So much for cutting the deficit in half…
White House sees 2006 budget gap of more than $400 billion – Jan. 12, 2006
White House sees $400B deficit in ’06
Administration says costs of Katrina recovery contributed to budget strain.
January 12, 2006: 5:09 PM EST
WASHINGTON (Reuters) – The White House projected a 2006 budget deficit of more than $400 billion Thursday, a sharp increase over a July forecast, and blamed the surge largely on costs of recovering from Hurricane Katrina.
The new deficit projection was likely to further intensify an election-year debate about whether to renew President Bush’s tax cuts, which he says are essential for maintaining economic growth but which Democrats say are a drain on federal coffers.
The deputy director of the White House Office of Management and Budget, Joel Kaplan, said White House officials believed that by sticking to Bush’s economic policies and spending restraint “we will return to our downward trajectory and remain on path to cut the deficit in half by 2009.”
A July forecast had projected the 2006 budget deficit at $341 billion. Kaplan said preliminary calculations indicate the deficit will exceed $400 billion, or 3.1 percent of gross domestic product.
Kaplan said the costs of recovering from Katrina and a second hurricane, Rita, represented a “temporary event.”