Another Year, Another Big Deficit

The White House estimated on Tuesday that the U.S. budget deficit for 2005, including an extra $80 billion for Iraq and Afghanistan operations, will total $427 billion.

“In the 2006 budget that we release on Feb. 7, OMB will estimate that the 2005 deficit, including the outlay effects from the supplemental we are discussing today, will be 3.5 percent of GDP or in nominal terms $427 billion,” said a senior administration official in a news briefing.

He referred to supplemental spending of more than $80 billion for military operations in Iraq and Afghanistan, making the White House estimate for the deficit higher than the $368 billion forecast by the Congressional Budget Office.

White House spokesman Scott McClellan insisted on Tuesday that the Bush administration was still on course on its goal of reducing the deficit in half over five years by promoting economic growth and controlling government spending, although analysts are skeptical it can be done.

Bush is under pressure to bring down the budget deficit as a way of restoring faith in the dollar, whose tumble against other currencies is increasingly being viewed with concern in global capitals.