CBO widens budget deficit view (incl war,etc 2006 @ 437 vs 2005 @ 318)

[papau]

CBO widens budget deficit view (incl war,etc 2006 @ 437 vs 2005 @ 318)

http://money.cnn.com/2006/01/26/news/economy/cbo.reut/index.htm

CBO widens budget deficit view
Congressional Budget Office projects fiscal 2006 gap of $337 billion; doesn't include extra funds for war.
January 26, 2006: 10:01 AM EST

WASHINGTON (Reuters) - The U.S. budget deficit will hit $337 billion this year, the Congressional Budget Office said Thursday, according to a source familiar with the forecast.

The forecast does not include a potential $80 billion to $100 billion in additional funds the Bush administration might request to finance the wars in Iraq and Afghanistan, or more money that likely will be needed this year for Gulf Coast hurricane rebuilding.

The new deficit estimate for fiscal 2006 is up from CBO's August forecast of $314 billion and up from the actual fiscal 2005 deficit of $318.62 billion.
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In fiscal 2005, there was a deficit of $318.6 billion, compared with a deficit of $412.1 billion a year earlier
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http://www.cbo.gov/showdoc.cfm?index=4985&sequence=1
The Budget and Economic Outlook: Fiscal Years 2005 to 2014
January 2004



Changes in CBO's Baseline Projections of the Deficit or Surplus
Since August 2003
(Billions of dollars)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total, 2004-2008 Total, 2004-2013

Total Deficit (-) proj 1/2004...-477 -362 -269 -267 -278 -268 -261 -162 -24 -16 -1,652 -2,383
Total Deficit (-)Proj. 8/03.... -480 -341 -225 -203 -197 -170 -145 -9 161 211 -1,445 -1,397


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FRBSF Economic Letter
2001-10; April 13, 2001
Uncertainties in Projecting Federal Budget Surpluses

In January 2001, the non-partisan U.S. Congressional Budget Office (2001a) issued updated federal budget projections for fiscal years 2002 through 2011. According to the CBO?s baseline projections, the federal government will accumulate $5.6 trillion in total surpluses over the coming decade. Slightly less than half of this total ($2.5 trillion) is expected to come from so-called "off-budget" programs, the most important of which is Social Security. The remainder of the surplus ($3.1 trillion) is expected to come from "on-budget" sources, as mounting federal tax revenues continue to exceed spending on the rest of the government's programs. In the absence of new legislation, the projected budget surpluses are large enough to pay off all of the publicly held federal debt that is available for redemption by the year 2006.

The emergence of these large projected surpluses has sparked a vigorous political debate over how the funds should be used--whether for tax cuts, paying down debt, or new spending. Participants in the debate often adopt the CBO?s baseline numbers as the starting point for their proposed budget plans. When thinking about these issues, it is important to keep in mind that ten-year budget projections are subject to considerable uncertainty. This Economic Letter discusses the nature of this uncertainty and presents some alternative projections constructed by the CBO to help illustrate the range of possible budget scenarios that might be observed over the next decade.

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[papau]

1. LAT - Bush promise to cut deficit in doubt.

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http://www.latimes.com/news/printedition/asection/la-na-deficit27jan27,0,1097200.story?coll=la-news-a_section

From the Los Angeles Times
Bush's Promise to Cut Deficit in Doubt
From Associated Press

January 27, 2006

WASHINGTON — The budget deficit will rise to at least $337 billion this year and may well approach or exceed $400 billion because of tax cuts and new spending for hurricane relief and the war in Iraq, congressional budget analysts said Thursday.

The latest Congressional Budget Office data also suggest President Bush is unlikely to be able to keep his promise to cut the federal deficit in half by the end of his term.

Even assuming a phasing-down of the war in Iraq and the costs of hurricane relief, implementing tax cuts sought by Bush and Congress would produce deficits exceeding $300 billion through the end of the decade, the nonpartisan office said. <snip>

Bush promised in 2004 to close the deficit from a then-estimate of $521 billion to $260 billion by 2009, and he promised again Thursday to meet that goal when he sends an austere fiscal 2007 budget to Congress on Feb. 6. <snip>

[papau]

2. Budget deficit will turn to surplus if Bush's tax cuts expire

http://www.usatoday.com/printedition/news/20060127/a_deficit27.art.htm

Report: Budget deficit will turn to surplus if Bush's tax cuts expire
By Richard Wolf
USA TODAY

WASHINGTON — <snip>But if those tax cuts are allowed to expire after 2010 — effectively a tax increase Bush has sworn to oppose — the budget would begin showing a surplus in 2012, the CBO's budget projections showed. Bush wants Congress to make the tax cuts permanent before he leaves office in 2009.<snip>

The White House has pegged this year's projected deficit at more than $400 billion, citing the costs of the war in Iraq and Hurricane Katrina. The White House budget office has overestimated the size of the deficit in the past two years by using what it says are “cautious” economic and revenue projections.

<snip>The long-term budget forecast is gloomier, particularly if Bush and Congress agree to extend the tax cuts. In 2016, the deficit would be nearly $400 billion. Beyond that, the costs of Medicare, Medicaid and Social Security are projected to rise to a level that “economic growth alone is unlikely to alleviate,” the report says. “A substantial reduction in the growth of spending, and perhaps a sizable increase in taxes as a share of the economy, will be necessary for fiscal stability to be at all likely in the coming decades.”

The non-partisan budget office also said the new Medicare prescription-drug benefit could cost $979 billion in the 10 years from 2007 through 2016. Last year, the administration put the figure at $720 billion for the years 2006 to 2015. The increase is mostly due to projections that more people will use the subsidized program.