WASHINGTON — A Bush administration official said Monday
the next government will inherit a record federal budget deficit for next year that approaches $490-billion (U.S.).
The official said the deficit was being
driven to record levels by the sagging economy and the stimulus payments being made to 130 million households in an effort to keep the country from falling into a deep recession. A deficit approaching $490-billion would easily surpass the record deficit of $413-billion set in 2004.
The administration official spoke on condition of anonymity because the new estimate had not been formally released.
White House press secretary Dana Perino had no comment on the $490-billion figure. But she told reporters that the White House and lawmakers acknowledged months ago that they were going to increase the deficit by approving a short-term boost for the slumping economy.
“
Both parties recognized that the deficit would increase, and that that was going to be the price that we pay,” Ms. Perino said.
The White House had predicted next year's deficit at $407-billion. Figures for the 2008 budget year ending Sept. 30 may also set a record.
February's White House estimate predicted the next administration would inherit a $407-billion deficit. That's expected to rise too, given the continuing weak performance of the economy.The numbers represent about 3 per cent of the size of the economy, which is the deficit measure seen as most relevant by economists. That's considerably smaller than the deficits of the 1980s and early 1990s, when Congress and earlier administrations cobbled together politically painful deficit-reduction packages.
Still, the new figures are so eye-popping in dollar terms
that it may restrain the appetite of the next president to add to it with expensive spending programs or new tax cuts.The deficit for 2007 totalled $161.5-billion, which represented the lowest amount of red ink since an imbalance of $159-billion in 2002. The 2002 performance marked the first budget deficit after four consecutive years of budget surpluses.
That stretch of budget surpluses represented a period when the country's finances had been bolstered by a 10-year period of uninterrupted economic growth, the longest period of expansion in U.S. history.
However, the U.S. fell into a recession in March 2001, and government spending to fight the war on terrorism contributed to pushing the deficit to a record in dollar terms in 2004.
The figures to be released later will paint a picture of the financial health of the government that President Bush's successor will inherit, as well as updated predictions of the health of the economy.
White House budget director Jim Nussle and Edward Lazear, chairman of the president's Council of Economic Advisors, were scheduled to officially release the administration's updated forecasts at an early afternoon news conference Monday
