Ok, Here is the deal. I read this article at bloomberg.com. Here is the text of the article. Following it is a link to the article itself if you would like to check it out.
I thought it was very compelling and very straight forward a very clear article without any of the hype from either side. Just the facts ma'am.
As a new home owner, I am acutely aware of what would happen if my bank called in my mortgage. I wonder if those responsible in the Bush administration understand this same concept. I also wonder who is responsible in that administration.
White House Forecasts Record $427 Bln Budget Deficit
Jan. 25 (Bloomberg) --
The Bush administration predicted the federal budget deficit will reach $427 billion this fiscal year, bigger than the record shortfall of last year and almost $100 billion higher than the gap it anticipated six months ago.
The deficit estimate includes added spending for military operations in Iraq and Afghanistan, an administration official told a briefing today. The forecast, due in the budget President George W. Bush sends Congress on Feb. 7, was released early to head off pressure to increase spending, another administration aide said. Both officials spoke on condition of anonymity.
If today's forecast proves accurate the deficit would be the biggest ever in dollars, topping last year's $412 billion shortfall. The new prediction is also greater than the $331 billion the administration anticipated for fiscal year 2005 last July and the $364 billion it projected in last year's budget.
``The financial affairs of this country are in very bad shape,'' Senate Minority Leader Harry Reid said. ``We have red ink as far as you can see, and there's no way to get around that,'' said Reid, a Nevada Democrat.
Earlier today, the Congressional Budget Office said this year's budget deficit would reach $368 billion and would total $855 billion over the next 10 years. The CBO didn't include war costs in its estimate.
Bush has pledged to cut the deficit in half in five years, and has called on Congress to prevent his income, dividend and estate tax cuts from expiring. ``We've got a revenue shortage,'' Senator Dianne Feinstein, a California Democrat, said after the CBO released its numbers. ``They effectively kill making tax cuts permanent.''
Iraq Funds
The administration is seeking $80 billion in added defense spending, mostly for Iraq, the Bush aide said. The request may be a little higher in the Feb. 7 request and includes about $75 billion for military operations and maintenance, the aide said.
The administration declined today to provide a deficit estimate for fiscal 2006, which begins Oct. 1. That figure will be included in the Feb. 7 budget, the aide said.
The estimated $427 billion deficit for fiscal 2005 is 3.5 percent of gross domestic product, the aide told reporters. That compares with 3.6 percent of GDP last year. The CBO's estimate of a $368 billion deficit would be 3 percent of GDP, the aide said.
Timing
The CBO's deficit forecast would reach $400 billion, or 3.3 percent of GDP, if funding for Iraq, Afghanistan and programs such as Palestinian aid were included, the aide said.
Bush, in a written statement, said most of the supplemental funds will support U.S. troops by providing them equipment and other supplies. The funding also provides for the continued pursuit of al-Qaeda and other terrorists in Afghanistan and elsewhere, and for training and equipment for Iraqi and Afghan security forces.
Officials said they announced the $80 billion request now because of Iraqi elections this weekend. The request is meant to signal that the U.S. will remain firm, that there will be enough money to carry out the mission, and that the U.S. will support whatever government emerges after the elections, they said.
There likely would be a supplemental request for fiscal 2006, the officials said, declining say how much or when it might be sought.
With the exception of Defense Department and Homeland Security spending, Bush and his aides have said they intend to allow almost no increase in discretionary spending controlled by Congress.
`Too High'
The White House deficit estimate is too high, said Drew Matus, senior economist at Lehman Brothers Inc. in New York.
``Given spending initiatives, anything above the CBO estimate of $400 billion including Iraq is too high,'' Matus said. It is ``better to be too high and announce a positive surprise than too low and adjust higher,'' Matus said in an e-mail.
White House Chief of Staff Andrew Card said in a speech to the Chamber of Commerce on Jan. 11 that the White House would exercise ``very strong discipline'' in its budget proposal. Representative Rob Portman, an Ohio Republican, said he expects non-defense and homeland security spending to increase ``between zero and 1 percent.''
The CBO's deficit estimate doesn't include the costs for Bush's proposal to allow younger workers to invest part of their Social Security taxes in private accounts. Bush's plan may increase the deficit by $1 trillion to $2 trillion over a decade, according to the CBO.
If you add in Social Security and extending tax provisions ``you are looking at deficits in the $400 billion to $500 billion range every year into the next decade rather than the deficit being cut in half,'' said Stanley Collender, an author on budget issues and senior vice president at Financial Dynamics Inc., a Washington consulting firm.
To contact the reporter on this story:
Richard Keil in Washington at dkeil@bloomberg.net.
To contact the editor responsible for this story:
Glenn Hall at ghall@bloomberg.net.
http://quote.bloomberg.com/apps/news?pid=10000006&sid=akyMVC8uG8_Y&refer=home
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