The U.S. budget deficit for next year will be $427 billion, the White House announced yesterday evening, after including for the first time a supplemental request of $80 billion needed in Iraq and Afghanistan. The U.S. Congressional Budget Office (CBO) had estimated earlier in the day that the federal government's budget deficit would run to $368 billion, but the White House's announcement ended speculation that this estimate was too low. According to the White House, $75 billion of the supplemental spending is intended for the U.S. military, while the remainder will be applied to a variety of programs, including training Iraqi and Afghani forces, building a new U.S. embassy in Baghdad, and aiding the new Palestinian leadership. The cost of supporting tsunami relief in the Indian Ocean region is not included in the supplemental. White House spokesman Scott McClellan said that the U.S. government was still planning to halve the deficit over the next five years, but media reports suggest that the government's plan to stimulate economic growth by lowering taxes cannot accomplish this goal, and that the cost of lowering taxes might itself further inflate the deficit.
