WASHINGTON, D.C. ? The federal deficit will shrink dramatically this year but will total $1.76 trillion over the next decade, and could be double that estimate if President Bush’s tax cuts are made permanent, the Congressional Budget Office said Thursday.

The $260 billion deficit forecast for the current budget year, which ends Sept. 30, is $112 billion below the office’s last estimate, in March.

The bulk of the improvement came from a gusher of tax revenues this year, reflecting a rebounding economy and healthy corporate profits.