Washington ? The White House conceded Friday that the federal budget deficit will grow much faster this year than previously expected, and administration officials predicted that the government would remain in the red until at least 2005.

Capping a week in which President Bush strained to deal with a slumping stock market, a series of corporate financial scandals and questions about his own business practices, the administration said the deficit, the first since 1997, would grow to $165 billion this fiscal year, which ends Sept. 30.

The new projection is up from the $106 billion that Bush’s budget officials predicted in February, and contrasts with last year’s $127 billion surplus. The new deficit figure encouraged congressional Democrats to step up their election-year attacks on the president’s handling of economic matters.

Bush’s critics were quick to blame the growing deficit on the $1.35 trillion, 10-year tax cut that Bush pushed through Congress last year.

“This is a clear editorial on the fiscal policies of this administration,” said Senate Majority Leader Tom Daschle, D-S.D. “I have said before that it was a disaster. I think the numbers today demonstrate why I believe that.”

The White House and congressional Republicans dismissed that idea, saying the true causes of the ballooning deficit are the war on terrorism, the sluggish economy and a stock market selling spree.

White House budget director Mitchell Daniels pointed in particular to the drop in revenue from taxes on capital gains, mutual fund distributions and stock options, a reversal of the unexpected receipts the government collected as stock markets soared in the late 1990s.

“No one saw this coming,” he said.

He and other Republicans said the tax cut, which Daniels called “well-timed and well-designed,” mitigated the economic decline by stimulating consumer spending.

“These deficit numbers would have been a lot worse, in my opinion, if there had been no tax cut last year,” Daniels said.

Still, the deficit casts a pall over GOP hopes for this fall’s congressional elections. The deficit remains small by historical standards, but the psychological impact of Friday’s announcement could be significant. Large deficits can prompt higher interest rates, lower stock prices and a weaker dollar.