How the war tab may shift agenda in Washington
Congress is likely to pay, but may trim tax cuts and prized programs.
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Robert Reischauer, a former director of the Congressional Budget Office, says the $87 billion addition to federal spending proposed by Bush "in and of itself is not cataclysmic. It is bearable." A resulting deficit of $550 billion in fiscal 2004 starting in October will amount to 4.7 percent of the nation's gross domestic product - its total output of goods and services. That is less than the peak of 6 percent of GDP reached in 1983 during President Reagan's first term in office. But at that time, Mr. Reischauer, now president of the Urban Institute in Washington, notes, some of the 1981 tax cuts had already been reversed.Skip to next paragraph
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In the long term, some economists worry, more borrowing by the government could push up interest rates for the nation at large, and harm the economy.
If "realistic assumptions" are made of congressional spending and tax actions, the deficit will grow to $700 billion to $800 billion over the next 10 years, says Reischauer. That's "even with a strong economy."
And that's without a larger military, which some experts say is warranted by the expanding US role in the world.
Lawmakers worry that a long engagement in Iraq, for instance, could push deficits even higher in the years to come by requiring more troops. Last week, the Congressional Budget Office released a new report on the ability of the US military to sustain an occupation in Iraq. It concludes that in the long term, the US can sustain a force level of only 67,000 to 106,000 military personnel, without involuntary mobilization and extended family separation. An alternative would be to create two new Army divisions, the report concludes. Reischauer says that Congress at some point soon will have to raise defense spending $50 billion to $100 billion a year to enlarge the armed forces or refurbish the equipment used in Iraq and Afghanistan.
So far, neither Democrats nor Republicans have been eager to come up with spending cuts to offset the war spending.
In fact, Democrats are using the new spending estimates in Iraq to argue for more spending on education and healthcare for Americans. Sen. Robert Byrd (D) of West Virginia is proposing an additional $6.1 billion to fully fund the money Congress authorized in the No Child Left Behind Act. "I urge my colleagues to begin reflecting on what kind of signal we will be sending to American families if we shortchange education funding by $6 billion one day and approve 10 times that amount for Iraq the next," he said, referring to a lower estimate of what the president would request.
But one of the most likely targets for cuts this fall is the prescription-drug benefit, now hung up in conference between the House and Senate. "If there is any sacrifice to be made for the $87 billion, it would be the prescription-drug bill. It's $400 billion that may well be a lot more than $400 billion over the next 10 years," says analyst Larry Sabato. "But the path of least resistance is to add to the debt. The reason they get away with it is that average people don't have a clue what the deficit is. And the number is so big, whether $100 billion or a trillion, that it makes no difference to them, yet it has tremendous impact on interest rates and for the future."
• Staff writers Liz Marlantes and David R. Francis contributed to this article.