The Congressional Budget Office on Thursday estimated that the federal deficit will decline to $260 billion this year but will increase to $286 billion next year.

The agency estimated total deficits over the next decade at $1.76 trillion.

The $260 billion forecast for the current budget year, which the CBO previewed earlier this month, would represent an improvement from last year's actual deficit of $319 billion.

However, the detailed CBO report released Thursday showed that the improvement will be temporary with deficit expected to swell to $1.76 trillion over the next decade.

The new CBO report updates estimates made in March, when the CBO projected that the deficit for this year would be $111 billion higher. The improvement reflected strong gains this year in federal tax collections, reflecting an improving economy.

But in the new report, the CBO projected that the deficit for the next budget year, which begins Oct. 1, will climb to $286 billion, then decline slightly to $273 billion in 2008 before rising for the next two years.

The Bush administration points to the improved deficit outlook for this year as evidence that the president's first-term tax cuts worked to get the economy out of the 2001 recession and have led to stronger economic growth and tax revenues.

However, Democrats said the new CBO estimates were evidence of the failure of the administration to get control of the deficit.

"The administration's supporters may wish to paint this deficit as progress, but a deficit of $260 billion falls far short of the $236 billion surplus booked in 2000 and the $305 billion surplus predicted for this year when the Bush administration took office," said Rep. John Spratt, the top Democrat on the House Budget Committee.

The CBO projects that the deficit will total $1.42 billion from 2007 through 2011 and will total $1.76 billion from 2007 through 2016.

That is based on an assumption that the deficits will shrink dramatically beginning in 2012, reflecting the fact that Bush's first term tax cuts will have all expired by that time. The president is working to get Congress to make those tax cuts permanent.