U.S. deficit takes a dip, but it's likely temporary

President Bush is crediting his tax cuts for new deficit figures that are far lower than earlier White House estimates, but the red ink is expected to climb again next year.

White House figures released Tuesday estimate the federal deficit for the 2006 budget year ending Sept. 30 will be $296 billion, much better than the $423 billion Bush predicted in February and a slight improvement over last year's $318 billion.

Impressive corporate profits and big income gains by the wealthy were largely responsible for driving up tax revenues and, in turn, pushing the deficit down.

The new projections show the deficit for next year rising to $339 billion, reflecting Iraq war costs and cautious revenue projections.

State Dept. databases struck by hackers

The State Department is recovering from large-scale computer break-ins worldwide over the past few weeks that appeared to target its headquarters and offices dealing with China and North Korea.

Investigators believe hackers stole sensitive U.S. information and passwords and implanted back doors in unclassified computers to allow them to return at will, said U.S. officials who requested anonymity.

Novak says he named sources on CIA leak

Syndicated columnist Robert Novak acknowledged Tuesday for the first time that he identified three confidential administration sources during testimony in the CIA leak investigation, saying he did so because they had granted him legal waivers to testify and because special prosecutor Patrick Fitzgerald already knew of their role.

In a column to be published today, Novak said he told Fitzgerald in early 2004 that White House senior adviser Karl Rove and then-CIA spokesman Bill Harlow had confirmed for him, at his request, information about CIA agent Valerie Plame. Novak said he also told Fitzgerald about another senior administration official who originally provided him with the information about Plame, and whose identity he says he cannot reveal even now.

The Veterans Affairs data analyst who lost sensitive information on 26.5 million veterans showed poor judgment by taking the data home, but his supervisors are also to blame for lax policies, investigators said Tuesday.

The FBI has determined the sensitive files were neither compromised nor accessed, the VA announced.

The bureau recently completed a full forensic analysis of the stolen laptop and external drive, which were recovered June 29.

In a blistering report, Veterans Affairs inspector general George Opfer detailed a series of missteps, inadequate security measures and a general lack of concern in the events leading to the May 3 burglary at the data analyst's Maryland home.

HUD earmarks aid for hurricane victims

The federal government will pay $4.2 billion into a program to help Louisiana residents rebuild or sell houses severely damaged by Hurricanes Katrina and Rita, officials said Tuesday.

The Department of Housing and Urban Development also announced it would provide $1 billion for hurricane-related housing needs in Mississippi, Texas, Alabama and Florida.

Also

Port security: The Senate agreed Tuesday to boost spending at U.S. ports and borders by nearly $1 billion next year to pay for additional security and staffing.

Indian money: A federal appeals court removed U.S. District Judge Royce Lamberth from a longstanding legal battle involving billions of dollars in Native American oil and gas royalties, saying the judge appeared to be biased against the Interior Department.

Compiled from The Associated Press