The new forecast is 50% bigger than the Bush administration’s projection five months ago, aggravated by a weak local economy, tax cuts and Washington’s invasion of Iraq.
The shortfall will balloon again to $475 billion in the next fiscal year, beginning on 1 October.
Democrats, gearing up for next year’s presidential elections, swiftly pounced on the figures. Former House majority leader Representative Richard Gephardt, a Democrat presidential candidate, described the deficit numbers as a result of US President George Bush’s “abysmal and poor” economic record.
Democrats also said the figures masked a budget problem far worse than advertised.
“Total fiction,” said Senator Kent Conrad, a top Democrat on the Senate Budget Committee, of the new Bush numbers.
Greenspan supports cuts
But Federal Reserve Chairman Alan Greenspan told a House committee hearing that he still supports tax cuts to kick-start the lagging economy.
“Restoring a balanced budget is an important priority for this administration,” said White House budget director Joshua Bolten. “But a balanced budget is not a higher priority than winning the global war on terror, protecting the American homeland or restoring economic growth and job creation.”
In his first months in office in 2001, Bush predicted federal surpluses totalling $5.6 trillion from 2002 through 2011. Currently, actual deficits and Bush projections total $2.1 trillion in red ink for the first seven years of that period.
Bolten said the largest factor for the turnabout had been lower revenue and higher spending caused by the weak economy accounting for 53% of the change in the projected 2003 deficit.