Washington ? With two months still to go in the government’s budget year, the federal deficit has hit a record $395.8 billion.

The monthly accounting of spending and revenue showed that the July deficit totaled $69.2 billion, up 27.5 percent from the $54.2 billion shortfall in July 2003, the Treasury Department said Wednesday.

The $395.8 billion deficit through the first 10 months of the government’s fiscal year was up 22 percent from the same period a year earlier and now has passed the record deficit of $374.3 billion for all of last year.

The Bush administration is projecting that the deficit for all of the 2004 budget year, which ends Sept. 30, will be $445 billion. This year will mark the third consecutive budget deficit after four straight years of surpluses that reflected the economic boom of the 1990s.

Democratic presidential challenger John Kerry is trying to make the flood of red ink a campaign issue against President Bush. Kerry argues that the current administration turned projected record surpluses into record deficits to finance massive tax cuts primarily benefiting the rich.

The administration counters that Bush’s tax cuts kept the 2001 recession from being worse and helped spur the current economic rebound.

The administration’s revised forecast of a $445 billion deficit for the entire year, issued July 30, was reduced from the $521 billion budget gap it had estimated for 2004 in early February.

Both Bush and Kerry are pledging to cut the deficit in half over the next five years, although each campaign has challenged the math being used by its opponent.

The Kerry campaign contends that Bush’s figures do not add up because they don’t take into account costs like making the tax cuts permanent while the Bush campaign argues that Kerry has proposed more new spending than he would save by repealing Bush’s tax cuts for the top 2 percent of taxpayers.