The Bush administration has shelved a report commissioned by the US Treasury that shows America faces a future of chronic federal budget deficits - totalling at least $44,200 billion (€37,422 billion) in current US dollars.
The study, the most comprehensive assessment of how the US government is in threat of being overwhelmed by the future healthcare and retirement costs of the "baby boomer" generation, was commissioned by then treasury secretary Mr Paul O'Neill.
But the Bush administration chose to keep the findings out of the annual budget report for fiscal 2004, published in February, as the White House campaigned for a tax-cut package that critics claim sets the US on course for bigger deficits.
The study's chief conclusion was that sharp tax increases or massive spending cuts - or a politically painful combination of both - are unavoidable if the US is to meet the healthcare and retirement benefits now promised to future generations.
The report is now being circulated as an independent working paper among think-tanks in Washington, just as President George Bush signs a 10-year, $350 billion tax-cut package into law.
The analysis was spearheaded by Mr Kent Smetters, at the time treasury deputy assistant secretary for economic policy, and Mr Jagdessh Gokhale, then a consultant to the US Treasury.
In a White House ceremony yesterday, Mr Bush was due to welcome the tax cut as a victory that will help generate jobs and fuel sputtering economic growth.
But Mr Bush's tax-cutting agenda has been criticised for inflating future budget deficits, which could act as a choke on US economic growth and constrain the federal government's ability to meet social security, retirement and healthcare obligations.
Mr Alan Greenspan, Federal Reserve chairman, last week bemoaned what he called Washington's "deafening" silence about the coming challenge to federal finances. The Smetters-Gokhale study's sum dwarfs previous estimates of the financial challenge facing Washington as baby boomers retire. - (Financial Times Service)
