Yesterday the House adopted the conference report on the 2005 emergency supplemental (H.R. 1268) to fund war operations in Iraq and Afghanistan. Next week the Senate will most likely approve the bill as well and it will go to the President for his signature. In clearing the measure, the House narrowly rejected a Democratic effort to add another $284 million in border security funding through a motion to recommit the measure back to conference. The $82 billion measure appropriates $75.9 billion towards war spending, bringing the total level of war spending since the spring of 2003 to $228.4 billion. See the National Priorities Project for a great breakdown of the cost of the war by state

Yesterday, the Congressional Budget Office released a monthy budget update for FY 2005, in which they said the budget deficit could drop to as low as $350 billion (the deficit last year reached a record-high $412 billion). CBO states this drop is attributable to non-witheld income and payroll tax receipts jumping by 33 percent (the highest rate in four years) and corporate tax receipts jumping 47 percent, increasing overall revenue well beyond projections. While Republicans claim the CBO estimate means their fiscal policies to reduce deficits are working, Democrats counter the deficit would still be rampant, whether or not it fell, and that continuous deficits are adding to the deterioration of the fiscal health of the nation. The updated projections that the deficit may drop by $65 billion this year does not alter the fact Bush came into office with a projected 10-year $5.6 trillion surplus and quickly instituted structural deficits through irresponsible tax and spending policies. Despite historically large deficits, the president has continued to push some of the same policies that brought the U.S. so far into the red, including his debt-financed Social Security proposal and extension of the first term tax cuts. While CBO is predicting in their monthly budget review the budget deficit may be smaller than originally thought, it is important to remember this is a short timeframe. Looking at the effect of the president's tax policies beyond the narrow five-year window included in the congressional budget resolution, we see the costs of those policies explode. So while news of increased tax receipts is good for a government running large deficits, it is important to remember the future costs of some of Bush's economic policies to put in context the direction the deficit is headed.

The House is expected to give final approval to an $82.04 billion "emergency" supplemental spending bill as early as tomorrow after House and Senate conferees announced they have reached agreement on the details of the legislation needed to fund the wars in Iraq and Afghanistan. The legislation (HR 1268) includes a few additional spending items for tsunami relief, foreign aid, and border security in the southwest U.S. The final cost is just above the $81.9 billion President Bush urged Congress to appropriate for the spending bill. The figure grew during talks where Lewis was convinced to include some of the money the Senate wanted to address security concerns at U.S. borders, particularly in the Southwest. The conferees agreed to provide another $75.9 billion for the Pentagon to pursue its military actions in Iraq and Afghanistan. The figure is $1 billion more than Bush asked for, and represents a compromise between the $74.8 billion Senate level and the $76.9 billion sought by the House. More details on supplemental OMB Watcher coverage of supplemental Bush Criticized Over War Budgeting Process

Federal Budget

• Congress Passes Irresponsible Budget Resolution
• Despite Public Disdain, Private Accounts Will Not Die
• Bush Criticized for Continuing 'Dishonest' War Budgeting
• Senate Passes Emergency Supplemental; Bill Held Up in Conference
• Economy and Jobs Watch: Economic Recovery Still Shortchanging Workers