A surge of unanticipated tax receipts will push the 2006 U.S. deficit down to 260 billion U.S. dollars, a 58 billion dollar improvement on last year's red ink, The Washington Post reported on Friday.

But the deficit will begin to rise again next year and will improve substantially only if President Bush's tax cuts are allowed to expire, the report quoted the Congressional Budget Office as saying.

This year's deficit is not only projected to be lower than last year's, despite ongoing war expenditure and hurricane relief, but it is also 112 billion dollars lower than that which the CBO estimated in March when it analyzed the president's budget proposals, said the report.

But the longer term outlook -- clouded by baby boomers who will be retiring just as the reach of Bush's tax cuts begins to expand -- has "not changed materially," the report emphasized.

The deficit is projected to rise to 286 billion dollars next year and 328 billion dollars by 2010, only to plunge when the tax cuts expire in 2011, it added.

Source: Xinhua