BBC NEWS May 29, 2003
The Bush administration reportedly buried a report commissioned by the US Treasury which predicted a budget deficit of over $44,000bn and called for tax rises. In a front-page story Britain's Financial Times said the report, which advocated tax rises, was left out of February's budget report as the White House lobbied for $350bn in tax cuts.
Those cuts, the opposite of what was reportedly recommended in the Treasury study, were signed into law by President George W Bush on Wednesday.
The newspaper said the study was "the most comprehensive assessment of how the US government is at risk of being overwhelmed by the 'baby boom' generation's future healthcare and retirement costs".
"It estimates that closing the gap would require the equivalent of an immediate and permanent 66% across- the-board income tax increase," the FT said.
The Bush administration has been heavily criticised for the tax cuts - which came on top of a 10-year $1,650bn in tax cuts in 2001 - as the US economy stagnates and unemployment rises.
Reports ignored
The FT reported that former Treasury Secretary Paul O'Neill, who was sacked from the administration in December, commissioned the paper.
Two leading US Treasury economists headed the study - Kent Smetters, former Treasury deputy assistant secretary for economic policy, and Jagdessh Gokhale, a Treasury consultant at the time.
In transcripts of interviews with them published by the FT, they disagree over whether the report was meant to be included in the budget report.
Mr Smetters said the report was "never meant to be a Treasury study. It was meant to be some internal thinking... on how to reform the budget".
He was contradicted by Mr Gokhale.
"When we were conducting the study my impression was that it was slated to appear (in the budget)," he said.
But Mr Gokhale added that it had been common practise for US administrations to ignore similar critical reports over the past decade.
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http://news.bbc.co.uk/2/hi/business/2946552.stm
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