AP, WASHINGTON — The federal budget deficit hit a record $374.2 billion in 2003, the administration reported Monday, as the costs of the war in Iraq, a new round of tax cuts and economic weakness pushed the government's red ink to the highest level in history.
Providing a final accounting of the budget year that ended Sept. 30, the administration said that the 2003 deficit was more than double last year's imbalance of $157.8 billion.
In dollar terms, the 2003 figure easily surpassed the old record of $290.4 billion set in 1992 when President Bush's father was president.
However, Bush administration officials noted that the 2003 deficit represented just 3.5 percent of the country's total economic output, below the 5 percent and 6 percent levels hit in the 1980s during the Reagan administration. The administration prefers to link the deficit to total economic output as a better measure of the country's ability to carry the debt burden.
The $374.2 billion deficit figure represented an improvement from the administration's forecast this summer when Bush officials projected the deficit this year would hit $455 billion. Officials credited stronger-than-expected tax collections in recent months in combination with less government spending for the improvement over the summer forecast.
Still, Joshua Bolten, head of the president's Office of Management and Budget, said that the deficit for the current 2004 budget year will rise even higher, topping $500 billion, before stronger economic growth will start the red ink on a downward path. The administration is forecasting that the deficit be cut in half over the next five years.
