Fuzzy deficit math?

Marketplace Staff Oct 11, 2006

KAI RYSSDAL: The federal budget deficit came in at a four-year-low today. Around 247 billion dollars. The White House made a big deal out of the announcement. But Nancy Marshall Genzer reports from Washington the numbers don’t necessarily add up.

NANCY MARSHALL GENZER: President Bush was all over the budget numbers today, announcing the good news himself:

PRESIDENT BUSH: In February of this year we project the 2006 deficit would be $423 billion. Today’s report shows $248 billion — $148 billion less than anticipated.”

But Democrats and deficit hawks say the White House cooked the books. Former Clinton budget director Leon Panetta.

LEON PENETTA:“What the Administration did is to establish a very pessimistic target about where the deficit would be in order to then be able to project they had cut it in half as they are trying to argue today.”

But Douglas Holtz Eakin, who was chief White House economist until December of last year, says Bush administration number crunchers made an honest mistake. However, he says deficits aren’t good, especially in light of what’s down the road.

DOUGLAS HOLTZ EAKIN:“One of the best forecasts we can make is the boomers will get one year older every year. They’re there. It’s baked in the cake that they’ll show up and collect their benefits and it will be an enormous strain on the federal budget.”

Panetta says the surpluses built up under the Clinton administration would have helped ease that strain, but they’re gone.

PANETTA:“And we’re back in a hole — a deficit hole — with neither Republicans or Democrats telling the country how they’re going to fix that situation.”

President Bush says if Congress will make his tax cuts permanent, they’ll boost the economy and help to reduce the deficit.

But even Holtz Eakin says the President also needs to think about cutting spending.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

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