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2004 Budget deficit: $480 billion!

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Sparks fly as Congress predicts 480 billion-dollar 2004 deficit

Tuesday, 26-Aug-2003 2:20PM PDT

Copyright 2003 by Agence France-Presse (via ClariNet)


WASHINGTON, Aug 26 (AFP) - Congressional budget experts predicted Tuesday the US federal deficit would surge to a record 480 billion dollars in fiscal year 2004 and could be pushed even higher by Iraq reconstruction costs.

The figure was slightly higher than the 475 billion dollar gap predicted by the White House for the fiscal year starting October 1.

But the CBO said the deficit could top 500 billion dollars with a supplemental budget requested expected for reconstruction in Iraq.

The CBO said the deficit would total 401 billion dollars in the current fiscal year, which ends September 30.

That deficit would be the largest ever in dollar terms but smaller than the deficits of the 1980s as a percentage of gross domestic product. The figure represents 3.7 percent of US economic output.

The report said government finances "have deteriorated sharply because of declining revenues -- for the third year in a row -- combined with double-digit growth in discretionary spending."

The CBO deficit projection is somewhat less than the 455 billion dollar gap projected by the White House, mainly because the congressional office expects some spending programs to be pushed into the next fiscal year.

Over the next decade, the CBO expects shortfalls to begin declining after 2004, posting a cumulative deficit of 1.397 trillion dollars between 2004 and 2013.

The forecast, however, assumes that recent tax cuts scheduled to expire in coming years won't be extended.

"In the absence of further legislative changes, the recent surge in deficits will peak in 2004," the CBO report said.

"After that, annual deficits will decline steadily before giving way to surpluses early in the next decade."

The CBO report sees the government in the red until fiscal 2012, when a surplus of 161 billion if seen.

The latest figures sparked fresh debate over the economic policies of President George W. Bush.

Democrats have argued that a series of tax cuts enacted since Bush took office in 2001 are the key culprits in the worsening budget outlook.

"The president is taking us into a deep, dark hole of deficits and debt that will take the nation many generations to recover from," Senator Kent Conrad said.

Conrad said the real deficit would be even greater that the figures show because the numbers include a surplus in the social security retirement trust fund, and assume tax cuts would expire in the coming years.

Including these factors, the Democratic lawmaker said, "then the deficit over this period, 2003 to 2013, is over 6.6 trillion dollars."

Bush has argued that the deficit has been caused by a weak economy along with the impact of the war on terrorism and the September 11, 2001 attacks.

Republicans contend the tax cuts will help buoy the economy and at least partially pay for themselves over the long run. The White House has long argued that 10-year forecasts are inaccurate and that improved economic growth will bring annual deficits to under 300 billion dollars by 2008.

"Ending deficits will require a growing economy and controlling runaway government spending. We must do both," said Republican House Budget Committee chairman Jim Nussle. "The budget plan we passed does just that. I intend to stick with the levels in our budget -- period."

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still don't see the problem..

economic growth is acclerating... we may hit almost 4% for the 4th quarter.. and early next year is being forecast around 5% growth :confused:

but since the dems are swearing by this route of criticism, to their demise i'm sure.. comps:

Budget Surplus(Deficit) as percentage of GDP:

france: (4%)

germany: (3.8%)

Italy: (3.5%)

US: (4.4%)

Unemployment Rates

France: 9.6%

germany: 10.6%

Italy: 8.7%

US: 6.2%

GDP Growth:

france: (0.3%)

germany: (0.1%)

italy: (0.1%)

US: 3.1%

but thats right, we should all keep complaining about the deficit...

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