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US 2006 budget deficit to exceed 400 billion dollars Thu Jan 12, 11:12 PM ET
WASHINGTON (AFP) - The United States' budget deficit for the fiscal year 2006 is now likely to balloon to more than 400 billion dollars, smashing a prior estimate of 341 billion dollars, a top US budget official said.
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Joel Kaplan, deputy director of the White House Office of Management and Budget (OMB), told reporters the sharp revision was partly attributable to increased government spending to help the hurricane-stricken US Gulf coast.
"Our new projections for 2006 will be released formally when the budget is released in the first week in February," Kaplan said, "but our preliminary calculations indicate that we'll project a deficit that increases from the 2005 level and exceeds 400 billion, or 3.1 percent of GDP."
Kaplan said "substantial investments" for rebuilding the country's devastated Gulf coast region, which received direct hits from hurricanes Katrina and Rita last year, would deepen the deficit.
The latest OMB estimates would push the budget further into the red compared with the fiscal year 2005 budget deficit of 319 billion dollars.
Last July, before the US was rocked by the twin hurricanes, the deficit for 2006 was forecast to strike 341 billion dollars.
Kaplan told reporters on a conference call that he was confident the forecast spike in the deficit for 2006 would only be a "temporary event", and that the policies adopted by the administration of US President George W. Bush would see the deficit returning to a "downward trajectory."
The Bush administration is seeking to cut the mammoth federal deficit in half by 2009.
Despite Kaplan's confidence, a senior senator of Bush's Republican Party said the growing deficit was "unacceptable".
"The expected increase in the deficit is to some degree understandable due to the extraordinary expenses incurred as a result of the Gulf Coast hurricanes," Senator Judd Gregg, the chairman of the powerful Senate Budget Committee, said in a statement.
"But it is still unacceptable," Gregg said.
Gregg said government spending had to be controlled, especially because of looming retirement costs facing the country.
The senator urged the passing of the Deficit Reduction Act, which seeks to save 40 billion dollars over five years, pending before the House of Representatives.
The US fiscal year runs from October 1 through to September 30.
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