Washington, DC -- August 17, 2005 -- This week, just over a month after the White House released its much publicized and misleading budget projections, the Congressional Budget Office (CBO) has released its own projections. This report should serve as a wake-up call to the Bush administration, Congress, and the American people that today's unsustainable fiscal policies are dangerous to the economic security of the country. The CBO report projects a $331 billion deficit for Fiscal Year 2005 (FY05), a $33 billion reduction from an initial CBO estimate made in early March. But this decrease is primarily due to temporary factors and CBO states it will not have a long-term impact on deficits. In its update, CBO has more than doubled its estimated cumulative deficit over the next ten years to $2.1 trillion. While the CBO numbers are more realistic than estimates released last month by the White House Office of Management and Budget (OMB), even they do not indicate just how troubling the long-term picture really is. The CBO estimates are required by law to assume the continuation of current policies, the most important for its estimates being the expiration over the next five years of most of the tax cuts legislated in 2001 and 2003. Since it is unlikely the Republican-controlled Congress will let that happen (with some tax cuts are already slated to be extended this fall in a congressional reconciliation bill), deficits will likely be much higher than CBO projections. In fact, extending all of President Bush's tax cuts will add an additional $1.6 trillion to the deficit over the next ten years, according to the CBO report. "Because of these limited assumptions, CBO budget projections are really just a baseline to measure the effects of different tax and budget policy proposals," commented Gary Bass, Executive Director of OMB Watch, a nonprofit watchdog group in Washington, DC. "We have some serious long-term fiscal problems to address. The president and Congress can bury their heads in the sand and continue toward a budgetary catastrophe, or they can correct our economic course and enact policies to reduce deficits and strengthen our financial foundation for the long-run." If the president's tax cuts are extended, CBO estimates the amount added to the federal debt over the next ten years will jump to over $3.7 trillion. Other analysts and Democratic staff at the House and Senate budget committees believe the $3.7 billion estimate is overly optimistic, releasing their own estimates based on the CBO analysis of over four or five trillion dollars. Regardless of their differing size, all estimates make clear that, if current policies continue, huge deficits are here to stay. This will sharply increase the amount of money needed to make continued interest payments on the national debt -- further squeezing the budget and draining revenues available for other spending obligations. "When you look at the long-term impact of our continued deficit spending, one of the many consequences is that the interest paid to maintain so much debt rapidly expands and cuts into larger and larger chucks of spending for other priorities," said Adam Hughes, Budget Policy Analyst at OMB Watch. "Payments on the national debt are the fastest growing spending category - even more than defense or health care - and unless something is done to address the ballooning debt, it will start to have dire repercussions for the security of our economy and our ability to meet our current and future spending needs." ###