Saturday March 05, 2005

Reducing the Deficit

Claim

On a recent Charlie Rose (02/09/05), the speaker of the house Dennis Hastert stated that they were making progress in reducing the budget deficit. In the most recent year he claimed it was reduced by 20% and at this rate it would be no problem to meet George W. Bush's goal of halving the deficit in 5 years.

Data

According to the Congressional Budget Office's Historical Budget Data report the budget deficit in the last 2 years has been $378B in 2003 and $412B in 2004. Latest estimates by the CBO have the 2005 deficit at $394B, at best a 5% reduction.

Spin

Where did the claim come from? The Bush administration had projected that the 2004 deficit would come in at an amazing $521B. As with any economic forecasting this was based on assumptions of spending and economic growth, ones that turned out to be overly pessimistic. To make things even worse, the 50% reduction goal is also based on this excessive estimate, based on actual data the goal (if achieved) will only reduce the deficit by a third.

ABC Report

( Mar 05 2005, 11:21:14 PM CST ) Permalink Comments [2]