WASHINGTON - The federal budget deficit, helped by a gusher of tax revenues, fell to $247.7 billion in 2006, the smallest amount of red ink in four years. The deficit for the budget year that ended Sept. 30 was 22.3 percent lower than the $318.7 billion imbalance for 2005, handing President Bush an economic bragging point as Republicans go into the final four weeks of a battle for control of Congress. Bush called the 2006 outcome a "dramatic reduction" in the deficit which allowed him to fulfill his 2004 campaign pledge of cutting the deficit in half earlier than his original 2009 target date. "These numbers show that we have now achieved our goal of cutting the federal deficit in half and we've done it three years ahead of schedule," Bush told reporters at a Rose Garden news conference. "The budget numbers are proof that pro-growth economic policies work." The pledge to cut the deficit in half was based on the administration's forecast that the 2004 deficit would hit $521 billion, a figure that proved to be too pessimistic by more than $100 billion. However, the administration has continued to use the forecast number as its benchmark for deficit reduction. Bush said he would continue to urge Congress to make permanent his first-term tax cuts, all of which are due to expire by the end of 2010. Republicans are hoping to appeal to voters in the upcoming election as the party that champions tax cuts while casting Democrats, who contend that those tax cuts primarily benefited the wealthy, as the party which would increase taxes. Both spending and tax revenues climbed to all-time highs in 2006. The sharp narrowing of the deficit reflected the fact that revenues climbed by 11.7 percent, outpacing the 7.3 percent increase in spending. The 2006 deficit was far lower than the $423 billion figure the administration had projected last February and also represented an improvement from a July revised estimate of $295.8 billion. Republicans said the big improvement showed that Bush's economic policies were working to stimulate growth and boost tax revenues. But Democrats said the narrowing of the deficit would be temporary as the pending retirement of 78 million baby boomers will send costs of the government's big benefit programs soaring. "The fact that some are trumpeting this year's deficit number as good news shows just how far we've fallen. Our budget picture is extremely serious by any measure," said Sen. Kent Conrad (news, bio, voting record), the senior Democrat on the Budget Committee. The nonpartisan Congressional Budget Office projects that the deficit for the current budget year will rise to $286 billion. Over the next decade, the CBO forecasts that the deficit will total $1.76 trillion. Extending the Bush tax cuts, which are currently scheduled to expire at the end of 2010, would add another $2.2 trillion to the deficit through 2016, the CBO estimates. The 2006 deficit was the smallest deficit since a $159 billion imbalance in 2002, a shortfall that came after four straight years of budget surpluses, the longest stretch that the government had finished with surpluses in seven decades. Since that time, the government has recorded three of the biggest deficits in history including including an all-time record in dollar terms of $413 billion in 2004. The reason for the improvement this year was a second consecutive big jump in revenues, propelled by strong economic strongth. The 11.7 percent increase in revenues was the second biggest percentage gain in history. The administration credits its tax cuts for the improving economy, contending they helped the nation withstand the 2001 recession, the terrorist attacks and a wave corporate accounting scandals. Democratic critics, however, contend that this year's improvement in the deficit will be only temporary. They contend the deficit is set to explode over the next decade as the baby boomers begin to retire and demands on Social Security and Medicare increase.