US Budget Deficit Returns in Midterm Election Year

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Last updated at: (Beijing Time) Thursday, August 29, 2002

US Budget Deficit Returns in Midterm Election Year

After four years of continuous fiscal surplus, the US government is expected to see, for the fiscal year 2002 ending Sept. 30, a huge budget deficit unlikely to be remedied in the near future.

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After four years of continuous fiscal surplus, the US government is expected to see, for the fiscal year 2002 ending Sept. 30, a huge budget deficit unlikely to be remedied in the near future.

The Congressional Budget Office (CBO) said Tuesday that US federal budget would see deficits in the next four years, and that a substantial return to the black could be expected only afterwards if the tax cuts enacted last year expire in 2010 as scheduled.

The CBO said the budget deficit of this fiscal year would hit 157 billion US dollars. It predicted a budget shortfall of 145 billion dollars for fiscal year 2003, adding that the federal ledger could only return to the plus side with a 15-billion-dollarsurplus in 2006.

There will be a total surplus of 1 trillion dollars from 2002 to 2012, far less than an estimated 2.4 trillion predicted by COB only five months ago, according to it.

This situation has not only brought a negative impact upon the recovery of the US economy, but also become a focus of the struggle between Republicans and Democrats in the midterm elections to be held this year.

In the 1990s when President Bill Clinton was in office, to eliminate fiscal deficit and realize balance of budget had been a major weapon of the Republicans against the Democratic government. The Clinton administration had managed to reduce fiscal deficit year by year from a record 290 billion dollars in 1992.

After tremendous efforts, surplus emerged in fiscal year 1998, and rose to a record 237 billion dollars in 2000. However, the trend has begun to reverse since President George W. Bush took office in January 2001. Last year, fiscal surplus dropped sharply to 127 billion dollars.

Currently, Republicans and Democrats are disputing about why the country reenters an age of deficit. The Bush administration says the economic recession last year has brought down the government income, and post-Sept. 11 military actions and other anti-terrorist measures have led to extra costs.

However, the Democrats hold a different theory. They say deficit is largely a consequence of the 1.35-trillion-dollar tax-cut plan over 10 years pushed by President Bush in 2001. The plan, failing to inspire economic recovery, has but affected the government's tax income.

Budget balance has always been an important topic in the US biparty politics, especially in election years. In the early days of the presidential election year of 1996, Republicans and Democrats fought so hard over this topic as to force some government offices to close for about two weeks.

No doubt, with the re-appearance of the budget deficit, Democrats are this year in the midterm elections enjoying a better opportunity to obtain more seats in the Congress.

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