LOS ANGELES, Jan 24: Projected federal surpluses over the next decade have plunged 71 per cent from last year’s estimates and annual deficits are back for the next two years, says a new congressional forecast on Wednesday, heralding a budget squeeze sure to colour this fall’s elections.

The nonpartisan Congressional Budget Office (CBO) estimated on Wednesday a 10-year surplus of $1.6 trillion, a staggering $4 trillion less than the $5.6 trillion the office estimated only a year ago. Both projections by CBO, the official budget analyst of Congress, are for 2002 through 2011, and assume no changes in current tax or spending programmes.

Further dramatizing the worsening fiscal pressures faced by President Bush and Congress, the CBO is now projecting one-year deficits of $21 billion this year and $14 billion in fiscal 2003, which starts Oct 1. The US government ran annual surpluses for four straight years beginning in 1998.

Just last year, the budget office envisioned surpluses of $313 billion this year and $359 billion in 2003. The new projections, if accurate, would mark one of the steepest budgetary downslides ever in the US history.

The fiscal nosedive has been prompted mostly by the recession, the cost of the $1.35 trillion 10-year tax cut by President Bush and the price tag of the war on terrorism. This year the recession is the key reason for the worsening numbers, but the tax cut’s costs are the biggest single factor over the entire decade.