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Thursday, January 26, 2006
CBO Projects $337 Billion Deficit for 2006
Today the Congressional Budget Office projected a $337 billion deficit for 2006. The increase over last year's $318 billion recorded deficit is largely attributed to hurricane costs and the introduction of the Medicare prescription drug benefit this month. $337 billion is far less than the Office of Management and Budget's estimate stating that the deficit will exceed $400 billion this year.
A problem with these projections is that by law, the CBO cannot factor in the costs of policies which have not yet been enacted. Therefore, new spending on the Iraq war, tax-cut extensions, and new Gulf Coast reconstruction spending -- all huge costs -- are not included in this figure. The agency noted that a more realistic deficit projection, taking into account some of these costs, would be more like $360 billion. Without the costs however, the report is able to show declining deficits beginning with $270 billion in FY07 and small surpluses beginning in FY12. They put the total 10-year deficit projection of $832 billion. Ranking member on the House Budget Committee John Spratt (D-SC) said,
CBO's projections show the deficit making a decided improvement after 2010, but this results from expiration of the tax cuts passed in 2001, 2002 and 2003, a policy the Bush administration clearly does not support."
Sen. Kent Conrad (D-ND) of the Senate Budget Committee added,
The thing that really alarms me is the growth of the debt. Remember, while we see a
deficit this year in the $360 billion range when you put in the need to fix the alternative
minimum tax and you put in the additional war cost, what is being lost, I believe, in
terms of helping the American people understand our fiscal condition, is the debt is growing
much more rapidly than the deficit.
Posted by Becky Lewis
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