Congressional forecasts published yesterday suggest that President George Bush will have to take radical steps if he is to meet his pledge to halve the ballooning US budget deficit within five years.
According to the non-partisan Congressional Budget Office (CBO), the deficit will fall from this year's 3.6 per cent of national income - a record $422 billion (€348.60 billion) - to 2.1 per cent of gross domestic product (GDP) in five years' time.
The CBO's estimate of the cumulative deficit in the decade to 2014 will be $2,294 billion.
This five-year outlook assumes no real rises in discretionary spending over the next decade and could be far worse if the president's tax cuts of 2001 and 2003 are extended, as Mr Bush has pledged to do.
Failure to reduce the deficit could lead to higher interest rates in the long term and a decline in the dollar, some economists warn.
Republicans pointed to the prospect of a declining budget deficit. "This report underscores that our policies are working to create a stronger economy, more jobs and a lower deficit," said Mr Jim Nussle, Republican chairman of the House Budget Committee.
But Democrats seized on the figures as further evidence of the profligacy of the Bush administration, saying that the deteriorating fiscal outlook would mean mortgage payments for home owners and a higher tax burden on the next generation.
"Only George Bush could celebrate over a record budget deficit of $422 billion, a loss of 1.6 million jobs, and Medicare premiums that are up by a record 17 per cent," Mr John Kerry, the Democratic presidential candidate, said.
Mr Kerry added that his own plan seek to restore fiscal discipline and rein in spending, cutting the deficit in half in four years.
Tax experts said that in order to meet his target of halving the deficit Mr Bush would need to abandon his tax cuts or impose massive cuts in government spending.
Ms Alice Rivlin, a former chief of the White House's Office of Management and Budget and of the Congressional Budget Office, said the figures were likely to turn out worse than the baseline forecasts released yesterday.
