$445 billion in the red

WASHINGTON — This year's federal deficit will soar to a record $445 billion, the White House projected Friday in a report provoking immediate election-season tussling over how well President Bush has handled the economy.

The administration's annual summertime budget update forecast shortfalls falling to $331 billion next year, then fading to $229 billion by 2009. For each year, the red ink was smaller than the White House envisioned six months ago.

The analysis was released the same day the Commerce Department said economic growth slowed this spring to an annual rate of 3 percent, well below the 3.8 percent spurt that many economists expected. The slowdown was caused by a spending cutback by consumers in the face of high gasoline costs, the department said.

Administration officials hailed the budget figures as a solid improvement over the deficits analysts forecast early this year and said they were on their way to their goal of halving this year's shortfall in five years. The White House estimated a $521 billion budget gap for 2004 in February, while the nonpartisan Congressional Budget Office predicted a $477 billion deficit.

"This improved budget outlook is the direct result of the strong economic growth the president's tax relief has fueled," said White House budget director Joshua Bolten.

He conceded that the red ink remained at "unwelcome" levels but said the report was still "good news" because of the reduction from earlier estimates.

Democrats contrasted the $445 billion projection with the $262 billion surplus for this year that Bush projected in 2001, when he was persuading Congress to approve the first of his tax cuts.

The shortfall will be the third consecutive — and ever-growing — deficit under Bush, following four consecutive annual surpluses under President Bill Clinton. Democrats said the turnabout underscored the damage done by Bush's tax cuts and his poor stewardship of the economy, and criticized the White House praise for the report.

"What we've got now is a president of the United States who is actively misleading the American people on the financial condition of the country," said Sen. Kent Conrad of North Dakota, top Democrat on the Senate Budget Committee. "Shame on him."

The White House attributed this year's improvement to the collection of $82 billion more in revenue than anticipated, reflecting stronger economic activity. That was partly offset by $6 billion more in spending than expected, largely for Medicaid and Medicare.