Congress' nonpartisan budget analyst says this year's federal deficit (search) seems on track to be less than the $477 billion it predicted in March, in the latest indication that the government's short-term fiscal picture may be improving.

Even so, the shortfall is already at $284 billion for the first seven months of the fiscal year, a Congressional Budget Office (search) report said. That means the final 2004 deficit seems likely to surpass last year's $374 billion, a record in dollar terms, or at least come close to it.

"Although the deficit will widen as the year goes on, recent trends suggest that the deficit in 2004 will be less than the $477 billion that CBO projected in March," said the report, which was issued on Thursday.

Other analysts have also begun revising their budget forecasts for the better. Christopher Wiegand, an economist for Citigroup Inc. (search) in New York, said he was now projecting a $370 billion deficit this year, down from a $470 billion estimate in January.

The improvements are good election-year news for President Bush, whose presidency is facing its third straight year of deficits following four consecutive surpluses under President Clinton. Yet the likelihood that the shortfall will set yet another record this year is something Democrats, who blame Bush's tax cuts, won't let voters forget.

"If anything, the deficit estimates we are seeing today highlight the stunning failure of President Bush's fiscal leadership," Sen. Kent Conrad, D-N.D., said in a statement.

Republicans said the improved numbers validated the tax reductions they have won since 2001, when Bush took office.

"Deficits are going down, unemployment (search) is going down, and the economy is growing. Our policies are working," said Sean Spicer, spokesman for the GOP-run House Budget Committee.

The CBO report attributed the improvement to better than anticipated revenue collections, which it said were running $30 billion to $40 billion higher than expected. The budget office did not make a new forecast for the year's shortfall.

The White House's last deficit forecast, made in February, was for $521 billion. It will issue a new one this summer.

Democrats have accused the administration of making an artifically high projection so it can claim credit for an improvement when the final numbers come in. White House officials have denied that.

The longer-term budget picture remains a looming crisis because the huge baby boom generation will begin drawing Social Security (search) and Medicare (search) benefits in a few years. In a speech on Thursday, Federal Reserve Chairman Alan Greenspan called the fiscal problems "a significant obstacle to long-term stability."