Post by shoreman on Aug 20, 2006 12:54:03 GMT -5
US budget deficit seen rising in fiscal 2007
By Donna Smith and Vicki Allen
news.yahoo.com/s/nm/20060817/bs_nm/economy_budget_deficit_dc_1&printer=1
The U.S. budget deficit will rise to $286 billion in fiscal 2007, up from this year's projected deficit of $260 billion, the Congressional Budget Office predicted on Thursday.
The CBO's deficit projection for the coming fiscal year was higher than the $265 billion it predicted in March.
But it also expects the deficit for the current fiscal year to be less than it had anticipated due to stronger revenue growth than previously expected and lower-than-expected spending on federal health care.
The CBO's projected fiscal 2006 deficit of $260 billion is some $112 billion lower than its March projection. The 2006 fiscal year ends September 30.
Republicans cited the lower deficit number for 2006, which ends on September 30 -- just over a month before the November 7congressional election -- as proof that Bush administration's tax cuts and other economic policies were working.
"The federal budget deficit is being erased as a result of the pro-growth economic policies implemented by a Republican Congress, along with renewed focus on spending taxpayer dollars wisely," said House of Representatives Majority Leader John Boehner, an Ohio Republican.
But Democrats said the numbers provide little comfort.
"While any improvement in the budget is welcome, a $260 billion deficit is no reason to celebrate, especially when the deficit forecast for next year -- $286 billion -- is even worse, and the long-term outlook remains so bleak," said Rep. John Spratt of South Carolina, the top Democrat on the House Budget Committee.
Sen. Kent Conrad of North Dakota, the senior Democrat on the Senate Budget Committee, said the nation's debt -- money borrowed by the government from investors and the Social Security retirement program -- will soar to more than $11 trillion by 2011, compared with $5.8 trillion five years ago.
SUSTAINABLE DEFICITS
Acting CBO Director Donald Marron said the current deficit level was "sustainable" in relation to the overall economy.
But Conrad described Marron's comments as "totally irresponsible" because the growing national debt and looming retirement of the baby boom generation would be drawing more heavily on Social Security and the Medicare health program.
Conrad noted that interest payments on the debt mountain are growing faster than any other spending item in the budget.
The health of the economy, the budget deficit and rising debt are likely to feature in campaigning for the mid-term election, which will determine control of Congress.
The CBO projected the five-year accumulated deficit at $1.4 trillion -- up from its March projection of $1.1 trillion, mostly because of expected ongoing spending on the wars in Iraq and Afghanistan.
The agency said it expects the economy to continue expanding over the next few years and the deficit to stay near current levels relative to the overall size of the economy.
After 2010, it said, the deficit would decline sharply, reflecting a rapid increase in tax revenues after the Bush administration's tax cuts expire. The agency estimated the budget deficit would peak in 2010 at $328 billion.
The CBO said it saw the U.S. economy slowing to a 3.0 percent growth rate next year, after taking out the effects of inflation, compared to 3.5 percent this year.
By Donna Smith and Vicki Allen
news.yahoo.com/s/nm/20060817/bs_nm/economy_budget_deficit_dc_1&printer=1
The U.S. budget deficit will rise to $286 billion in fiscal 2007, up from this year's projected deficit of $260 billion, the Congressional Budget Office predicted on Thursday.
The CBO's deficit projection for the coming fiscal year was higher than the $265 billion it predicted in March.
But it also expects the deficit for the current fiscal year to be less than it had anticipated due to stronger revenue growth than previously expected and lower-than-expected spending on federal health care.
The CBO's projected fiscal 2006 deficit of $260 billion is some $112 billion lower than its March projection. The 2006 fiscal year ends September 30.
Republicans cited the lower deficit number for 2006, which ends on September 30 -- just over a month before the November 7congressional election -- as proof that Bush administration's tax cuts and other economic policies were working.
"The federal budget deficit is being erased as a result of the pro-growth economic policies implemented by a Republican Congress, along with renewed focus on spending taxpayer dollars wisely," said House of Representatives Majority Leader John Boehner, an Ohio Republican.
But Democrats said the numbers provide little comfort.
"While any improvement in the budget is welcome, a $260 billion deficit is no reason to celebrate, especially when the deficit forecast for next year -- $286 billion -- is even worse, and the long-term outlook remains so bleak," said Rep. John Spratt of South Carolina, the top Democrat on the House Budget Committee.
Sen. Kent Conrad of North Dakota, the senior Democrat on the Senate Budget Committee, said the nation's debt -- money borrowed by the government from investors and the Social Security retirement program -- will soar to more than $11 trillion by 2011, compared with $5.8 trillion five years ago.
SUSTAINABLE DEFICITS
Acting CBO Director Donald Marron said the current deficit level was "sustainable" in relation to the overall economy.
But Conrad described Marron's comments as "totally irresponsible" because the growing national debt and looming retirement of the baby boom generation would be drawing more heavily on Social Security and the Medicare health program.
Conrad noted that interest payments on the debt mountain are growing faster than any other spending item in the budget.
The health of the economy, the budget deficit and rising debt are likely to feature in campaigning for the mid-term election, which will determine control of Congress.
The CBO projected the five-year accumulated deficit at $1.4 trillion -- up from its March projection of $1.1 trillion, mostly because of expected ongoing spending on the wars in Iraq and Afghanistan.
The agency said it expects the economy to continue expanding over the next few years and the deficit to stay near current levels relative to the overall size of the economy.
After 2010, it said, the deficit would decline sharply, reflecting a rapid increase in tax revenues after the Bush administration's tax cuts expire. The agency estimated the budget deficit would peak in 2010 at $328 billion.
The CBO said it saw the U.S. economy slowing to a 3.0 percent growth rate next year, after taking out the effects of inflation, compared to 3.5 percent this year.