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Wednesday, January 26, 2005

Neo-cons Trump Fiscal Conservatives

White House Predicts $427 Billion Deficit, Including New War Costs
By Edmund Andres and John O'Neil (25 Jan 2005, NYT)

WASHINGTON, Jan. 25 - White House officials predicted this afternoon that the budget deficit would hit a record $427 billion this year, including an additional $80 billion that President Bush will ask for mostly to cover the costs of the war in Iraq.

White House officials said today that they were still on track to fulfill Mr. Bush's campaign promise of cutting the budget deficit in half by 2009.

But the administration is already well behind on its goal. The White House predicted last summer that the budget deficit would decline in 2005 and continue to sink after that.

The officials said Mr. Bush would ask Congress next month for the extra $80 billion when he submits his budget next month for fiscal 2006. The new request would bring total costs of the war to more than $200 billion by the end of this year, with spending likely to continue at near current levels through at least 2006.

The new estimate calls for the budget to climb slightly, and a new report earlier today by the nonpartisan Congressional Budget Office shows that deficits will remain above $350 billion through 2009 and climb sharply after that.

The Congressional Budget Office estimated that continued costs of the war in Iraq and other aspects of the war on terrorism could add $285 billion over the next five years.

The congressional agency also noted deficits would climb much more sharply in the subsequent five years. Extending Mr. Bush's tax cuts would cost $1.8 trillion over the next 10 years. Preventing an expansion of the alternative minimum tax, a parallel tax that was designed to prevent wealthy people from taking advantage of loopholes, would cost about $500 billion.

Even without the wars in Iraq and Afghanistan, and despite expectations of strong economic growth over the next two years, the Congressional Budget Office said the federal budget outlook worsened since last year.

Congressional analysts predicted that interest costs on the federal debt will double over the next decade to more than $300 billion a year.

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