The Congressional Budget Office is projecting that this election-year's federal deficit will reach $422 billion, congressional aides said Tuesday, the highest ever, yet a smaller shortfall than analysts predicted earlier this year.
The figure, provided by aides who spoke on condition of anonymity, is sure to provide political fodder for both parties during the remaining two months of the.
"This is by far the biggest deficit in American history," said Thomas Kahn, Democratic staff director of the House Budget Committee. "There is no credible way Republicans can portray the record deficits they have created as good news."
"Deficits are going down, jobs are going up, the economy continues to improve," said Sean Spicer, Republican spokesman for the House Budget panel. "I don't see how you can't be happy with that news."
Democrats plan to cite it as evidence that President Bush's tax and economic policies have been a disaster. But Republicans are ready to assert that the numbers show things are improving.
The number was being released later Tuesday in the annual summertime forecast issued by the nonpartisan Congressional Budget Office.
The projection by Congress' nonpartisan budget analysts would surpass last year's $375 billion shortfall, the current record.
When adjusted to erase the effects of inflation, the 2004 projected deficit exceeds the value of every annual shortfall since World War II.
Tuesday's CBO estimate should prove fairly accurate because the federal budget year, which runs through Sept. 30, has less than one month to go. The government is expected to spend about $2.3 trillion this year, which means it will be borrowing about one of every five dollars it spends.
In a preliminary report in early August, the budget office said it expected this year's shortfall to hit $422 billion. That was an improvement from its $477 billion forecast in January, a revision the office attributed mostly to stronger than anticipated revenue collections.
CBS News Correspondent Mark Knoller notes that the White House's own Office of Management and the Budget issuedof a $445 billion deficit on July 30.
That amounts to 3.8 percent of the total economy, which the White House has said is manageable.
In his standard stump speech, the president never mentions the federal deficit — or the national debt for that matter — both of which have reached all-time highs on his watch. However, Mr. Bush does claim to be pursuing a plan to cut the deficit in half over five years. but even then, deficit spending would continue through a second term — should Mr. Bush win one.
After a fleeting four-year return to annual budget surpluses under President Clinton, deficits have returned with a vengeance under President Bush.
Republicans who spent the 1980s and 1990s railing against budget shortfalls have argued that fighting wars in Iraq and Afghanistan, battling terrorism and righting the economy are higher priorities.
They also argue that today's deficits are no reason for panic because as a percentage of the overall economy, they are smaller than the largest shortfalls under President Reagan. Many economists consider that ratio the most significant measure of the harm deficits can cause.
Democrats say the shortfalls are forcing policy-makers to restrain spending for schools, domestic security and other priorities, while driving up the government's borrowing costs. And they say deficits have worsened because of the price tag of the tax cuts that Mr. Bush and his GOP allies have pushed through Congress.
Whatever the short-term deficits, most analysts agree the budget picture will worsen considerably within the coming decade. That is when the huge baby boom generation will begin relying increasingly on Social Security and Medicare, driving those programs' costs upward.