Estimate shows reduced deficit

The administration's budget to be released Feb. 5 is expected to be more optimistic.
WASHINGTON (AP) -- Budget estimates released Wednesday showed some improvement in the deficit but gave little solace to Democrats struggling to match President Bush's promise to balance the budget.
The new forecast from the Congressional Budget Office put the deficit for the current budget year reaching about 200 billion after factoring in Iraq war costs. Last year's deficit was 248 billion.
Both the White House and the top Democratic budget writers welcomed the improved outlook, but difficult disagreements remain over how to close the gap.
The CBO, a nonpartisan agency that provides lawmakers with estimates of the budget and the costs of legislation, said the budget could run a 170 billion surplus in the 2012 fiscal year.
That figure, however, assumes Congress will let Bush's tax cuts expire at the end of 2010, effectively raising taxes on income, inheritances, married couples and parents.
What's next
The Bush administration releases its budget Feb. 5 and promises it will be balanced by 2012 without any such tax increases.
White House budget director Rob Portman met on Capitol Hill with a group of moderate House Democrats and claimed such lawmakers as allies in the president's effort.
"This notion that you have to raise taxes to achieve balance ... is no longer the environment or the scenario," Portman told reporters.
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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