- The Washington Times - Tuesday, July 11, 2006

2:53 p.m.

The federal deficit is projected to be $296 billion this year, President Bush announced today — $127 billion less than predicted just six months ago and putting the administration a year ahead on its pledge to cut the deficit in half by 2009.

“This economy’s growing, federal taxes are rising, and we’re cutting the federal deficit faster than we expected,” Mr. Bush said, turning the announcement into a victory lap for his tax-cutting policies during his first administration.

However, Mr. Bush said tackling the deficit in the long run will require action on Social Security, and he challenged Congress to stop playing politics on the issue and instead to have a “sense of obligation” to fix it.

“The time of playing politics with Social Security and Medicare and Medicaid is over,” he said. “We need to fix this for younger generations of Americans to come.”

That drew a loud, sustained applause from administration officials and Republican members of Congress in the room.

The second-loudest applause came when Mr. Bush announced the deficit figure of $296 billion for fiscal 2006, which ends Sept. 30.

The deficit still would be the fourth-largest in dollar terms in the nation’s history, though it puts the president ahead of schedule to cut the deficit in half by 2009, compared with where it was in 2004 when he made the vow.

At that time, the deficit was projected to reach $521 billion, or 4.5 percent of the gross domestic product. Cutting that in half would mean an annual deficit of about $260 billion, or about 2.2 percent of GDP.

Some Republican lawmakers joined Mr. Bush for his announcement, including Sen. Ted Stevens, Alaska Republican and a senior member of the Senate Appropriations Committee, and Rep. Mike Pence, Indiana Republican and budget hawk chairman of the Republican Study Committee. No Democrats were present.

“Todays news is not cause for complacency, much less celebration. We are not on a glide path to a balanced budget,” said Rep. John Spratt of South Carolina, the top Democrat on the House Budget Committee.

While he called the lower deficit figure “welcome,” he said it is still $600 billion below the amount projected for 2006 when Mr. Bush took office in 2001.

In addition to the deficit, which is the yearly shortfall, Mr. Spratt said Mr. Bush also has presided over a $3 trillion increase in the national debt, which is the accumulated amount owed by the federal government.

Ninety percent of the $127 billion reduction is due to increased revenues from economic growth, while just $12 billion, or about 10 percent, is due to lower-than-expected spending.

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