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10-13-06, 06:08 AM #1
Numbers prove federal deficit shrank to it's smallest in 4 years last fiscal year
WASHINGTON — President Bush got some welcome news Wednesday as the federal deficit for the last fiscal year shrank to $247.7 billion, the smallest in four years, because of a nearly 12% jump in tax revenue. Bush said the numbers were more evidence that the economy was booming thanks to tax cuts that he wanted to see extended.
At two separate briefings, Bush used the news as an opportunity to reassure voters less than a month before midterm congressional elections that the economy was still in good shape, with more new jobs and investment leading to greater tax revenue.
"Tax relief fuels economic growth and … when the economy grows, more tax revenues come to Washington. And that's what's happened," Bush said at his afternoon news conference, where he was joined by Treasury Secretary Henry M. Paulson Jr.
Bush said "pro-growth policies" that congressional Democrats had resisted had helped him deliver on a 2004 campaign promise to halve the deficit, and three years ahead of schedule.
The administration has drawn criticism for its deficit projections, and Democrats cried foul again Wednesday. They said the deficit reduction was exaggerated because Bush's 2004 figure was a projection later reduced by $100 billion, meaning the deficit actually shrank 39% from 2004 to 2006.
"Cutting the deficit in half from an intentionally inflated high point is a misleading goal and certainly no measure of success," said the Senate Budget Committee's ranking Democrat, Kent Conrad of North Dakota.
Other Democrats said Bush had overstated the strength of the economy and gave too much credit to tax cuts.
"Only a president with such a historically bad economic record would be this excited about a $248-billion deficit," said Rep. Carolyn B. Maloney of New York, ranking Democrat on the Joint Economic Committee. "The large budget deficits run up by President Bush have produced record-low national saving, record-high trade deficits and record-high foreign borrowing."
Though Bush took credit for "restraining spending," federal expenditures rose 7.4% compared with 2005, to a record $2.65 trillion. The biggest spending increases: education, up 28.1%; Medicare, up 12.5%; and interest on the public debt, up 15.2%. Tax revenue also reached an all-time high of $2.41 trillion.
Many economists believe this year's smaller deficit is just a blip. The nonpartisan Congressional Budget Office predicts the deficit for fiscal 2007 will swell to $286 billion and total $1.76 trillion over the next decade.
The Congressional Budget Office also cast doubt on Bush's assertion that tax cuts would reduce the deficit. Its estimates show that extending the cuts, which are scheduled to expire in 2010, would add $2.2 trillion to the deficit through 2016.
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