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Sunday, October 17, 2004

Bush plans pension raid to stay afloat
By Edmund AndrewsWashingtonOctober 16, 2004

Less than a day after President George Bush implied that his Democratic challenger John Kerry lacked "fiscal sanity", the Administration said it had hit the debt ceiling set by Congress and would have to borrow money set aside for federal employees' pensions until after the election.


Federal operations are unlikely to be affected because Congress is certain to raise the debt limit in a lame-duck session in November. Since Mr Bush took office in January 2001, the federal debt has increased about 40 per cent, or $US2100 billion ($A2800 billion), to $US7400 billion.
Congress has raised the debt ceiling three times in three years, raising it most recently by $984 billion in May 2003.


On Thursday, Treasury Secretary John Snow said the Federal Government was about to breach the limit again and would be able to keep operating only if it started tapping money intended for the civil service retirement fund, the pension system for federal workers.
"Given current projections, it is imperative that the Congress take action to increase the debt limit by mid-November," Mr Snow warned, saying that his arsenal of financial tools "will be exhausted" at that point.


The announcement came just a few days after Congress adjourned and one day after Mr Bush battled Senator Kerry over economic and social policy in their final televised debate.
In that debate, Mr Bush accused Senator Kerry of proposing major new programs without the money to pay for them. "My opponent talks about fiscal sanity," Mr Bush said. "His record in the United States Senate does not match his rhetoric."


White House officials and congressional leaders knew for at least two months that federal borrowing would soon exceed the legal limit.

Representative John Spratt, the ranking Democrat on the House Budget Committee, said the ballooning federal debt reflected Mr Bush's failure at fiscal responsibility and stemmed in large measure from his three big tax cuts.

"This is the burden Republicans are passing on to the next generation, and they have no plan or prospect for addressing it," Mr Spratt said.

Administration officials cast the latest news in the most positive possible light, reporting in a separate announcement on Thursday that the official federal budget deficit for the 2004 fiscal year was $US413 billion. That is lower than the $US522 billion shortfall the Administration predicted at the start of this year, though still the biggest federal budget deficit on record.

In its most recent projection, the non-partisan Congressional Budget Office estimated that budget deficits would remain at more than $US300 billion a year for at least the next five years if Mr Bush's tax cuts were all extended and even if the costs of the Iraq war ended after next year.

Mr Bush has often declared that his tax cuts, which will total $1900 billion over 10 years, provided crucial support for the economy as it spun into a recession and was then further weakened by corporate scandals, the September 11 attacks and the cost of fighting wars in Afghanistan and Iraq.

The Bush campaign on Thursday sought to play down post-debate snap polls that indicated Senator Kerry won Wednesday's debate.

According to an American ABC News poll on Thursday, Mr Bush and Senator Kerry are deadlocked in the final weeks of the election. The two candidates are tied with 48 per cent, with 1 per cent for Ralph Nader.

- New York Times, Reuters

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