WASHINGTON (Reuters) –

Falling government revenues amid a

slowing economy, coupled with increased federal spending, will

result in a U.S. budget deficit this year of around $400

billion, the Congressional Budget Office estimated on

Wednesday.

The $400 billion cited by Congress’ budget analysis office

for the 2008 fiscal year ending September 30 is slightly higher

than the White House’s deficit estimate of $389 billion.

Either way, this year’s budget shortfall likely will

approach the record-breaking deficit suffered in fiscal 2004 of

$412.7 billion.

In its “mid-session review” issued July 28, the White House

predicted that next year’s budget deficit could hit $482

billion, not counting the full cost of the Iraq war and other

possible government expenditures.

After steadily rising from 2002-2004, during President

George W. Bush’s first term, budget deficits had been declining

since fiscal 2005, with many predicting a “glide path” to

balance by 2012.

Last year, the budget deficit was $162 billion.

But with the U.S. economy struggling, largely due to a

housing slowdown and credit crunch that is rippling through the

economy, Congress and Bush agreed on an economic stimulus

program in February. That is costing the government $152

billion this year, largely due to tax rebates aimed at

stimulating consumer spending.

That unexpected spending, along with revenues that were

running below last year’s and added funding for the Iraq war,

have contributed to the larger deficit this year.

“The Bush administration converted record surpluses into

record deficits, and left the outlook for next year even

worse,” said House Budget Committee Chairman John Spratt, a

South Carolina Democrat.

The latest deficit forecast was very close to the

projection the CBO it gave in March, when it said this year’s

deficit likely would be $396 billion.

(Reporting by Richard Cowan, editing by Chris Wilson)