A new forecast on Friday showed US economic rescue efforts would push the budget deficit to the biggest percentage of the economy since 1945, as EU officials pledged aid to Eastern Europe but balked at boosting their own stimulus efforts.
The Congressional Budget Office (CBO) said its latest budget deficit estimate for this fiscal year, which ends on Sept. 30, would amount to US$1.845 trillion, or 13.1 percent of the country’s entire economic output.
The new projections were based on a sweeping US$3.55 trillion multi-year budget proposed by US President Barack Obama’s administration to Congress last month.
Obama has acknowledged the size of his budget’s US$1.752 billion deficit this year would require “some hard choices” on spending priorities.
The White House said the new CBO forecasts would not trim the Democratic president’s objectives or thwart his plan to halve the shortfall by 2013.
“None of the numbers today changed either the president’s objectives or his ability to achieve that deficit reduction,” White House spokesman Robert Gibbs said.
Republicans grabbed the ammunition to push back against Obama’s massive budget package that teams tax cuts and heavy spending.
“It’s worse than even the most pessimistic predictions for this budget,” Senate Republican Leader Mitch McConnell said. “If there was ever any doubt that the administration’s budget spends too much, taxes too much and borrows too much, it’s gone.”
The CBO’s red ink estimate would dwarf the nation’s record fiscal budget deficit last year of US$459 billion, which amounted to a relatively small 3.2 percent of GDP.
The agency estimated that for the current fiscal year, spending would soar 34 percent from the past year to US$4.004 trillion and revenues would plunge 15 percent to US$2.159 billion.
The deficit would remain high in the next fiscal year, at US$1.379 billion, before falling below the US$1 trillion mark in 2011, to US$970 billion.
Deficits then would shrink to about 2 percent of GDP by 2012 and remain steady through 2019.
Meanwhile, EU leaders pledged billions to support Eastern Europe and the IMF, but insisted they would not spend more on their own economies despite a record slump in industrial output.
Official figures on Friday showed industrial output in the 16 nations using the euro slumped 3.5 percent in January from December and slumped 17.3 percent over 12 months.
The slide, the sharpest on record, showed that the downturn in the industrial sector gathered pace at the start of the year.
In the 27-nation EU, industrial output fell 2.9 percent in January over one month and 16.3 percent over a year.
With some 4.5 million European jobs at risk this year, European leaders said current stimulus efforts must be allowed to work first before any more is done given the strain on public finances.
They agreed at a summit in Brussels to double loans available to eastern Europe to 50 billion euros (US$68 billion) and to add 75 billion euros to the IMF’s coffers.
Europe wants to double the resources of the IMF to US$500 billion, while Washington has suggested US$750 billion.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS