US budget deficit to fall to $260 billion: CBO

The US budget deficit is forecast to surpass administration hopes by falling to 260 billion dollars this fiscal year, thanks to booming tax revenues, congressional experts said Thursday.
The Congressional Budget Office (CBO) said it now expects the deficit to fall 58 billion dollars from fiscal 2005 owing to "higher-than-anticipated revenues, mostly from individual and corporate income taxes".
The projection by the non-partisan office would bring the deficit down to 2.0 percent of gross domestic product, from 2.6 percent of GDP last year.
But in the 2007 fiscal year, according to the CBO, the deficit will rise again to reach 286 billion dollars.
White House spokesman Tony Snow played down the CBO's projection that the deficit would go up again next year, calling economic forecasting an "inexact science".
"The president's confident that we remain on a path to cut the deficit in half by his stated deadline (of 2009), if not before, and that the way you do that is by promoting ... growth," he told reporters.
The figure for this year of 260 billion dollars is a whopping 112 billion dollars lower than the amount estimated by the CBO when it analysed President George W. Bush's budgetary proposals in March.
Unveiling a mid-year budget review last month, Bush forecast the deficit would fall to 296 billion dollars for the current fiscal year.
The president, facing sagging approval ratings on several fronts, hailed the news as validation of his economic policies.
"The economic growth fuelled by tax relief has helped send our tax revenues soaring," he said on July 11, noting that revenues are expected to increase 11 percent, or 246 billion dollars, in the current fiscal year. But critics contend that the budget deficit still remains high due to a lack of White House fiscal discipline, and will worsen because of the long-term costs of retirement and health care for the baby-boom generation.
Democrats argue that if future retirement costs are added into the accounting mix, the real budget deficit is now 180 billion dollars higher than officially reported.
The CBO said that if the bulk of Bush's multi-billion-dollar tax cuts expire as scheduled in 2010, the US budget deficit would shrink to just 0.4 percent of GDP by 2016.
The president, however, has loudly and repeatedly called on Congress to make the tax cuts permanent.