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Budget surplus on verge of becoming a deficit

By Johnathan Karl
CNN Washington Bureau

WASHINGTON (CNN) -- The chairman of the Senate Budget Committee warned Tuesday that the record budget surplus is on the verge of turning into a deficit, as Congress faces significantly higher spending obligations and declining tax revenues.

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"We've had a double whammy: We've been the victims of a surprise terrorist attack and most forecasters believe our economy is heading for recession," said Sen. Kent Conrad, D-North Dakota.

According to Conrad, "back of the envelope" calculations by the Congressional Budget Office show the surplus for 2002, most recently projected to be $176 billion, is now expected to be less than $50 billion.

That figure does not include expected new spending to increase airline security, compensate victims of the attacks, stimulate the economy and pay for further defense and security needs. Those additional measures are expected to cost significantly more than $50 billion.

Part of the problem, Conrad said, is the economic slowdown is expected to result in a loss of about $60 billion in tax revenue next year.

"The Medicare surplus is gone, the Social Security surplus is almost all gone," Conrad said. "But we've had no choice ... we must do what is necessary to strengthen the economy and defend the nation."


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