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Federal deficit predicted to hit $1.76 trillion in next decade

WASHINGTON -- The federal deficit will total $1.76 trillion over the next decade, and could be double that estimate if President Bush's tax cuts are made permanent, the Congressional Budget Office said yesterday.

The $260 billion deficit forecast for the current budget year, which ends Sept. 30, is $112 billion below the office's last estimate, in March.

The bulk of the improvement came from a gusher of tax revenues this year, reflecting a rebounding economy and healthy corporate profits.

But the budget office forecast the improvement as short-lived, projecting the gap between revenues and spending will rise to $286 billion in 2007 and total $1.76 trillion over the next decade.

The deficit picture, according to the budget office, would be even worse if Bush succeeds with a top domestic priority, persuading Congress to make permanent the tax cuts of his first term.

They are set to expire at the end of 2010.

Extending the cuts through 2016 would add $2.2 trillion to the deficit.

The cost would climb to $3.26 trillion if a permanent fix is made to the alternative minimum tax, which is designed for the wealthy but is ensnaring more middle-income taxpayers.

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