The budget unveiled earlier this week projected a $521 billion deficit for fiscal 2004 – and that is without including the costs of war and peace in Iraq and Afghanistan, estimated at about $50 billion a year.
The stratospheric forecast is even more worrying when you consider how inaccurate past projections have been: two years ago, the White House projected a fiscal 2004 deficit of only $14 billion.
Yet, the ballooning deficit comes even as the budget cuts or eliminates 128 federal programmes, including funds for secondary school counsellors, air traffic control systems and environmental protection.
Military and security spending has
soared above original estimates
The culprit is yet more increases in military and security spending: Defence Department costs rise from $375 billion this year to $402 billion, a 7.1% increase, while Homeland Security spending rises from $28 billion to $30 billion, or 9.7%.
Meanwhile, the latest Bush plan axes 65 programmes and cuts back on 63 others - but the total savings for next year add up to only $4.9 billion.
The result has the left aghast at what it sees as reckless tax cuts hitting vital federal programmes, while conservatives voice dismay at such blatant budget indiscipline.
"Right now, we are trying to have it all – lower taxes and increased spending," says a recent report from the Brookings Institution titled Restoring Fiscal Sanity. "The result is a government budget that is out of control and poses substantial risks for the future."
The White House has portrayed its budget as a stringent plan that tailors spending to the county's greatest needs while halving the budget deficit within five years. But it is a portrayal that economic analysts say lacks credibility.
Analysts doubt the White House
can halve the deficit in five years
According to Nigel Gault, a specialist in US economics at Massachusetts-based analysts Global Insight, the Bush administration's assumptions about economic growth, inflation, and interest rate are reasonable.
But its spending and revenue projections are not credible, making significant deficit reduction an elusive target.
"I can't imagine how that could be achieved," says Gault. He says the cost of military operations abroad will probably remain high, significant non-military discretionary spending cuts are politically unattainable, and tax rises – including one already hidden in the budget - are "politically explosive".
"The budget assumes revenue from the alternative minimum tax," says Gault, "but Bush has asked the Treasury to look at this again – it would leave a lot of middle class Americans very angry." Since revenue from this tax is already factored into budget calculations, lessening its impact blows another hole in the budget.
Even members of Bush's own party are questioning his predictions. Senator John McCain said on Monday the budget "makes for very entertaining reading", while Bill Young, chairman of the House Appropriations Committee, warned: "The numbers simply do not add up."
A key problem is plunging federal tax receipts, which fell from 20.9% of GDP in fiscal 2000 to a forecast 15.7% this year - the lowest such figure since 1950. Corporate tax receipts are down to 1930s levels.
Despite this, Bush wants to make his tax cuts permanent, arguing that lower taxes spur growth.
Meanwhile, security spending has been rocketing upwards - by roughly $200 million above expectations in just two and a half years. Healthcare costs are also exceeding original estimates.
And a future without Bush at the helm next year does not look much better, says Gault. The likely Democrat presidential candidates challenging Bush have proposed a partial roll back of the Bush tax cuts – but would that be enough?
"I don't think so," says Gault. "On the spend side, it's going to be difficult. They can't look weak on defence with big military cuts." And the Democrats will face pressure to increase funding for a variety of federal programmes.
"No one is going into the election with a credible plan," says Gault.