Government projects 'highest ever' federal deficit, increased Medicare costs

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The government's Office of Management and Budget has projected a federal budget deficit for fiscal year 2004 at $445 billion, including increased projections for Medicare spending, making it the highest ever, according to an agency report.

The government's estimates for Medicare spending increased $67 billion (3.6%) over the next five years -- $26 billion of which was not in President Bush's February budget proposal – compared with the original estimates.

According to OMB Director Joshua Bolten, a lot of the rise in Medicare spending is due to "technical adjustments, technical corrections (and) a slightly higher medical inflation rate than we were projecting six months ago."

The Committee for a Responsible Federal Budget expressed concern that the deficits will continue to increase at alarming rates as more baby boomers retire and become eligible for Medicare.

White House estimates were originally $521 billion. The 2004 deficit would be equal to 3.8% of total economic output, the Office of Management and Budget said.