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National Deficit to hit $427 Billion
SOURCE: Associated Press
January 26 2005

Jan. 26, 2005 - The White House says its drive to halve federal deficits by 2009 remains on track, though it projects that the cost of wars in Iraq and Afghanistan will help drive this year's shortfall to a record $427 billion.

The figure, provided by a senior Bush administration official who briefed reporters on condition of anonymity, was among a flood of numbers released Tuesday that underscored a gloomy budget picture.

The nonpartisan Congressional Budget Office said projected deficits for the decade ending in 2014 had grown $503 billion worse than it calculated in September, excluding war costs. The deterioration was chiefly due to tax cuts and hurricane aid enacted since then.

The congressional analysts projected that this year's deficit would hit $368 billion, excluding war expenses, and about $400 billion with them.

The highest deficit ever was last year's $412 billion. The administration official said the White House's 2005 projection of $427 billion showed progress because it was less than last year's gap when compared with the size of the growing U.S. economy a key measure of the deficit's potency.

"By working with Congress to exercise responsible spending restraint" and cutting taxes to spark economic growth, "we've got a plan to cut the deficit in half over the next five years," White House spokesman Scott McClellan said.

The congressional analysts said deficits over the decade ending in 2015 would total $855 billion. But because the budget offices' estimating techniques require it to count existing law and omit anything else that estimate was not being taken seriously by many people.

Not included were war spending, the costs of renewing President Bush's expiring tax cuts and keeping the alternative minimum tax from affecting more middle-income Americans.

Including extra interest the government would have to pay, the budget office estimated those items together would add more than $2.9 trillion to projected deficits.

Combined, that would keep projected deficits over the next 10 years above $330 billion each year and growing steadily in the decade's latter half, budget office figures showed.

Those numbers exclude Bush's still-evolving plan to revamp Social Security, which analysts have estimated could cost another $1 trillion to $2 trillion over the next decade.

"No one should be lulled into thinking that this is a good news report," the Concord Coalition, a bipartisan group that favors balanced budgets, said of the congressional figures. "To the contrary, it is further confirmation that fiscal policy is on a dangerous path."

On Capitol Hill, Republicans said the figures showed the need to clamp down on spending.

"We must get serious about putting our financial house in order, beginning with short-term deficit reduction and then long-term control" of expensive federal benefit programs, said Senate Budget Committee Chairman Judd Gregg, R-N.H.

Democrats used the numbers to attack Bush.

"The nations financial woes can be directly attributed to the irresponsible fiscal policies of this administration," said Sen. Kent Conrad of North Dakota, top Democrat on the Senate Budget panel.

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 war costs.

The latest proposal would bring war spending since the terrorist attacks of Sept. 11, 2001, to about $308 billion, including $25 billion to rebuild Iraq and Afghanistan, according to the Congressional Research Service, which provides reports to lawmakers.

Bush sends his 2006 budget to Congress on Feb. 7. The administration won't request war funds for 2006 until later, the officials said.

The officials said that of the $80 billion, $75 billion would be for the Defense Department, mostly for the Army. They said it would include personnel costs, the start of an effort to add at least 17 combat brigades to the Army and replacing worn out equipment.

The rest of the money would largely be for aid the State Department would give to U.S. allies and for other expenses. Included would be money to help new Palestinian leader Mahmoud Abbas, to build an embassy in Baghdad at an estimated cost of $1.5 billion, and to aid victims of fighting in Sudan's Darfur province.

The officials did not say whether the request would include aid for Indian Ocean countries staggered by last month's devastating tsunami. One said the United States was spending $5 million daily there, and the administration would seek "very generous assistance."

The United States already has committed $350 million to tsunami recovery efforts.