projected a cumulative deficit of $1.3
trillion from 2005 to 2014.
The 10-year figure represented an
increase of nearly 60% from the budget office's comparable $861-billion
estimate just four months ago, partly because of recent legislation
extending popular tax breaks that were due to expire, such as relief
from the "marriage penalty." In addition, disaster assistance to
victims of the Florida hurricanes last year prompted the budget office
to project similar expenses in the future, in accordance with
forecasting rules.
The budget office's figures also did not
take into account the revenue loss to the Treasury if Congress were to
give its expected approval to an extension of major tax cuts that were
enacted in 2001 and 2003, and which were scheduled to expire in the
next 10 years. Nor did it include potential relief from the alternative
minimum tax — which was designed to prevent high-income taxpayers from
using tax breaks to escape most income taxes but was beginning to bite
ordinary taxpayers as inflation pushes their income higher.
A
handful of Republicans tried to argue that there was some good news in
the Congressional Budget Office report. "I hope these numbers temper
continued efforts to create unprecedented levels of new spending so
that our economic recovery can continue without being drowned in red
ink," said Sen. John Cornyn (R-Texas).
Democrats expressed
particular anger at the administration's insistence on keeping war
costs, Social Security restructuring and the revenue losses from
extending Bush's tax cuts out of the budget that the president was to
submit. Excluding those costs, they said, would allow Bush to spend
money without counting the expenses, making the deficit look
artificially low.
"Why don't you just leave out some more
things and claim you balanced the budget?" said Sen. Kent Conrad of
North Dakota, the ranking Democrat on the Senate Budget Committee. "The
only way he got to cutting the deficit in half is, he just left out
things."
Conrad and House Democratic leader Nancy Pelosi (D-San
Francisco) warned about the long-term effects financing the additional
debt might have on the economy.
"Economists have warned that
huge deficits are a drag on the economy that will eventually force
interest rates up. If we do not act to restore accountability, then
mortgages, car loans, credit card debt, and student loans will all cost
more," Pelosi said.
Times staff writer Richard Simon contributed to this report.
