Deficits and the Federal Debt
September 30, 2003
As recently as January 2001, the Congressional Budget Office projected budget surpluses of $5.6 trillion over a decade. But as fiscal year 2003 ends, a new study says that federal budget deficits could add up to $5 trillion over the next decade.
- The Bush administration has estimated a $455 billion deficit for fiscal 2003 and $475 billion for FY 2004, but says economic growth will shrink the deficit to $213 billion in FY 2007.
- The Congressional Budget Office put the budget deficit for FY 2004 at $480 billion and projected a surplus by FY 2012.
- As a percentage of the overall economy, administration officials say, deficits are lower than in the 1980s.
- Deficits could total $5 trillion over the next decade, given expected new spending for national defense, homeland security and prescription drugs, as well as projected tax relief.
- The report attributed 36 percent of the deficit to tax cuts, 28 percent to re-estimates in the wake of slower economic growth, and 20 percent to new demands for national defense and homeland security.
- Under their projections, deficits never fall below $420 billion and reach $610 billion -- or 3.4 percent of Gross Domestic Product -- by 2013.
As a result, publicly held debt will rise to 51 percent of GDP by 2013, and cause federal interest payments to hit $470 billion, or 15 percent of revenues in that year.
Source: David Jackson, "Big deficits return to cloud the picture," Dallas Morning News, September 30, 2003; "Mid-term and Long-Term Deficit Projections:
Estimates and Projections Underlying the Joint Statement of September 29, 2003, issued by The Concord Coalition, the Center for Budget and Policy Priorities and the Committee for Economic Development," September 29, 2003.
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