July 12, 2007	Thursday	Jamadi-us-Sani 26, 1428

WASHINGTON, July 11: The White House on Wednesday cut its forecast for the federal budget deficit this year to $205 billion, saying an expanding economy will boost tax revenues.

The forecast for the 2007 fiscal year to September 30 represented a reduction of $43 billion or 18 per cent from last year, the White House said in a semi-annual budget review.

“This projected deficit is 1.5 per cent of gross domestic product (GDP), well below the 40-year average of 2.4 per cent,” a White House statement said.

“This estimate is also $39 billion lower than the estimate in the February budget, primarily due to higher-than-expected tax receipts.”

The White House repeated its goal of balancing the budget by 2012, and said this would be the case based on President George W. Bush’s current spending programmes. But the Republican president’s term ends in January 2009.

Over the first eight months of the fiscal year, the US government has run a deficit of $148.5 billion, compared with $227 billion in the 2006 fiscal year.

Critics of the administration said Bush has squandered the budget surplus he inherited in 2001 by implementing lavish tax cuts for the wealthy.

Bush has said the tax cuts have stimulated the economy and that most of the new spending has been for his worldwide war on terror.

“Nothing in the administration’s deficit announcement changes the failed fiscal record of President Bush,” said Senate Budget Committee chairman Kent Conrad, a Democrat.

“He has increased spending by nearly 50 per cent since taking office, while at the same time repeatedly cutting taxes primarily on the wealthiest. The result has been that the $5.6 trillion projected surplus he inherited has been wiped out. And debt has exploded on his watch -- rising from $5.8 trillion in 2001 to approximately $9 trillion by the end of this year.”

But Republican Senator Judd Gregg said the latest budget report “is further proof that the current tax system is working.”

He added: “Unfortunately, this economic boon for American families and small businesses may soon come to an end, following the passage of a Democratic budget that contains the largest tax hike in the nation's history.”—AFP