The federal deficit is at a record high and economic growth has slowed, but President Bush (search) is insisting on the campaign trail that the U.S. economy is on a "rising path." In his weekly radio address Saturday, which he taped Friday while on a stop in Michigan, Bush worked to convince voters that the economic rebound is not stalling.

His optimistic forecast came a day after the White House projected that the deficit for the budget year ending Sept. 30 will soar to $445 billion — the highest in history.

That analysis came as the Commerce Department (search) said economic growth slowed this spring to an annual rate of 3 percent, well below the 3.8 percent spurt that many economists expected. Consumers, hit by high gasoline prices, cut back their spending, the department said.

For his part, Bush said consumer confidence reached a two-year high in July, existing home sales hit a record in June and the home ownership rate has climbed to a record level.

"All of this added economic activity is creating opportunity," he said. "Since last August, Americans have started work at more than 1.5 million new jobs, many of them in high-growth, high-paying industries."

Administration officials noted that the projected deficit was less than the $521 billion forecast in February, and said they were on their way to their goal of halving this year's shortfall in five years.

"The impact of our growing economy is being felt in Washington, where estimates of government deficits are shrinking," the president said. "Because of my policy of strengthening the economy while enforcing spending discipline in Washington, we remain on pace to reduce the deficit by half in the next five years."

Democrats view the statistics differently. They say the budget shortfall is the third consecutive — and ever-growing — deficit posted on Bush's watch, following four annual surpluses in a row under President Clinton (search). Democrats say it's evidence of the damage done by Bush's tax cuts and his poor stewardship of the economy.

"Just today, we've learned more tough economic news. The growth of our country has slowed to 3 percent, oil prices are at a record high level, and wages are not keeping up with inflation," Democratic presidential nominee John Kerry said while campaigning Friday in Pennsylvania.

The Massachusetts senator drew a contrast with the economy during the Clinton administration, saying: "Guess what? In the last four years, the income of average Americans has dropped by $1,600" even while the cost of health care, education and gasoline have gone up.

Bush said tax cuts have spurred growth, and he called anew on Congress to make them permanent.

"To millions of hardworking Americans, tax relief has been the difference in helping make ends meet," he said. "This is a crucial time for our economy. We have emerged from a period of great challenge.

"Terrorist attacks, recession and corporate scandal hurt the wallets of millions of Americans, but these shocks to our economy did not damage our spirit. We're a hardworking and resilient nation. Our economy is on a rising path, and together we will bring our prosperity to every corner of America."

Regarding the red ink, White House budget director Joshua Bolten said: "The deficit remains at a level that we think is unwelcome. The good news is that it is much lower than we projected ... just six months ago."

The White House said this year's actual deficit could well be smaller because federal agencies often overestimate expected spending. Final figures for the fiscal year will be in shortly before the Nov. 2 elections.

Democrats said that by extending only five years, the projections ignored the longer-term budget crisis looming as the baby boom generation starts retiring later this decade.

The report also boosted the estimate of Medicare spending by $67 billion over the next five years. It said $26 billion was to correct costs left out of Bush's budget last February, with the rest reflecting new estimates for the program's spending.

Medicare, the government's health insurance program for the elderly and disabled, spends about $300 billion a year. It already faces questions about its solvency because of the burden the baby boomers will place on it, and growing medical costs.