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EDITIONS
Friday, 12 July, 2002, 19:10 GMT 20:10 UK
US heads for $165bn budget deficit
President Bush at the White House on 12 July
Democrats point to President Bush's tax cuts
The White House says it expects the US federal government to end the year with a deficit of $165bn (106.3bn).

The debt has been swollen, in part, by anti-terrorism spending.

It will be the first time since 1997 that the federal government has gone into the red.


The president deals with the cards that were dealt him

Ari Fleischer, White House spokesman
But it is not a surprise - analysts have been forecasting deficits because of the fragile economy, tumbling financial markets and the cost of responding to the 11 September terrorist attacks.

And President George W Bush warned of a deficit in February - although the figure being spoken of then was a considerably lower $106bn.

In the last financial year - which ended on 30 September 2001 - there was a $127bn surplus.

Tax cuts

White House officials blamed the projected deficit on matters beyond President George W Bush's control.

"The president is the first to acknowledge that when nations have emergencies, when nations have wars and when nations have recessions, a deficit is an appropriate way for the country to fight the war and fight the recession," said White House spokesman Ari Fleischer.

"The president deals with the cards that were dealt him," he added.

But opposition Democrats said the budget's long-term prospects were worse than the President was suggesting.

They blamed the $1.35 trillion 10-year tax cut that he pushed through Congress last year, and the impact of higher defence and security spending.

Federal government revenues have also been falling below expectations because of last year's tax cut and the slowed economy.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Justin Webb
"The president's marks for handling of the economy are slipping"
See also:

12 Jul 02 | Business
10 Jul 02 | Business
29 Jun 02 | Business
23 Jun 02 | Business
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