January 27, 2006	Friday	Zilhaj 26, 1426

WASHINGTON, Jan 26: Congressional experts on Thursday projected a US budget deficit of $337 billion in the current fiscal year through September 30, a modest rise from last year but less dire than earlier forecasts.

The report by the nonpartisan office suggested a modest rise in the deficit after a 318-billion-dollar gap in fiscal 2005.

But the forecast is below a White House projection earlier this month that the deficit would top 400 billion dollars.

The CBO said that spending on recovery from Hurricane Katrina will increase the short-term deficit but the strong pace of economic growth will keep the deficit from spiraling higher.

The robust pace of economic growth in recent years has contributed to more jobs and higher standards of living and, for the budget, remarkable growth in federal receipts, the report said.

If the projections are correct, the deficit would be about 2.6 percent of US gross domestic product for the fiscal year that began October 1.

The CBO forecasts that real GDP will grow by 3.6 percent in calendar year 2006 and 3.4 percent in 2007.

The report said spending related to hurricane relief and ongoing military operations in Afghanistan and Iraq could add 20 billion to 25 billion dollars to its 2006 deficit projection.

The CBO report said mandatory spending for items such as pensions and medical care continues to pose significant fiscal problems in the longer-term outlook.

And lawmakers noted that the long-term deficit could be challenging because it assumes the expiration of many of the current tax cuts.

If Congress extends the lower tax rates, the deficit will be far higher.

While today’s news underscores the strength and resilience of our economy, it also reminds us that controlling the budget is a long-term, step-by-step commitment — one that takes resolve, particularly when extraordinary circumstances make it difficult, said House Budget Committee Chairman Jim Nussle.

Over the next few months, I will write a plan that builds on the efforts we’ve already made to create jobs, control spending, make government more efficient and reduce the deficit.—AFP