GOP Downplays Federal Deficits

Republicans from the White House to Capitol Hill are playing down the return of huge federal deficits, after years of touting a balanced budget as a paramount goal with economic, fiscal and even moral consequences.

The shift in emphasis comes as President Bush's new budget is projecting deficits of $304 billion this year and $307 billion next year, easing only to $190 billion by 2008. Those figures exclude the costs of a war with Iraq and are viewed as optimistic by many private analysts. The record $290 billion shortfall occurred in 1992.

Republicans say that with the weak economy and the terrorist threat, the world has changed and a balanced budget remains an important goal — eventually. For now, they say, the government and the $10.5 trillion U.S. economy can cope with currently projected deficits.

"There are times when it is necessary for the federal government to borrow in order to address critical national priorities. These are such times," White House budget chief Mitchell Daniels told the House Budget Committee last week.

Contrast that with the GOP's predominant budget message, from President Reagan to House Republicans' 1994 "Contract with America" and beyond. Republicans spoke relentlessly then about eliminating the string of deficits that was unabated since 1970 — coupled with their goals of cutting taxes and trimming federal spending.

"We must have a balanced budget if we are to achieve a stable, productive national economy," Reagan declared during his 1980 election campaign, in which he helped elevate the issue to prominence.

Democrats say that with Republicans controlling the White House and Congress and unable to shift blame, the GOP has decided to minimize the significance of deficits as they surge out of control.

"Where have the Republican budget hawks gone? They've become the endangered species," said House Minority Leader Nancy Pelosi, a California Democrat.

The GOP's tone also has caught the ear of conservative advocates of lower government spending.

"You're kind of stuck with it, so what are you going to say," Tom Schatz, president of Citizens Against Government Waste, said of the bleak deficit forecast. "I just wish they'd talk a little bit more about, 'We know it's a problem.'"

Administration officials and congressional Republicans said last week that deficits will eventually shrink, thanks to Bush's proposals to curtail spending and stimulate the economy with tax cuts. For now, they said, the priorities are correct.

"This budget reflects two realities. First, we have a responsibility to defend our nation from enemies who want to attack it. Second, in order to get back to a balanced budget, we must grow the economy," said House Speaker Dennis Hastert, R-Ill.

Treasury Secretary John Snow told the House Budget Committee that rising deficits were not disrupting financial markets. "The level we're at today is manageable and is not an undue burden," he added.

GOP lawmakers and White House officials also insisted that Bush's projected deficits were smaller than many past shortfalls when compared with the inflation or economic growth since then.

Without such comparisons, "the use of the word 'record' is meaningless," said new Senate Budget Committee Chairman Don Nickles, R-Okla..

But for years, Republicans did not equivocate.

In his second month as president in 1989, Bush's father sent Congress a budget-balancing plan "to reduce the burden placed on the backs of future generations. ... That is the moral dimension of the deficit problem."

Five years later, House Republicans led by speaker-to-be Newt Gingrich, R-Ga., included a constitutional amendment requiring a balanced budget among the promises in their campaign document, the "Contract with America." It allowed exceptions for times of war.

The GOP long battled President Clinton over their plans to cut taxes, restrain spending and erase deficits. They compromised with him in 1997, but the issue dominated the period's debate.

"By the year 2002, we can have a federal government with a balanced budget or we can continue down the present path towards total fiscal catastrophe," Rep. Tom DeLay, R-Texas, now the House majority leader, said in 1995.

"Passing the balanced budget amendment is the single most important thing we can do to ensure the nation's economic security and to protect the American dream for our children and grandchildren," Senate Majority Leader and GOP presidential candidate Bob Dole, R-Kan., said in 1996.

The current de-emphasis on deficits has not come without internal GOP strains. There have always been clashes between advocates of a balanced budget and those whose greater goals are tax cuts and lower spending, and the differences were on display last week when Daniels testified to the House Budget Committee.

"This is a tough pill to swallow," Rep. Gil Gutknecht, R-Minn., told Daniels of the big deficits in Bush's budget.

Unexpectedly, the strong economy and financial markets turned deficits into surpluses from 1998 through 2001. But shortfalls returned in 2002 when the red ink hit $158 billion.