by Calculated Risk on 1/13/2006 01:33:00 AM

The Washington Post reports: Deficit Could Top $400 Billion

Driven by the cost of hurricane relief, the federal budget deficit is expected to balloon back above $400 billion for the fiscal year that ends in September, reversing the improvements of 2005, a White House official told reporters yesterday.

But some budget analysts cautioned that the estimate should be considered more of a political mark to inform the coming budget debate than an economic forecast.

This is the third straight year in which the White House has summoned reporters well ahead of the official budget release to project a higher-than-anticipated deficit. In the past two years, when final deficit figures have come in at record or near-record levels, White House officials have boasted that they had made progress, since the final numbers were below estimates.

"This administration has a history of overestimating the deficit early in the year, lowering expectations, then taking credit when it comes in below forecast," said Stanley E. Collender, a federal budget expert at Financial Dynamics Business Communications. "It's not just a history. It's almost an obsession."

The General Fund deficit will be close to $600 Billion this year - the White House is reporting the Enron style "unified budget deficit". But kudos to WaPo writer Jonathan Weisman for correctly describing the political game the White House has been playing with the budget for the last few years.

The bottom line is simple: the General Fund budget is a disaster and the situation continues to get worse.