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US faces $157 bn 2002 budget deficit
Washington, Aug 10: The US federal budget is headed for a deficit of $157 billion this year, Congress` nonpartisan fiscal watchdog estimated on Friday in the latest report illustrating the sharp reversal in the nation`s fiscal position as tax revenues plunged.
Washington, Aug 10: The US federal budget is headed for a deficit of $157 billion this year, Congress' nonpartisan fiscal watchdog estimated on Friday in the latest report illustrating the sharp reversal in the nation's fiscal position as tax revenues plunged.
After 10 months of the current fiscal year - which ends in September - the government was running a deficit of $150 billion, a sharp reversal from the $172 billion surplus recorded over the same period last year, the Congressional Budget Office said in its August monthly budget review. A 2002 deficit would break a run of four straight years of surpluses in Washington. The government posted surpluses of $236 billion in fiscal year 2000 and $127 billion in 2001.
The CBO projection was broadly in line with those of other government and private analysts. The White House budget office in July forecast the government would run a $165 billion deficit this year.
The reemergence of deficits has become a potent political issue ahead of November elections, where small swings could shift control in both the House of Representatives and Senate.
Democrats generally blame President Bush's $1.35 trillion tax cut in 2001 and argue the shortfalls will erode Social Security and Medicare at a time when the massive baby boom generation is nearing retirement. "We warned the administration they were leaving no room for error and, over the last 18 months, we have seen our warnings vindicated," South Carolina Rep. John Spratt, the top Democrat on the House Budget Committee, said in a statement.
Republicans say the tax cut has been a key factor in supporting a nascent US economic rebound, which they argue will ultimately restore surpluses. They say the soft economy and costs of the US war on terrorism are also responsible for the return of deficits.
In its July report, the White House budget office attributed the majority of the sudden fall in tax revenues this year to the declining US stock market and its corresponding effect on capital gains tax receipts.
"This is due almost entirely to stockmarket related income," White House budget director Mitch Daniels said. "No one, as far as I know, really saw this coming."
The CBO said weaker-than-expected individual tax payments and larger-than-expected individual tax refunds accounted for roughly 70 per cent of the decline in revenues - with a drop in corporate tax receipts making up around another 20 per cent.
"Other factors contributing to the revenue shortfall probably include changes in the realisation of capital gains," it said. The agency is due to release more comprehensive, 10-year budget projections on August 27. Bureau Report
After 10 months of the current fiscal year - which ends in September - the government was running a deficit of $150 billion, a sharp reversal from the $172 billion surplus recorded over the same period last year, the Congressional Budget Office said in its August monthly budget review. A 2002 deficit would break a run of four straight years of surpluses in Washington. The government posted surpluses of $236 billion in fiscal year 2000 and $127 billion in 2001.
The CBO projection was broadly in line with those of other government and private analysts. The White House budget office in July forecast the government would run a $165 billion deficit this year.
The reemergence of deficits has become a potent political issue ahead of November elections, where small swings could shift control in both the House of Representatives and Senate.
Democrats generally blame President Bush's $1.35 trillion tax cut in 2001 and argue the shortfalls will erode Social Security and Medicare at a time when the massive baby boom generation is nearing retirement. "We warned the administration they were leaving no room for error and, over the last 18 months, we have seen our warnings vindicated," South Carolina Rep. John Spratt, the top Democrat on the House Budget Committee, said in a statement.
Republicans say the tax cut has been a key factor in supporting a nascent US economic rebound, which they argue will ultimately restore surpluses. They say the soft economy and costs of the US war on terrorism are also responsible for the return of deficits.
In its July report, the White House budget office attributed the majority of the sudden fall in tax revenues this year to the declining US stock market and its corresponding effect on capital gains tax receipts.
"This is due almost entirely to stockmarket related income," White House budget director Mitch Daniels said. "No one, as far as I know, really saw this coming."
The CBO said weaker-than-expected individual tax payments and larger-than-expected individual tax refunds accounted for roughly 70 per cent of the decline in revenues - with a drop in corporate tax receipts making up around another 20 per cent.
"Other factors contributing to the revenue shortfall probably include changes in the realisation of capital gains," it said. The agency is due to release more comprehensive, 10-year budget projections on August 27. Bureau Report