Joshua Bolten and Dan Senor

(Bolten) "Actually our 2003 [deficit] number is going to come in lower than $455 billion. We are not going to announce an actual number until toward the end of the month, some time when all the calculations are in. But my expectation is that we will go below $400 billion as a result of both slower expenditures than were anticipated in July...and some modest good news in revenue collections, which seem to be firming. It is revenue collections which dropped off a cliff over the past few years and are substantially responsible for the deficit situation. [The firming revenue picture] is a good sign about the economy. It is a good sign about our budget situation."

(Bolten) Over the short term, my own view is that...if the two conditions that I mention prevail - continued pursuit of strong pro-growth economic policies and exercise of fiscal restraint - we are well within sight to meet the president's commitment to cut the deficit in half from its peak next year over the next five-year window.

In fact, our projections show we should be able to do it faster than five years. What the president has said publicly is cut that deficit in half over five years.... Our projections show us well within sight of doing that. As I said, I don't have a great deal of pessimism, in fact I have optimism, that it will be possible to meet the president's objective rapidly within that five-year period again if we continue pro-growth economic policies and exercise fiscal restraint of the nature reflected in the president's '04 budget proposals....

The real problem comes about a decade from now as some of us baby boomers retire and we see enormous challenges to our budget situation, not from the discretionary spending which is what we are talking about now - that is the subject of budget resolutions and appropriations and so on - but the entitlement side of the ledger (principally Social Security, Medicare, and Medicaid). Those are huge challenges that I think need to be addressed on their own merits....

I think the budget situation and I think entitlements actually will be on the agenda in the 04 campaign and I think they ought to be ... the environment has not so far been ideal to bring forward actual legislative activity on social security reform but while I know the president has not made any decisions about what the campaign agenda will be in 2004. But I would not be at all surprised were he to decide that was an import issue to take to the people."

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