CBO projects $400 billion deficit, citing tax rebates

The estimate comes about two weeks after the Office of Management and Budget projected that the fiscal 2008 budget deficit would be $389 billion.

The fiscal 2008 budget deficit will total roughly $400 billion, slightly more than the $389 billion predicted by the Office of Management and Budget last month, according to a Congressional Budget Office estimate released Wednesday.

The numbers prompted fresh criticism from Democrats that President Bush's tax cuts left ballooning deficits in their wake.

House Budget Chairman John Spratt, D-S.C., in a statement issued shortly after CBO issued its projections, said the estimate "gives the Bush administration the dubious distinction of having run up the largest deficits in our nation's history. ... [It] can try to blame these results on factors beyond its control, but it cannot escape comparison with its predecessor."

CBO said the deficit totaled approximately $371 billion for the first 10 months of fiscal 2008, $213 billion more than the shortfall in fiscal 2007.

It noted that its estimate of $400 billion is "close to the amount the agency projected last March after accounting for proposed supplemental appropriations." The estimate comes about two weeks after OMB projected that the fiscal 2008 budget deficit would be $389 billion, followed by $482 billion in fiscal 2009, well above the record $413 billion deficit set in fiscal 2004. Like OMB, CBO cited the tax rebates associated with the $150 billion economic stimulus package enacted in February as the reason for the increase, as well as the slowing economy.

A spokesman for OMB said Thursday the CBO estimates were "in line with our estimates." During a news conference July 28, when the OMB released its estimates, OMB Director James Nussle said the near-term deficits are temporary and manageable if spending is kept in check, the tax burden is not increased and the economy continues to grow. He said that under those circumstances, the nation could see a budget surplus by 2012.