Bush Seen Projecting Record Deficit

Tue Jul 27, 2004 04:42 PM ET

By Anna Willard and Caren Bohan

WASHINGTON (Reuters) - The White House is expected to project soon a record federal budget deficit of about $420 billion for 2004, which could give ammunition to both sides of the election-year debate over tax and spending policies.

Congressional sources said on Tuesday the White House review of the current fiscal year, which ends Sept. 30, was likely to project a deficit about $50 billion greater than 2003. But the new figure would be nearly $100 billion less than forecast five months ago.

A congressional aide who spoke on condition of anonymity said the $420 billion figure is "what people are talking about" on Capitol Hill. Others gave a similar figure, which would be a record in dollar terms.

White House budget office spokesman Chad Kolton declined to discuss specific projections but said the office had not yet briefed anyone at the Capitol on details of the review.

Republicans have said privately that they would view a better-than-expected projection as a sign of progress toward President Bush's goal of cutting the deficit in half in five years.

But the campaign of Democratic presidential candidate Sen. John Kerry ridiculed the prospect of portraying a $420 billion deficit projection as good news.

"It takes a lot of chutzpah," said Gene Sperling, a former economic aide to former Democratic President Bill Clinton and now an adviser to Kerry.

"There was supposed to be a $400 billion surplus this year," Sperling said, referring to Clinton-era projections. "That is an $800 billion deterioration and they are trying to brag about it."

The president has been accused of recklessness by Democrats who blame his huge tax cuts for the red ink. Bush has cited a recession and the aftermath of the Sept. 11, 2001, attacks, including wars in Afghanistan and Iraq.

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