Deficit's Climb Will Continue, Analysts Indicate President and Congress Putting Tax Relief, Spending Hikes on Table to Stimulate Economy. FEDERAL BUDGET

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WITH release of its proposed federal budget, the Bush administration on Jan. 29 begins months of haggling with Congress over how to spend the government's money.

Regardless of the outcome, there are two certainties: The federal government will continue to spend more than it generates in revenue, and the nation's staggering debt will continue its perilous climb.

If the political will existed to slash government spending and broaden the tax base, United States fiscal planners could help to reverse this trend. But Washington is headed in the opposite direction. President Bush and Capitol Hill legislators are scrambling to find ways to boost the sagging American economy during this election year. They have put tax relief and spending increases on the table as a way to create economic activity and jobs.

Public- and private-sector economists warn that such measures will only contribute to a long-term slide in the US economy. Lower revenues and higher spending could spiral the nation's $2.5 trillion debt to $4 trillion over the next five years, says Barry Bosworth, a senior economist and expert on budget policy and debt at the Brookings Institution.

US government forecasts project that the nation's economy will slowly emerge from recession without the robust growth associated with other post-recession periods. The soaring US debt will push down an already abysmally low rate of domestic investment. Slower American productivity means a full economic recovery is even more remote, says Mr. Bosworth.

Despite this year's $350 billion federal budget deficit and a national debt that skyrockets past $12 trillion when private-sector household and business debts are included, US taxpayers want more government programs and fewer taxes, says Bosworth.

Murray Weidenbaum, chairman of the Council of Economic Advisers in the first Reagan administration, says he is worried about what the budgeteers will produce. "If they plan to spend more money and cut taxes without strengthening the economy, then we'd be better off if they did nothing," he says. Indeed, only months ago, Bush's advisers counseled him to do little more than pressure the Federal Reserve Board to lower interest rates. But the continuing recession and December's 7.1 percent unemployment rate spurred Bush to come up with an economic recovery plan, part of the $1.5 trillion budget plan announced Jan. 29.

Economists warn that "quick fix" attempts to stimulate the economy through tax cuts would only rob the government of desperately needed revenue. …


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