GOP: $300 Billion Deficit Not a 'Record'

The government is on track to pass the $300 billion budget deficit mark this year and next, a figure Democrats say is a record and Republicans say is proportionately less than previous deficit years.

"They're not always engaged in an academic search for truth," Indiana University economics professor Willard Witte said of both parties.

Republicans say the expected 2003 and 2004 deficits in real dollars are less than nine other years since World War II and also consume a smaller percentage of gross domestic product.

Technically, they are right, say many economists, who agree that the most meaningful way to compare historic budget figures is to factor in changes in the dollar's value or the size of the economy.

But Democrats are still trying to make hey of the very large numbers and argue the $304 billion deficit this year and $307 billion deficit next year prove the United States can't afford to pass President Bush's proposed tax cuts.

"How can they say it's not a record? You don't need a Ph.D. in economics to know $304 billion is more than $290 billion," Tom Kahn, Democratic staff director of the House Budget Committee, said, referring to the "record" $290 billion deficit of 1992.

But language is a tricky thing, said Witte, who added both parties will try to exercise the truth in order to get their way.

"They're engaged in trying to carry the day in some policy argument, so they're bound to interpret the truth in the light that makes their case most strongly," he said.

Republicans are adamant that describing the deficit as a "record" is erroneous. They ask voters to look at inflation, which when compounded over time makes yesterday's dollars much larger than today's.

For instance, the $307 billion deficit of 2004 would be just $265 billion in 1996 dollars. The $290 billion shortfall of 1992 is worth $318 billion in 1996 dollars and more than $372 million in 2002 dollars.

"Many headlines erroneously proclaimed the president's proposals would produce 'record' deficits," chided a newsletter by the Senate Budget Committee, run by Chairman Don Nickles, R-Okla., which cited "a deficit of understanding."

Republicans claim deficits in 1943, 1944, 1945, 1983, 1985, 1986, 1991 and 1993 were all larger in their time.

And in 1995, the battle over how best to characterize multiyear budget figures centered on "cuts" in Medicare and Medicaid. That year, Republicans reduced the automatic growth rate for the two huge and popular health insurance programs for the elderly, poor and disabled.

Democrats accused the Republicans of cutting the programs, but Republicans argued then that spending for both was still increasing above the rate of inflation. GOP Chairman Haley Barbour even took out newspaper ads offering $1 million to anyone who could prove Republicans would "cut" Medicare.

Republicans also argue that the expected deficits are smaller in proportion to the size of the U.S. economy. Next year's projected $307 billion shortfall would be 2.7 percent of the $10.5 trillion economy — a proportion many economists don't find alarming by itself — and certainly smaller than the 6 percent of the economy the $208 billion deficit of 1983 ate up, the biggest percentage since World War II.

Since 1980, budget deficits have exceeded 2.7 percent of the economy 12 other years.

But some analysts say with the number of baby boomers headed for retirement, the government should be trying to improve its budget in order to pay for Social Security. They also worry that if the shortfalls don't fade when the economy recovers, companies will compete for borrowing with the government and push interest rates upward.

"Then it becomes an issue," said J.P. Morgan and Co. senior economist Jim Glassman.

The Associated Press contributed to this report.