The Congressional Budget Office (CBO) has released its update to the Budget and Economic Outlook for Fiscal Years 2008 to 2018. The report anticipates that at the end of the current fiscal year (Sept. 30), the federal deficit for FY 2008 will be $409 (about 3 percent of GDP), $51 billion more than it predicted in March. That change is almost entirely the result of higher spending than projected in the March baseline. Much of that spending increase was expected, however, because it results from supplemental appropriations for military operations in Iraq and Afghanistan, which were pending at the time. Added spending for deposit insurance and unemployment benefits also contributes to the increase in overall spending in 2008. For FY 2009, CBO expects the federal budget deficit to hit $438 billion (also 3 percent of GDP), but this figure does not include an $83 billion reduction in revenue as the result of an expected AMT patch next fiscal year. The anticipated $521 billion deficit would best the deficit record set in FY 2004 by about $108 billion. When the Bush Administration released its Mid Session Review in July, it predicted that the budget deficit would be $389 billion in FY 2008 and $482 billion in FY 2009. And, CBO reminds in the opening paragraph of the report what fiscal policy makers need to keep their eyes on: Over the longer term, the fiscal outlook continues to depend mostly on the future course of health care costs as well as on the effects of a growing elderly population.