White House Says Congress Underestimated New Medicare Costs
By ROBERT PEAR and EDMUND L. ANDREWS

Published: February 2, 2004

ASHINGTON, Feb. 1 — Bush administration officials said Sunday that Congress had grossly underestimated the cost not only for prescription drug benefits, but also for private health insurance plans that would be offered to elderly people under the new Medicare law.

When President Bush signed the legislation on Dec. 8, the Congressional Budget Office said it would cost $395 billion in the decade from 2004 to 2013. On Thursday, the White House put the cost at $534 billion.

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Mr. Bush will try to explain the difference when he submits his budget to Congress on Monday.

The budget is expected to show a record deficit of more than a half-trillion dollars in 2004, up from $375 billion last year. But the president says his policies will reduce the deficit to $364 billion in 2005 and to $237 billion by 2009, fulfilling his vow to cut the deficit in half in five years.

Administration officials said that Mr. Bush's budget would not include the costs of the Iraq war. Nor, they said, would it include the costs of restructuring the alternative minimum tax, estimated at more than $162 billion over five years.

The minimum tax is intended to prevent wealthy people from making excessive use of sophisticated tax breaks, but it will snare millions of people with moderate incomes in the next few years.

Budget analysts say the administration's five-year goal glosses over the much bigger fiscal gap that looms over the next 10 years. The huge upward recalculation of costs for the new Medicare law has little effect in the first five years, because the new drug benefits do not become available until 2006.

The same is true of Mr. Bush's proposal to make his tax cuts permanent. The cost would be more than $1.2 trillion over 10 years, but most of that would come at the end of this decade.