Aides: White House to Project Record Deficit

The White House will project soon that this year's federal deficit (search) will exceed $420 billion, congressional aides said, a record figure certain to ignite partisan warfare over President Bush's handling of the economy.

The annual summertime analysis is expected out this Friday, said several congressional aides speaking on condition of anonymity Tuesday. That would be well after the frequently ignored legal deadline of July 15.

White House budget office spokesman Chad Kolton said the report will be issued when it is ready, and offered no date. Friday will be a day after the Democratic National Convention (search) ends — a release date that would prevent presidential candidate Sen. John Kerry, D-Mass., (search ) and others at the gathering from citing its figures to criticize Bush.

Some aides said they believed the projected shortfall would be close to $450 billion, though one said it would be about $420 billion.

Either way, the White House was ready to emphasize that the figure is well below the $521 billion it projected for this year last February, and tie it to improvements in the economy.

"It is hard to disregard the strong progress made on the economy and our fiscal situation," Kolton said Tuesday.

Democrats have said Bush purposely overestimated this year's budget gap so he could take credit for improvement when the real figures came in.

"The new estimate ... will set a new record of fiscal mismanagement and deficit spending," said Kerry economic adviser Gene Sperling.

The federal budget year runs through Sept. 30 and has only two months to go.

Last year's deficit was $375 billion, the worst ever in dollar terms. The White House has said the numbers are manageable because they only equal about 4 percent the size of the U.S. economy — well below the 6 percent ratio reached under President Reagan.

The nonpartisan Congressional Budget Office (search ) projected in January that this year's shortfall would be $477 billion. In May, citing higher than expected revenue collections, it said it believed the red ink would be smaller but offered no figure.

Two weeks ago, the Treasury Department (search ) said the deficit for the first nine months of this budget year was $327 billion. That was more than 20 percent larger than the $270 billion shortfall for the same period last year.