Increased Medicare Costs To Contribute to $368 Billion Federal Budget Deficit for Fiscal Year 2005, CBO Says
The Congressional Budget Office on Tuesday in an annual report said that without additional expenditures the federal budget deficit in fiscal year 2005 would reach $368 billion, as Medicare and Medicaid costs continue to serve as a "major hindrance to long-term fiscal security," the Washington Times reports (DeBose, Washington Times, 1/26). According to the report, Social Security, Medicare and Medicaid costs will account for 10.4% of the gross domestic product in FY 2015 (Cohn, CongressDaily, 1/25).
The report estimated that the 10-year cumulative federal budget deficit would reach $1.3 trillion, an almost 60% increase from estimates announced last November (Havemann et al., Los Angeles Times, 1/26). The report also estimated that Social Security costs would increase by about 4.4% annually until FY 2015. However, according to the report, the increase in Social Security costs "will be dwarfed by the growth in government medical coverage," and the nation cannot "grow its way out of future deficits" without new taxes and "economy and productivity growing at a historically high rate," the Washington Times reports (Washington Times, 1/26).
White House officials separately on Tuesday said that the federal budget deficit in FY 2005 would reach $427 billion, which includes $80 billion that President Bush recently requested to support the wars in Iraq and Afghanistan. According to the Los Angeles Times, the estimates from CBO and the White House "suggested Bush would have a harder time than previously thought in keeping his promise to cut the deficit in half by the end of his presidency," although Bush administration officials said they would "still meet that goal" (Los Angeles Times, 1/26).
"The summary is that the budget outlook is a bit better than last year. The outlook for the future is, in a baseline sense, a bit worse," CBO Director Douglas Holtz-Eakin said.
Senate Budget Committee Chair Judd Gregg (R-N.H.) said, "CBO's report reflects the challenges that we know lie ahead. The deficit is too high, and too much of our spending is on automatic pilot. We must get serious about putting our financial house in order, beginning with short-term deficit reduction and then long-term control of entitlement spending" (Washington Times, 1/26).
Bush is scheduled to send Congress his proposed FY 2005 federal budget on Feb. 7 (Los Angeles Times, 1/26).
The report is available online.
Alan Gilbert, special assistant to Bush for domestic policy, is scheduled to answer questions about health care on Thursday at 9 a.m. ET in an "Ask the White House" chat. A transcript will be available online after the chat.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.