Administration says deficit at lowest level in five years

At an estimated 1.2 percent of gross domestic product, according to the administration, the deficit is half the 40-year average deficit of 2.4 percent of GDP. President Bush used the news to call on Congress to exercise fiscal restraint and not raise taxes.

"Now the fundamental question is whether the United States Congress will work constructively with the administration to keep taxes low and to keep spending sound," Bush said after meeting with his economic advisers. "I look forward to working with members of both parties to continue keeping our fiscal house in order and to continue to head for a balanced budget."

In an interview after the announcement, Office of Management and Budget Director Jim Nussle said lower-than-expected revenue growth last year reflected some softening of the economy but only "on the margins ... It means you cannot take economic growth for granted. We're not going to grow out of this. We need to control spending."

Senate Budget Chairman Kent Conrad, D-N.D., said Bush was trying to recast himself as a fiscal conservative and he called the bid "too little, too late" to make up for past spending.

"He will go down in history as the most fiscally irresponsible President ever," Conrad said in a statement. "The fact is that the nation's debt has exploded under his watch -- rising by $3 trillion since 2001, to $9 trillion today. And this debt buildup is occurring at the worst possible time, on the brink of the retirement of the baby boom generation."

White House Press Secretary Dana Perino attributed the buildup of debt under Bush to national security needs that had to be paid for in the wake of the Sept. 11, 2001, terrorist attacks. "There was extra spending on that, and we don't apologize for it," she said.

The administration's most recent fiscal 2007 forecast, included in the July Mid-Session Review, had projected a deficit of $205 billion. At the beginning of the year, as part of Bush's fiscal 2008 budget proposal, the administration had forecast that the fiscal 2007 budget deficit would total $244 billion.