Both revenues and spending climbed to record levels in 2007. Spending rose by 2.8 percent to $2.73 trillion while revenues rose by a faster 6.7 percent to a record $2.57 trillion, a gain the administration attributed to the economic stimulus from the president's tax cuts.
''This year's budget results further demonstrate how the president's tax relief, combined with spending discipline, has helped promote a sustained economic expansion, which led to revenue growth and resulted in a declining deficit,'' said White House budget director Jim Nussle.
But administration officials said while the short-term budget deficit was improving, greater efforts were needed to deal with the budgetary pressures that will arise in future years with the approaching retirement of 78 million baby boomers.
''For the sake of our children and grandchildren, Congress should begin to take action to prevent this fiscal train wreck,'' Nussle said in a statement accompanying the budget figures.
Senate Budget Committee Chairman Kent Conrad, D-N.D., said that Bush would ''go down in history as the most fiscally irresponsible president ever. The fact is that the nation's debt has exploded on his watch — rising by $3 trillion since 2001, to $9 trillion today.''
Bush recently signed into law a measure increasing the government's borrowing ceiling to $9.815 trillion. It was the fifth debt increase of Bush's presidency. The national debt is the accumulation of the annual deficits.
During the Clinton administration, the federal budget ran a surplus for four consecutive years, something that had not been accomplished for seven decades.
While there were projections that the budget would run up surpluses of $5.6 trillion over the next decade, the bursting of the stock market bubble in 2000, the recession that followed in 2001 and the terrorist attacks, which led to increased military spending to fight wars in Afghanistan and Iraq, pushed the country back into deficit spending.
While the administration contends that Bush's first-term tax cuts helped jump-start economic growth and are contributing to record revenues currently, Democrats dispute that view, saying the tax breaks were too tilted to the wealthy and actually have contributed to the record deficits.
The deficit hit an all-time high in dollar terms of $413 billion in 2004 and has been coming down since. It fell to $319 billion in 2005 and $248.2 billion last year.
The Congressional Budget Office projects that the deficit will improve further in the 2008 budget year, which began on Oct. 1, projecting a decline to $155 billion before the imbalance starts to rise again in 2009.