Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

U.S. Federal Deficit Climbs to $374Bln

WASHINGTON -- The U.S. federal deficit soared to $374.2 billion in 2003, the White House said, a record total that more than doubled last year's red ink and looked like a prelude to even gloomier numbers.

White House budget director Joshua Bolten conceded that worse fiscal numbers were on the horizon, estimating the gap for the new year "will likely exceed $500 billion even with the strengthening economy."

He said spending restraint and policies aimed at bolstering the economy can wrench the budget onto a course to halve deficits by 2009.

Because the $374.2 billion shortfall marked an improvement from a $455 billion projection the White House made in July, administration officials cited it as evidence that their attempts to fortify the economy were working.

"Today's budget numbers reinforce the indications we have seen for some months now: that the economy is well on the path to recovery," Treasury Secretary John Snow said Monday.

Democrats mocked the administration's sunny interpretation and tried to focus attention on the numbers for the budget year just ended. They noted that last year's red ink was more than twice 2002's $158 billion, and surpassed the $290 billion record set in 1992.

"I'm somewhat amused to see them say they thought that was good news," said Senator Kent Conrad of North Dakota, the top Democrat on the Senate Budget Committee.

Democrats blamed President George W. Bush for wiping out four years of annual surpluses under President Bill Clinton through a series of tax cuts. Republicans have blamed the deficits on the recession and on the costs of opposing terrorism.

The deficits could become a political concern for Bush and Congress Republicans trying to retain control of the White House and Congress in next year's elections.

Some Democrats have accused the White House of purposely padding its deficit forecast last July to lay the groundwork for casting the final budget as good news.

Democrat Senator Ernest Hollings raised that question anew on Monday, when it became clear the actual 2003 deficit was $81 billion less than the administration projected three months ago.

"We need to find out what kind of shenanigans caused the estimate to be so off, whether OMB deliberately estimated high numbers so everybody could jump for joy this week," Hollings wrote in a letter to Senate Budget Committee Chairman Don Nickles, a Republican, requesting hearings on the inaccuracy of the administration's July projection.

About a third of the improvement since the July estimate was because actual revenue collections totaled $26 billion more in 2003 than the White House projected, for a total of $1.782 trillion.

Part of that improvement was because in July, the White House assumed a $15 billion drop in tax collections because of "revenue uncertainty" -- a drop that never occurred.

Spending for 2003 ended up at $2.157 trillion, which was $55 billion lower than the White House's July projection.