The Bush administration says revised budget figures show the U.S. fiscal deficit this year will be considerably lower than what was projected six months ago, but it is still expected to be the largest in history.
Budget director Joshua Bolton says the deficit will be some $70 billion less than projected because a strong economy is bringing in more tax revenue.
Instead of the $521 billion shortfall predicted in February, the budget office said Friday that the fiscal 2004 deficit is now likely to total $445 billion. The U.S. fiscal year ends October 1. Despite the improvement, the deficit will still be the largest in U.S. history, an amount equal to 3.8 percent of economic output.
Budget director Bolton says the Bush administration is on target with its plan to reduce the fiscal deficit by half within five years.
"Looking out into the future what this revision means is that we're not just on track in meeting that goal of cutting the deficit in half we're ahead of pace," he said. "It gives us a great deal of confidence that we're on track and pursuing a set of policies that will bring the deficit to a very low number within very few years."
The U.S. budget turned from surplus to deficit because of a brief recession in 2001, significant tax cuts, and increased defense spending for military operations in Afghanistan and Iraq. The budget had been in surplus for the four years ending in 2000.
Separately, the Commerce Department reports that the pace of economic growth slowed in the second quarter of the year to an annual rate of three percent. Revised figures show that the U.S. economy expanded at a very strong 4.5 percent pace in the first quarter. The Bush administration is predicting nearly four percent growth this year. The recovering U.S. economy has created over one million jobs in the past six months.