US GOVTS: CBO Predicts a $172B Budget Deficit in FY2007

The Associated Press reported that the Congressional Budget Office (CBO) projects a $172 bln budget deficit for FY2007. The figure was supposedly disclosed by a congressional aide ahead of the release of the CBO's "The Budget and Economic Outlook: Fiscal Years 2008 to 2017" at 15:00. The report also predicts the budget could swing back to a surplus by 2012, although that would require President Bush's tax cuts to expire at the end of 2010.

The CBO's report also underestimates the cost of military operations in Iraq. The CBO's estimates are typically put together before any supplemental spending has been approved. In recent years the funding for the war in Iraq has largely come from supplemental spending bills making the CBO estimates published early in the year too low.