Congress' deficit forecast worsens
Analysts say deficit will hit $2.29 trillion in 10 years; earlier forecast was $2.01 trillion.
September 7, 2004: 12:25 PM EDT
WASHINGTON (Reuters) - The U.S. budget deficit will balloon to $2.29 trillion over the next decade, congressional analysts said Tuesday. This represents a worse outlook than previously forecast and one likely to stir election-year debate about President Bush's economic policies.
The forecast from the nonpartisan Congressional Budget Office compares to its March outlook for a cumulative deficit of $2.01 trillion for the 2005-2014 period, if current economic policies stay the same.
"The outlook in terms of the deficits in 2004 and 2005 has improved, but the projection of the cumulative deficit over the 2005-2014 period has worsened," the CBO said in a summer update of its budget outlook.
The CBO confirmed a preliminary forecast made in August for a record deficit of $422 billion for the 2004 fiscal year.
That number compares to the White House's latest deficit outlook of $445 billion for this year and was better than earlier estimates. The White House no longer provides a 10-year deficit forecast.
CBO is expecting the deficit to decline to $348 billion in 2005, if current laws and policies do not change.
"This report underscores that our policies are working to create a stronger economy, more jobs and a lower deficit," said House of Representatives Budget Committee Chairman Jim Nussle, an Iowa Republican.
The economy, particularly the deficit, has become a key theme between the two presidential candidates.
Bush blames the 2001 recession, the costs of the aftermath of the Sept. 11 attacks and the war on terror for the growing budget shortfall.
Democrats say Bush's tax cuts are responsible for turning the surplus he inherited into a record deficit, which they say threatens the future of Social Security and the Medicare health-care program for the elderly.
"Only George W. Bush could celebrate over a record budget deficit of $422 billion," Democratic presidential candidate John Kerry said in a statement Tuesday.
Kerry said he has a plan to restore fiscal discipline, rein in "out of control" spending and cut the deficit in half in four years.
CBO warned that even if the economy grows more rapidly than projected, "significant long-term strains" on the budget will get worse within the next decade as the baby-boomers begin to retire.
The report projects economic growth of 4.5 percent in 2004 and a slightly slower 4.1 percent next year.
CBO also forecasts that the federal government will reach its $7.384 trillion debt limit in October.
The U.S. Treasury has asked Congress to raise the borrowing ceiling for the third time in three years, a sensitive vote Republicans would like to avoid ahead of the election.
Analysts say deficit will hit $2.29 trillion in 10 years; earlier forecast was $2.01 trillion.
September 7, 2004: 12:25 PM EDT
WASHINGTON (Reuters) - The U.S. budget deficit will balloon to $2.29 trillion over the next decade, congressional analysts said Tuesday. This represents a worse outlook than previously forecast and one likely to stir election-year debate about President Bush's economic policies.
The forecast from the nonpartisan Congressional Budget Office compares to its March outlook for a cumulative deficit of $2.01 trillion for the 2005-2014 period, if current economic policies stay the same.
"The outlook in terms of the deficits in 2004 and 2005 has improved, but the projection of the cumulative deficit over the 2005-2014 period has worsened," the CBO said in a summer update of its budget outlook.
The CBO confirmed a preliminary forecast made in August for a record deficit of $422 billion for the 2004 fiscal year.
That number compares to the White House's latest deficit outlook of $445 billion for this year and was better than earlier estimates. The White House no longer provides a 10-year deficit forecast.
CBO is expecting the deficit to decline to $348 billion in 2005, if current laws and policies do not change.
"This report underscores that our policies are working to create a stronger economy, more jobs and a lower deficit," said House of Representatives Budget Committee Chairman Jim Nussle, an Iowa Republican.
The economy, particularly the deficit, has become a key theme between the two presidential candidates.
Bush blames the 2001 recession, the costs of the aftermath of the Sept. 11 attacks and the war on terror for the growing budget shortfall.
Democrats say Bush's tax cuts are responsible for turning the surplus he inherited into a record deficit, which they say threatens the future of Social Security and the Medicare health-care program for the elderly.
"Only George W. Bush could celebrate over a record budget deficit of $422 billion," Democratic presidential candidate John Kerry said in a statement Tuesday.
Kerry said he has a plan to restore fiscal discipline, rein in "out of control" spending and cut the deficit in half in four years.
CBO warned that even if the economy grows more rapidly than projected, "significant long-term strains" on the budget will get worse within the next decade as the baby-boomers begin to retire.
The report projects economic growth of 4.5 percent in 2004 and a slightly slower 4.1 percent next year.
CBO also forecasts that the federal government will reach its $7.384 trillion debt limit in October.
The U.S. Treasury has asked Congress to raise the borrowing ceiling for the third time in three years, a sensitive vote Republicans would like to avoid ahead of the election.
