Latest estimate pegs deficit at more than $300 billion

This year's federal budget deficit should exceed $300 billion-the largest ever-mainly due to growing defense spending and a limp economy that has depressed government revenue, the Congressional Budget Office says in its latest monthly estimate.

According to the CBO analysis, dated last Friday, the fiscal 2003 deficit has reached an estimated $202 billion for the first seven months of the fiscal year, which began last Oct. 1. For the same six months last year, the deficit was about $64 billion-meaning that the latest estimate represents a jump of $138 billion in the deficit as compared to the same period last year.

"CBO now expects that the government will end [fiscal 2003] with a deficit of over $300 billion ... because of weaker-than-projected revenues and additional outlays of more than $40 billion from the recently enacted supplemental appropriation bill," CBO said, referring to the emergency supplemental approved last month to finance the war in Iraq.

If CBO's projection holds up, the 2003 deficit would surpass the $290 billion deficit for fiscal 1992-although leading Republicans have argued that, because the U.S. economy is much larger today, a $300 billion shortfall for 2003 would have less of an impact.

However, some private analysts have an even bleaker view of the budget, according to the Associated Press-with some of them envisioning red ink totaling $425 billion this year. And CBO's figures do not reflect the tax cut bills now pending before the House and Senate: CBO calculates that the $550 billion tax bill in the House would add $60 billion to this year's shortfall, while the $350 billion Senate tax cut bill would add $44 billion.

President Bush's budget forecast a $304 billion deficit for this fiscal year, assuming that all his tax and spending plans were enacted. That number seems virtually certain to be surpassed.

The CBO estimate was released the week before Senate Republican leaders will try to push through a bill raising the debt ceiling by $984 billion-to $7.38 trillion. Underlining the government's revenue problems, the CBO's analysis estimated that the April surplus was only about $50 billion, the smallest for the month since 1995.

Overall, revenue collections through April were an estimated $1.055 trillion, or $62 billion lower than a year earlier. The government has spent $1.257 trillion through April, or $76 billion more than in 2002, with defense, Social Security and Medicare expenditures leading the way.