WASHINGTON – The federal deficit will swell to a record $422 billion this year but fall short of even more dire forecasts, Congress’ top budget analysts projected Tuesday.
The nonpartisan Congressional Budget Office said the shortfall would shrink to $348 billion next year, still the third worst ever in dollar terms. Last year’s $375 billion gap was the previous record.
The projections reverberated on the campaign trail, where Democrats immediately criticized President Bush for what will be the fourth consecutive year in which the budget’s bottom line has worsened.
“‘W’ stands for wrong, the wrong direction for America,” said Democratic presidential candidate Sen. John Kerry of Massachusetts, referring to Bush’s middle initial.
A $422 billion deficit would be the biggest dollar amount in history, though the shortfalls of World War II were larger when the figures are adjusted to even out the impact of inflation.
But Republicans noted that the forecast was better than the $477 billion deficit congressional analysts predicted in March and the $445 billion gap the White House expected in July. Coupled with other recent data, they said, the new numbers were evidence of an improving economy.
The improvement is “a sign of the economic growth that is a result of President Bush’s leadership on tax relief,” said Tim Adams, policy director for the Bush campaign.
The government is expected to spend nearly $2.3 trillion this year, which means it will borrow about one of every five dollars it spends.
The congressional report envisions shortfalls gradually easing to $65 billion by 2014 for a 10-year total of nearly $2.3 trillion. But the analysts noted that their forecast, meant as a neutral measuring stick, assumed no changes in taxes or spending for the next decade.
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