Bush Administration: Federal Deficit Approaches $490 Billion

WASHINGTON — The next president will inherit a record budget deficit approaching $490 billion, a Bush administration official said today.The official said the deficit was being driven to an all-time high by the sagging economy and the stimulus payments being made to 130 million households in an effort to keep the country from falling into a deep recession. A deficit approaching $490 billion would easily surpass the record deficit of $413 billion set in 2004.The administration official spoke on condition of anonymity because the new estimate had not been formally released. Administration officials were scheduled to do that at a news conference later today.The new figure actually underestimates the deficit, since it leaves out about $80 billion in war costs. In a break from tradition — and in violation of new mandates from Congress — the White House did not include its full estimate of war costs.The White House press secretary, Dana Perino, had no comment on the $490 billion figure. But she told reporters that the White House and lawmakers acknowledged months ago that they were going to increase the deficit by approving a short-term boost for the slumping economy.“Both parties recognized that the deficit would increase, and that that was going to be the price that we pay,” Ms. Perino said.The White House had earlier predicted next year’s deficit at $407 billion. Figures for the 2008 budget year ending September 30 may also set a record.The numbers represent about 3% of the size of the economy, which is the deficit measure seen as most relevant by economists. That’s considerably smaller than the deficits of the 1980s and early 1990s, when Congress and earlier administrations cobbled together politically painful deficit-reduction packages.Still, the new figures are so eye-popping in dollar terms that it may restrain the appetite of the next president to add to it with expensive spending programs or new tax cuts. In fact, pressure may build to allow some tax cuts enacted in 2001 and 2003 to expire as scheduled at the end of 2010, with Congress also feeling pressure to curb spending growth.The deficit for 2007 totaled $161.5 billion, which represented the lowest amount of red ink since an imbalance of $159 billion in 2002. The 2002 performance marked the first budget deficit after four consecutive years of budget surpluses.That stretch of budget surpluses represented a period when the country’s finances had been bolstered by a 10-year period of uninterrupted economic growth, the longest period of expansion in American history.In his first year in office, helped considerably by projections of continuing surpluses, President Bush drove through a 10-year, $1.3 trillion package of tax cuts.However, the country fell into a recession in March 2001 and government spending to fight the war on terrorism contributed to pushing the deficit to a record in dollar terms in 2004.The House Budget Committee chairman, Rep. John Spratt, a Democrat of South Carolina, said the $490 billion figure confirms “the dismal legacy of the Bush administration: under its policies, the largest surpluses in history have been converted into the largest deficits in history.”The figures to be released later will paint a picture of the financial health of the government that Mr. Bush’s successor will inherit, as well as updated predictions of the health of the economy.The White House budget director, Jim Nussle, and the chairman of the president’s Council of Economic Advisors, Edward Lazear, were scheduled to release the administration’s updated forecasts at an early afternoon news conference.

Bush Administration: Federal Deficit Approaches $490 Billion

Bush Administration: Federal Deficit Approaches $490 Billion

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