US predicts 445-billion-dollar Bush deficit in 2004
Fri Jul 30, 5:50 PM ET Add Politics - AFP to My Yahoo!
WASHINGTON (AFP) - US President George W. Bush (news - web sites)'s administration forecast a record 445-billion-dollar budget deficit in 2004, blaming the "war on terror" and repeated economic shocks.
The shortfall for the fiscal year ending September 30 represented a sharp deterioration from a gap of 375 billion dollars in 2003.
The 2004 deficit would be equal to 3.8 percent of total economic output, the Office of Management and Budget said.
Nevertheless, Bush's administration, gunning for reelection November 2, boasted that the expected 2004 deficit would be smaller than the 521-billion-dollar hole it predicted in February because of higher-than-expected receipts.
In 2005, it said, the deficit was expected to narrow to a still-hefty 331 billion dollars, including an initial request for 25 billion dollars in spending money for operations in Iraq (news - web sites) and Afghanistan (news - web sites).
In an annual report on the US economy released Friday, the International Monetary Fund (news - web sites) called for "decisive action" to rein in the fiscal deficit.
"Most (IMF (news - web sites)) directors ... questioned whether the administrations medium-term fiscal objective -- of halving the deficit in five years -- is ambitious enough," it said.
Democratic presidential challenger John Kerry (news - web sites)'s campaign criticized the red ink in the budget.
"Even worse than this record deficit is the record deterioration George Bush has caused for the long-term fiscal health of the country and his lack of any plan to restore fiscal discipline," said Kerry economic adviser Gene Sperling.
The administration blamed the string of deficits on a battery of economic shocks.
"Today's deficits are due to an extraordinary confluence of adversity: the stock market downturn that began in 2000, the subsequent recession, the terrorist attacks of September 11, 2001, subsequent spending for homeland security and the war on terror, and the crisis in investor confidence from revelations of corporate scandals years in the making," the mid-session budget review said.
"The largest factor causing the change in surplus estimates subsequent to April 2001 is lower receipts than originally projected due to a weaker economy, the consequent reversal of a massive revenue surge and related factors."
Even without Bush's series of generous tax cuts, expected to provide relief of 272 billion dollars in 2004, the deficit would exceed 100 billion dollars this year, the White House said.
On the economy, the budget predicted:
-- economic growth of 4.7 percent this year and 3.7 percent in 2005;
-- consumer prices rising 2.5 percent this year and 2.3 percent next year -- both forecasts up by more than one percentage point since February; and
-- an unemployment rate at an annual average of 5.5 percent this year and 5.3 percent in 2005.
"Growth over the past year has been strong," the budget office said in a bullish pre-election message.
"During the second half of last year, the economy expanded at one of the fastest rates in two decades," it said. "All indications point to further solid growth in the remainder of the year."
Jobs growth had accelerated, it said, pointing to a gain of 1.5 million jobs in the past 10 months.
"Largely because of this improved economic performance, revenues have increased dramatically from the February projections for 2004 and 2005," the budget review said. |
