President Bush's $2.7 Trillion Dollar Budget Is On The Hill
Monday, February 06, 2006
SUSIE GHARIB President Bush sent to Congress today a $2.7 trillion budget that calls for big tax cuts and increases in spending on defense. His 2007 budget plan leaves the U.S. government deeply in the red, despite cuts in Medicare and other programs. Washington bureau chief Darren Gersh has details.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: It may never make a nationwide best-seller list, but the president`s budget always touches off a fierce debate over what is fact and what is fiction. The administration says its 2007 spending outline meets the nation`s priorities.
JOSHUA BOLTEN, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET: Today I am presenting on the president`s behalf a budget that keeps the economy strong and restrains spending.
GERSH: Here are the administration`s facts. The budget restrains spending by slowing the growth of Medicare by $36 billion over five years and cuts non-defense discretionary spending next year by $2.2 billion, keeps the economy strong by extending the tax cuts through the year 2011 at a cost of $120 billion. At the same time, the budget expands tax incentives for health savings accounts and health insurance by $52 billion over five years. Budget analysts say that`s only half the story and that`s where the fiction comes in.
ROBERT BIXBY, EXECUTIVE DIRECTOR, CONCORD COALITION: When you look at the bottom line that they`re putting out, it`s important then to look at the assumptions. And I think there are some very unrealistic assumptions there that would probably keep the deficit much higher than the administration is showing.
GERSH: For example, the administration assumes the war in Iraq and Afghanistan will cost $50 billion in fiscal year 2007 and then drop to zero the following year. The administration`s budget also assumes no change in the alternative minimum tax. More and more middle class families are caught up in the AMT, a system originally designed to snare the very wealthy. A permanent fix would cost $1 trillion.
BIXBY: It might surprise people, but the budget numbers actually assume a very large back door tax increase.
GERSH: Overall, the administration says the budget will keep the economy strong, which in turn keeps the deficit under control. Again, critics say, that`s only part of the story.
SEN. KENT CONRAD, (D) NORTH DAKOTA: The thing that is getting lost in this conversation is what`s happening to the debt in our country. The debt is skyrocketing.
GERSH: The Bush administration estimates debt held by the public will grow by $1.2 trillion over the next five years, just as the baby boomers begin to retire. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
