Official Facts Contradict Administration Statements: Decline In 2004 Deficit Estimate Is Not Due To Faster Economic Growth
Publication Date: October 2004
Special Collection: John D. and Catherine T. MacArthur Foundation
Keywords: National debt; Federal budget; Economic projections; Fiscal future
On September 7, the Congressional Budget Office released a report estimating that the budget deficit will equal $422 billion in fiscal year 2004. Although this is $46 billion larger than the deficit in 2003, the increase in the deficit is smaller than had been projected earlier in the year, when CBO estimated the 2004 deficit would hit $477 billion. This led Vice President Cheney to declare, in referring to the fact that the $422 billion deficit is smaller than was projected earlier, “That’s a direct result of economic growth that came about as a result of the tax changes that the President put through, and the Congress supported.” Numerous Republican lawmakers and others associated with the Administration issued similar statements, implying that economic growth has been faster than expected. In addition, some press stories reported as fact, without attributing it to the Vice President or other officials, the claim that the change in estimates is due to a stronger economy.
But the Vice President’s statement is demonstrably incorrect. This is not a matter of debate or interpretation; it is a simple matter of fact. Overall economic growth has been equal to what CBO expected when it issued its $477 billion deficit estimate earlier this year. Since economic growth was the same — not faster — as earlier projected, the higher-than-expected revenues cannot have resulted from faster growth.