White House Predicts $427B Deficit

WASHINGTON – The White House will project that this year’s federal deficit will hit $427 billion, a senior administration official said yesterday, a record partly driven by wars in Iraq and Afghanistan.The official, among three who briefed reporters on condition of anonymity, said the estimate was a conservative one that assumed some higher spending than other analysts use. Last February, the White House projected that the 2004 shortfall would hit $521 billion, only to see it come in at $412 billion.The official said the figure represented progress because it would be smaller than last year’s record $412 billion shortfall when compared to the size of the growing U.S. economy. That ratio is a key measure of the deficit’s potency.“Our projections will show we remain on track to cut the deficit in half by 2009,” one of President Bush’s budget goals, the official told reporters.Even so, the number was among a blizzard of figures released yesterday that illustrated how federal deficits remain a problem that Mr. Bush and Congress must reckon with.The Congressional Budget Office projected that this year’s deficit would hit $368 billion – which would be the third highest ever – excluding war costs. Adding expenditures for Iraq and Afghanistan operations would push this year’s red ink to about $400 billion, said the nonpartisan budget analysis service.Underscoring budget pressures hounding lawmakers, senior administration officials invited reporters to the White House to outline their upcoming request for an additional $80 billion, or slightly more, to help pay this year’s costs of wars in Iraq and Afghanistan.“I am grateful that Congress, in a strong bipartisan fashion, has consistently voted to support our troops, and I urge it to do so again,” Mr. Bush said in a written statement.There is little doubt lawmakers will follow Mr. Bush’s lead, as they have repeatedly since the September 11, 2001, terrorist attacks. The latest proposal would bring war spending so far to about $308 billion, including $25 billion to rebuild Iraq and Afghanistan, according to the Congressional Research Service, which provides reports to lawmakers.Mr. Bush plans to send his 2006 budget to Congress on February 7. It will not include a request for more war funds for that year, the officials said, saving that request for later.Yesterday’s forecast by the Congressional Budget Office was widely awaited at the start of a year when Mr. Bush and Republicans are likely to propose tight spending restraints – and battle Democrats and some GOP lawmakers over those plans.The budget office projected $855 billion in shortfalls for the decade ending in 2015. The office estimated that deficits would gradually fade into slight surpluses by 2012 – but not many were taking that forecast at face value.In making those estimates, the budget office assumed that current tax and spending laws would be unchanged, as it is required to do by law.The practice is designed to give lawmakers a neutral starting point to work from when crafting legislation.As a result, the budget office projections omitted war costs and some of Mr. Bush’s top legislative priorities.The budget office said assuming U.S. troop strength in Iraq and Afghanistan stays steady through next year and then declines gradually, those wars would add $590 billion to the decade’s deficits.Mr. Bush’s proposal to prevent his tax cuts from expiring – and easing the impact of the alternative minimum tax on middle-income Americans, a move both parties favor – could add red ink exceeding $2.3 trillion, the budget office said.The budget office did not say how much Mr. Bush’s plans to revamp Social Security would cost, but it has been estimated at $1 trillion to $2 trillion.On the other hand, the budget office assumed most domestic programs would grow at the same rate as inflation.

White House Predicts $427B Deficit

White House Predicts $427B Deficit

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