President Bush yesterday claimed victory on his promise to cut the 2004 budget deficit in half, announcing he has reached that goal three years ahead of his self-imposed 2009 deadline.
The Treasury Department said the federal government ran a $247.7 billion deficit for fiscal 2006, which ended Sept. 30.
It is the seventh-highest deficit ever in dollar terms, but measured as a portion of the economy as determined by the gross domestic product, it is 1.9 percent — smaller than in 18 of the past 25 years. It is also less than half of the $521 billion deficit the president projected for 2004, leaving Mr. Bush crowing in both a morning press conference and an afternoon speech.
“We have now achieved our goal of cutting the federal budget deficit in half and we’ve done it three years ahead of schedule,” the president said, crediting his 2001 and 2003 tax cuts with spurring economic growth and thus more tax revenue.
“The reduction of the deficit I’ve announced today is no accident. It is the result of the hard work of the American people, and because of sound fiscal policies here in Washington,” Mr. Bush said.
Democrats said the president’s tax cuts have ruined the federal budget in the past five years, and turned record surpluses into deficits.
“No amount of Republican Party spin can obscure the bottom line: The Bush administration and congressional Republicans inherited a projected 10-year budget surplus of $5.6 trillion in 2001, and in just 70 months turned that surplus into a projected deficit of $4 trillion,” said House Minority Whip Steny H. Hoyer, Maryland Democrat.
Rep. John M. Spratt Jr. of South Carolina, the top Democrat on the House Budget Committee, said the projection for 2006 when Mr. Bush took office was for a $305 billion surplus, and he blamed spending increases and tax cuts for the deficit.
He said the administration is including in its calculations money supposedly dedicated to Social Security. Excluding that money, the deficit for 2006 would be more than $425 billion, Mr. Spratt said.
Federal spending hit a record high in 2006, at $2.654 trillion. That is a $182 billion increase over fiscal 2005.
Tax revenues grew by $253 billion, far outstripping the increased spending.
Mr. Bush was able to gloat about the deficit numbers because Democrats had been on the record doubting the president would achieve his deficit-cutting goal.
“When the president says he’s going to cut the deficit in half over the next five years, I don’t believe it,” Sen. Kent Conrad, North Dakota Democrat, said in 2004.
He has accused Mr. Bush of inflating the early deficit projections in order to claim better progress later on. Administration officials dismissed that charge as bad politics because it would mean eight months of criticism for the higher numbers earlier in the year.
The president has been highlighting tax cuts as he campaigns for next month’s congressional elections. When fully enacted, he said, they will amount to $1.1 trillion back in taxpayers’ pockets.
Many of the cuts are due to expire 10 years after enactment, and Mr. Bush said a Democrat-controlled Congress will guarantee those taxes will go back up.
Each party blames the other for blocking tax cuts in the waning days of last month’s legislative session. Democrats supported extending the tax cuts for college tuition and for state and local sales tax deductions, but opposed making the estate tax cut permanent. Republicans insisted on passing them all as a package, and the two sides ended in a stalemate.
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