Unforeseen spending on the post-hurricane clean-up operation and military operations in Iraq and Afghanistan are likely to push up the US budget deficit this year compared to last, while renewed tax cuts will prolong the deficit, according to the latest Congressional Budget Office report.
The CBO, a non-partisan arm of Congress, stated in a report released last week that the budget deficit will rise to at least $337 billion this year and may well exceed $400 billion because of tax cuts and new spending, in line with the expectations of many economists.
The CBO data also suggests that President Bush is unlikely to be able to keep his 2004 promise to cut the federal deficit in half by the end of his term.
In fact, assuming a scaling down of troop numbers in Iraq and an extension of expiring tax cuts, the CBO projected that the deficit would fall to no lower than $222 billion before increasing to $300 billion by 2016.
If tax cuts are left to expire and no changes are made to the alternative minimum tax - things which are unlikely to happen - the CBO estimates that the budget deficit will fall to $241 billion by 2009 and $114 billion by 2011.
Following four years of budget surpluses, the government fell back into a deficit in fiscal 2002 which then hit $412 billion in 2004. Economic growth and spending cuts helped to trim the deficit back to $319 billion last year.
It is argued that CBO budgetary estimates are flawed because they do not take into account future changes in the law.
Nonetheless, the figures will make grim reading for President Bush as he prepares to release his 2007 budget request in the coming weeks. They will also intensify the debate within Republican ranks between those who, like the President, favour extending tax cuts, and moderates who argue that further tax cuts are politically unacceptable when the White House is calling for deep cuts in social programs to cater for military and other spending.
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment