U.S. Budget Deficit Projected To Hit $337 Billion

Congressional experts projected a U.S. budget deficit of $337 billion in the fiscal year through September 30, a modest rise from last year but less dire than earlier forecasts.

The report, issued Jan. 26, by the nonpartisan Congressional Budget Office (CBO) suggested a rise in the deficit after a $318 billion gap in fiscal 2005. But the forecast is below a White House projection earlier this month that the deficit would top $400 billion

The CBO said that spending on recovery efforts related to 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% of U.S. gross domestic product for the fiscal year that began October 1.

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

Copyright Agence France-Presse, 2006

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