President Bush has sent to the US Congress a budget that massively boosts military expenditure, lowers taxes and runs up record deficits even without a war in Iraq.
The budget forecasts record deficits of $304 billion in 2003 and another $307 billion in 2004.
The budget also forecasts a 4.2 per cent increase in government spending to $2.23 trillion in 2004 and a 4.7 per cent rise in receipts to $1.92 trillion.
The shortfall breaks the 1992 record deficit of $290 billion held by Mr Bush's father. "My administration firmly believes in controlling the deficit and reducing it as the economy strengthens and our national security interests are met," the president said.
The US leader defended his 10-year, $674-billion stimulus package, centred on abolishing taxes on share dividends, which has been criticised for favouring the rich.
The budget forecast real economic growth of 2.9 per cent in the calendar year 2003 and 3.6 per cent in 2004.
Over the next five years, the cumulative budget deficit would amount to $1.08 trillion, the budget papers said. A five-year outlook showed no surplus in sight, with a deficit of $190 billion in 2008.
The budget deficit forecasts for fiscal 2003 and 2004 are equal to 2.8 per cent and 2.7 per cent of gross domestic product (GDP), respectively, compared to about six per cent of GDP in 1992.
AFP