Bush 2004 Deficit to Reach $480 Billion, Report Forecasts

The federal government will post a record $480 billion deficit next year and accumulate nearly $1.4 trillion in new debt over the coming decade before climbing back into the black by 2012, the nonpartisan Congressional Budget Office said yesterday.

But if President Bush succeeds in making his tax cuts permanent, the government will run substantial budget deficits as far as the eye can see, the forecast made clear. Add the White House's proposed $400 billion prescription drug benefit, and the deficit would total $324 billion in 2013.

In a departure from past projections, the CBO's update lays out the stark policy choices facing Congress and the president when they return to Washington after Labor Day. Those decisions will establish whether the government quickly returns to the budget surpluses of 1998 through 2001 or accumulates record deficits just when the baby-boom generation begins to retire.