Jan. 23 (Bloomberg) -- The U.S. budget deficit will widen to at least $219 billion this year, the most since 2006, as a sagging economy reduces tax revenue, according to a Congressional Budget Office forecast.

The shortfall will be even larger if lawmakers approve a $150 billion economic stimulus plan, which wasn't included in the CBO's projection. The deficit projection also doesn't include all of the funding that may be provided for the wars in Iraq and Afghanistan, which might add another $30 billion in spending, the agency said. The deficit last year was $163 billion.

The agency said that, while it didn't expect a recession this year, the economy will grow more slowly than it initially expected -- by 1.7 percent rather than the 2.9 percent it predicted in August. The CBO said it expects economic growth to rebound to 2.8 percent in 2009.

``The ongoing problems in the housing and financial markets and the high price of oil will curb spending by households and businesses this year and trim the growth of GDP,'' the biannual report said. ``Although recent data suggest the probability of a recession in 2008 has increased, CBO does not expect the slowdown in economic growth to be large enough to register as a recession.''

The agency said slower economic growth will translate into lower tax receipts flowing into the Treasury. It expects revenue to grow this year by 3 percent, not the 7 percent it forecast six months ago. Revenue will total about $2.654 trillion this year, the CBO said.

Corporate Taxes

The agency said corporate tax receipts will decline for the first time since 2003, falling by 1.7 percent. Last year, that revenue grew by 4.5 percent. Individual income tax receipts will grow by 4.1 percent, the agency predicted.

The CBO predicted in August that the deficit for the fiscal year ending Sept. 30 would be $155 billion. That estimate didn't include the $51 billion cost of changes in the alternative minimum tax approved by Congress in December.

The Bush administration's Office of Management and Budget said in July it expected this year's deficit to grow to $258 billion, or about 1.8 percent of the nation's economy.

The CBO projection is lower than the median 1.7 percent of GDP forecast offered by 66 private economists surveyed between Jan. 3 and Jan. 8 by Bloomberg News.

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net.

Last Updated: January 23, 2008 10:32 EST