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. Last Updated: 07/27/2016

U.S. Expects $455Bln Budget Hole in 2003

WASHINGTON -- The White House said Tuesday that federal budget deficits would balloon to a record $455 billion this fiscal year and to $475 billion in 2004, a presidential election year, even without factoring in the mounting cost of the U.S. occupation of Iraq.

The government will also add more than $2 trillion to the national debt over the next five years, the Office of Management and Budget said in a report.

Senator Kent Conrad of North Dakota, the ranking Democrat on the Senate Budget Committee, reacted by warning that President George W. Bush was "taking us right over the fiscal cliff."

While OMB director Joshua Bolten acknowledged the bigger deficits were "a legitimate subject for concern," he said the gap would begin to shrink from fiscal 2005. The White House pledged for the first time to cut the deficit in half by 2006.

But officials offered no new proposals and acknowledged their deficit-reduction assumptions were predicated on a quick economic rebound, which has yet to materialize.

Bolten conceded the 2004 deficit could top $475 billion because the administration did not include projections for funding ongoing military operations in Iraq. "A judgment about what those numbers are will have to be made later," he said.

Democrats accused the White House of understating the deficit's size as it approaches the half-trillion-dollar mark for the first time, and said tax cuts were primarily to blame for U.S. fiscal woes.

"There seems to be no shame, no shock and no solution," said South Carolina Representative John Spratt, the top Democrat on the House Budget Committee.

Bolten countered that the deficit -- roughly 50 percent larger than the White House projected in February -- was "manageable" and reflected the administration's priorities since the Sept. 11 attacks -- national security and boosting the economy through tax cuts.

He insisted Bush's tax cuts were not to blame, estimating that the nation would still face a $278 billion deficit this year even without the tax cuts.

Bolten said the White House planned to cut the deficit in half by 2006 by pressing Congress to hold down spending and getting the economy to "return to healthy and sustained growth." Assuming these targets are met, the White House said deficits would shrink to $304 billion in 2005, $238 billion in 2006, $213 billion in 2007 and $226 billion in 2008.

The White House projections included only the initial costs of the war in Iraq. Those, plus the weaker-than-expected economy, forced OMB to revise its forecasts from February, when it expected deficits of $304 billion this year and $307 billion in 2004.

The White House says it is does not know how much postwar costs in Iraq and Afghanistan will add to the deficit.

The revisions underscored the sharp reversal in the U.S. fiscal position. As recently as 2001, White House and congressional analysts predicted 10-year budget surpluses of up to $5.6 trillion. Many analysts now expect massive deficits through 2013.

At $455 billion, this year's deficit would eclipse the previous record of $290 billion in 1992.

The U.S. government enjoyed four years of surpluses between 1998 and 2001.