WASHINGTON (AP) - The Bush administration is pinning its budget hopes on a rapid, robust economic recovery driven by its huge tax cut despite figures released Wednesday that show a steep drop in the government surpluses projected for 2001 and 2002.

The White House Office of Management and Budget is expecting an economic rebound next year, including a growth rate of 3.2 percent in gross domestic product. That's nearly double the anemic 1.7 percent rate forecast for this year and higher than the 2.8 percent rate consensus of many private economists.

Budget Director Mitch Daniels said the 10-year, $1.35 trillion tax cut President Bush signed into law in June - coupled with restrained government spending and the Federal Reserve's interest rate cuts - would boost U.S. economic growth and fortify the budget bottom line.

``Economic growth is the key to continuing this very strong fiscal picture,'' Daniels told reporters. ``A return to economic growth will be the focus of the president and the administration in the months ahead.''

The impact of the economic slowdown and the $40 billion in tax refund checks was apparent in the midyear budget outlook released Wednesday by the White House. It estimated a fiscal 2001 surplus of $158 billion, only $1 billion above the tax receipts that flow to Social Security. The revision is $123 billion less than the last estimate in April but the surplus still will be the second-largest ever.

A similarly tiny non-Social Security surplus of $1 billion is now expected in fiscal 2002, which begins Oct. 1. That represents a $58 billion drop from the April estimate, for an overall surplus of $173 billion next year that is almost entirely Social Security.

An even starker view of the shrinking surplus may come when the nonpartisan Congressional Budget Office issues a rival forecast next week. Budget analysts widely believe the CBO projections will show a less favorable 2001 surplus and be less aggressive in predicting future economic growth rates.

Despite the near-term decline, the OMB expects an overall surplus of more than $3.1 trillion over 10 years - down from $5.6 trillion before the tax cut and other changes - even accounting for the tax cut and proposed spending increases. Among these spending increases: $198 billion more for defense and $37 billion extra for a Medicare overhaul that includes a prescription drug benefit.

Senate Budget Committee Chairman Kent Conrad, D-N.D., said the administration's growth forecast is unrealistic and that Bush will be forced to dip into Social Security and Medicare trust funds to keep the tax cut and still pay for defense, education and other priorities.

``They have got a phony budget and they're going to have nothing but trouble because they tried to make their big tax cut fit in,'' Conrad said.

Unmet needs over 10 years could include a $70 billion farm bill, $70 billion to extend expiring tax provisions, up to $200 billion for missile defense and at least $250 billion to ensure that millions of middle-class taxpayers to not fall prey to the complex alternative minimum tax, according to an analysis from the liberal Center on Budget and Policy Priorities

Democrats also claimed the budget revision contains accounting tricks that just barely allow Bush and congressional Republicans to keep their political pledge not to divert Social Security payroll taxes for other government operations. One change involved a new method of accounting that effectively moved $4.3 billion from Social Security to the general revenue side of the ledger.

A second fattened the fiscal 2001 bottom line through a Treasury Department estimate that $5 billion in corporate taxes would be paid before Sept. 30, even though new tax law moved the payment deadline until after the start of fiscal 2002.

``Once again, the Bush administration is resorting to cooking the books in order to hide the impact of their budget policies from the American people,'' said Rep. Charles Rangel of New York, senior Democrat on the House Ways and Means Committee.

In Crawford, Texas, where Bush was vacationing, White House spokesman Ari Fleischer pressed the administration's view that Congress must be restrained from overspending, particularly on items not part of Bush's agenda. But, Fleischer added, ``There is no question that this is an era where choices will need to be made because no one should bust the budget for any reason. That includes Republicans.''

Republicans are using the numbers to begin an offensive: accusing Democrats of overspending. House Speaker Dennis Hastert, R-Ill., and other GOP leaders held a conference call Tuesday night with rank-and-file Republicans to outline a fall strategy of making runaway spending the issue, not the tax cut.

``Less surpluses in Washington means less money for the big-spending Democrats,'' said House Majority Leader Dick Armey, R-Texas. ``What they really want is to repeal the president's economic recovery plan.''

Most spending above congressional budget limits in recent years occurred under a GOP-led Congress and former President Clinton. And the surplus has dwindled dramatically from forecasts made in April, after the spending spree.

Lawmakers will endure some pain this fall drafting meager spending bills for fiscal 2002 and figuring out how to offset the cost of additional tax cuts, such as a House-passed $33 billion package of energy breaks and renewal of popular expiring tax provisions.

``It puts Democrats and Republicans in a box,'' said Rep. John Spratt of South Carolina, the House Budget Committee's top Democrat.