White House forecasts record $427 Bln budget deficit

Jan 26 | Updated: Jan 27 2005, 05:30am hrs
The Bush administration predicted the federal budget deficit will reach $427 billion this fiscal year, bigger than the record shortfall of last year and almost $100 billion higher than the gap it anticipated six months ago.

The deficit estimate includes added spending for military operations in Iraq and Afghanistan, an administration official told a briefing today.

The forecast, due in the budget President George W. Bush sends Congress on Feb. 7, was released early to head off pressure to increase spending, another administration aide said. Both officials spoke on condition of anonymity.

If todays forecast proves accurate the deficit would be the biggest ever in dollars, topping last years $412 billion shortfall. The new prediction is also greater than the $331 billion the administration anticipated for fiscal year 2005 last July and the $364 billion it projected in last years budget.

The financial affairs of this country are in very bad shape, Senate Minority Leader Harry Reid said. We have red ink as far as you can see, and theres no way to get around that, said Reid, a Nevada Democrat.

Earlier today, the Congressional Budget Office said this years budget deficit would reach $368 billion and would total $855 billion over the next 10 years.