The budget office predicts the economy will grow at a rate of 1.6 percent this year and will rebound to a 2.2 percent growth rate next year. That's a half percentage point more than predicted but also the widely cited "blue chip" consensus of leading economists. The administration also sees inflation averaging 3.8 percent this year, but easing to 2.3 percent next year -- better than the 3.0 percent seen by the blue chip panel.
"The nation's economy has continued to expand and remains fundamentally resilient," said the budget office report. A $482 billion deficit, however, would easily surpass the record deficit of $413 billion set in 2004.
The new figure actually underestimates the deficit, since it leaves out about $80 billion in war costs. In a break from tradition -- and in violation of new mandates from Congress -- the White House did not include its full estimate of war costs.
The White House in February had forecast that next year's deficit would be $407 billion, which puts the increase in the projections at $72 billion.
Figures for the 2008 budget year ending Sept. 30 will actually drop from an earlier projection of $410 billion to $389 billion, the report said.
The White House still projects that the budget will reach a surplus by 2012, helped by revenues boosted by optimistic economic projections of economic growth.
The deficit numbers for 2008 and 2009 represent about 3 percent of the size of the economy, which is the measure seen as most relevant by economists. That's considerably smaller than the deficits of the 1980s and early 1990s, when Congress and earlier administrations cobbled together politically painful deficit-reduction packages.
Still, the new figures are so eye-popping in dollar terms that it may restrain the appetite of the next president to add to it with expensive spending programs or new tax cuts. In fact, pressure may build to allow some tax cuts enacted in 2001 and 2003 to expire as scheduled at the end of 2010, with Congress also feeling pressure to curb spending growth.
The deficit for 2007 totaled $161.5 billion, which represented the lowest amount of red ink since an imbalance of $159 billion in 2002. The 2002 performance marked the first budget deficit after four consecutive years of budget surpluses.
That stretch of budget surpluses represented a period when the country's finances had been bolstered by a 10-year period of uninterrupted economic growth, the longest period of expansion in U.S. history.
In his first year in office, helped considerably by projections of continuing surpluses, Bush drove through a 10-year, $1.35 trillion package of tax cuts.
However, the country fell into a recession in March 2001 and government spending to fight the war on terrorism contributed to pushing the deficit to a record in dollar terms in 2004.
House Budget Committee Chairman John Spratt, D-S.C., said the new deficit figure confirms "the dismal legacy of the Bush administration: under its policies, the largest surpluses in history have been converted into the largest deficits in history."
The figures to be released later will paint a picture of the financial health of the government that Bush's successor will inherit, as well as updated predictions of the health of the economy.
White House budget director Jim Nussle and Edward Lazear, chairman of the president's Council of Economic Advisors, were scheduled to release the administration's updated forecasts at an early afternoon news conference.