The Congressional Budget Office has said that the US budget deficit will reach a record $427 Billion in 2005! Now please remember that at the end of Clinton's reign there was a budget surplus (although I've forgotten how much). Now certainly the war in Iraq has a lot to blame for this figure, with Bush asking for another $80 billion only the other day. The CBO isn't predicting any improvements either with an estimated deficit of around $855billion for the years of 2006 to 2015. This looks like a positive reading of the problems though as other analysts have siad the figures don't take into account any further military costs or the potential $2-$3.8 TRILLION costs of the Presidents plans to revamp state pensions and extend tax cuts. Just what the country needs when it's so heavily in debt - more tax cuts!!!
Anyway, one of the big loosers seems to be public spending. With rising debts the administration has said they'll be looking at cutting public spending to help bring the deficit down. Hmm.... I wonder whom those cuts will be hitting whilst the rich get tax cuts?
The CBO has also said it envisages an 'orderly' decline in the dollar over the next two years. This is terrible news for companies that import to the States and is something that the European and Asian markets are already worried about. Countries such as China, who lend the States a hell of a lot of money at present, may be inclined to put some economic pressure on the US to get there house in order sooner rather than later or we'll be seeing an even worse worldwide economic decline and recession if we're not careful. It certainly looks like the old benchmark of £1 = $2 may go beyond even that! Not exactly the news people would be hoping for at the beginning of Bush's second term. One wonders if they'll be an America left for whomever succeeds him (be they Democrat or Republican) or whether the country will have to file for bankcruptcy and forfeit some of its States to countries such as China instead of meeting its repayments?
US Budget Deficit To Reach $427bn (BBC News Online; Tuesday 25th January 2005)
