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U.S. Budget Deficit Tumbles, Congressional Analysts Say
AP ^ | Jul 7, 2005 | Andrew Taylor

Posted on 07/07/2005 3:41:41 PM PDT by Skylab

U.S. Budget Deficit Tumbles, Congressional Analysts Say

By Andrew Taylor Associated Press Writer Published: Jul 7, 2005

WASHINGTON (AP) - Higher-than-expected tax receipts and the steadily growing economy have combined to produce an improved picture for the federal budget deficit, congressional analysts say.

The deficit for the current budget year, which runs through Sept. 30, should be "significantly less than $350 billion, perhaps below $325 billion," according to the Congressional Budget Office. The agency produces nonpartisan estimates for Congress and will put out a full update Aug. 15.

Thursday's new figures come as the White House is to release its midyear budget review July 13. Administration figures are also expected to show significant improvement from the $427 billion current-year deficit it predicted in January.

Last year's $412 billion deficit was a record in dollar terms, but economists say the more significant measure is against the size of the economy. In those terms, the current deficit picture - a $350 billion deficit for this year would equal 2.9 percent of gross domestic product - is significantly better than deficits witnessed in the mid-1980s and early 1990s. Then, deficits of 4 percent to 6 percent of GDP were common.

The biggest factors for the improving deficit picture are higher tax receipts from corporations and individuals. The economy is performing slightly above earlier administration expectations. Despite the improvement projected over the short term, neither the CBO nor the administration's Office of Management and Budget is expected to dramatically overhaul its long-term deficit projections, which show a steady decline in the level of red ink through the end of the decade but anticipate a spike in the deficit soon thereafter as the baby boom generation claims its retirement benefits.

"This is good, but let's try to figure out if there's anything permanent here," said CBO Director Douglas Holtz-Eakin.

Still, the new numbers will make it easier for the White House to credibly claim it will meet its goal of cutting the deficit in half - from the $521 billion it originally predicted for fiscal 2004 - by the time President Bush leaves office. Budget watchdog groups like the bipartisan Concord Coalition say White House budget projections are suspect since they leave out long-term costs for the war in Iraq and other factors.

"The numbers are coming out better," said White House budget director Joshua B. Bolten in an interview last month. "We had projected a very steady path of decline of the deficit, especially as a percentage of GDP, which is the right way to judge it. Right now, we're doing better than hitting that target. They'll be better because we've gotten better revenues than we originally projected."

As it addresses the deficit, the White House has focused chiefly on clamping down on domestic programs whose budgets are appropriated every year by Congress. That's only about one-sixth of the overall budget, however. Congress is also planning a five-year, $35 billion cut from automatically budgeted programs such as Medicaid and farm subsidies.

"The long-term budget issues are the mandatory programs - Social Security, Medicare, Medicaid. Everything else is dwarfed by that," Holtz-Eakin said. He added that the current improvement in the deficit picture "looks like a pittance" when compared with the long-term liabilities.

AP-ES-07-07-05 1754EDT


TOPICS: Business/Economy; Front Page News; Government
KEYWORDS: braggingaboutfailure; budget; budgetdeficit; bushtaxcuts; cary; deficit; supplyside
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1 posted on 07/07/2005 3:41:42 PM PDT by Skylab
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To: Skylab
economists say the more significant measure is against the size of the economy.

This cannot be repeated enough because most people don't grasp it the first twenty times.

2 posted on 07/07/2005 3:43:02 PM PDT by Dr.Hilarious (If Al Qaeda took over the judiciary and mainstream media, would we know the difference?)
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To: Dr.Hilarious

The $$ dazzle them and the RATspeak you hear on the MSM. You are 100% correct in your post.


3 posted on 07/07/2005 3:44:50 PM PDT by IllumiNaughtyByNature (Forget about Terrorism Fool! My pug has the master plan!)
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To: Dr.Hilarious

Exactly.


4 posted on 07/07/2005 3:45:20 PM PDT by Skylab
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To: Dr.Hilarious

Hmmm, tax cuts equal higher revenues? Shocked, shocked i tell you!


5 posted on 07/07/2005 3:47:01 PM PDT by icwhatudo (The rino borg...is resistance futile?)
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To: Dr.Hilarious

Hmmm, tax cuts equal higher revenues? Shocked, shocked i tell you!


6 posted on 07/07/2005 3:47:29 PM PDT by icwhatudo (The rino borg...is resistance futile?)
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Comment #7 Removed by Moderator

To: Skylab

Well, well, well. Gotta be Bush's fault.


8 posted on 07/07/2005 3:48:58 PM PDT by Chuck54 (Someone please ping me when Barak Obama utters an original thought.)
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To: Skylab

Good post. Bad news for the MSM and the Dems, who will ignore it. But they don't call the shots any more . . .


9 posted on 07/07/2005 3:49:00 PM PDT by cvq3842
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To: K4Harty
The $$ dazzle them and the RATspeak you hear on the MSM

You got it. The see Petey Jennings do that little incredulous rolling of the eyes as he said 'The US budget deficit reached a new high today...with no end in sight" or whatever, and they think "A new high for the budget deficit."

The same MSM folks who report this as if it's some sign of the apocalypse are right on the spot, though, to criticize any budget "shortfalls"--"While the President said today his was the largest budget for ((whatever)), in adjusted dollars it falls far short of the level of funding in the 1970's..." or whatever.

It's not paranoid Republican ranting--it's true. They use whichever standard--adjusted $, proportion of the GNP, whatever--gives them the best spin.

10 posted on 07/07/2005 3:49:29 PM PDT by Dr.Hilarious (If Al Qaeda took over the judiciary and mainstream media, would we know the difference?)
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To: icwhatudo
I read about this a week or two ago and was wondering why the MSM weren't reporting this good economic news. Then I remembered how they covered Warren Buffett extensively when he was betting against the dollar, and I saw one story about how that wasn't a good bet a few months later.

If this were news under the Clinton Presidency, the cover of Time would read "The New Boom!"

11 posted on 07/07/2005 3:51:39 PM PDT by Dr.Hilarious (If Al Qaeda took over the judiciary and mainstream media, would we know the difference?)
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To: Dr.Hilarious; expat_panama

yep. There was nothing unexpected about receipts going up. It happens every time rates are cut. The rate cuts are just not dynamically scored. That is all.


12 posted on 07/07/2005 3:56:10 PM PDT by fooman (Get real with Kim Jung Mentally Ill about proliferation)
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To: Dr.Hilarious

If Clinton were in there we would hear: the budget deficit will be eliminated in 6 years, no 8, no 12, no 7, no 9, no 10, no 8, etc.


13 posted on 07/07/2005 3:56:50 PM PDT by RightWhale (withdraw from the 1967 UN Outer Space Treaty)
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To: Dr.Hilarious
Many Americans and some Freepers have a problem with comparative analysis. One always has to put these issues and candidates into comparative perspective.
14 posted on 07/07/2005 4:01:15 PM PDT by plain talk
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To: RightWhale
"Budget deficits as far as the eye can see."--Bill Clinton

And then he took credit for the deficit's erasure!

15 posted on 07/07/2005 4:10:27 PM PDT by Dr.Hilarious (If Al Qaeda took over the judiciary and mainstream media, would we know the difference?)
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To: Dr.Hilarious

There was a time when they were wondering what to do with the annoying surpluses.


16 posted on 07/07/2005 4:16:09 PM PDT by RightWhale (withdraw from the 1967 UN Outer Space Treaty)
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To: Sam the Sham; A. Pole; Willie Green

Surely you can find something to whine about here.


17 posted on 07/07/2005 4:19:08 PM PDT by listenhillary (The interests of Muslims and interests of socialists coincide in the war against crusaders~OBL)
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To: Dr.Hilarious
This cannot be repeated enough because most people don't grasp it the first twenty times.

That phony "statistic" is meaningless, and shouldn't be referenced at all.
It's "junk economics" ~ an apple-to-oranges comparison that has no intelligent significance.

18 posted on 07/07/2005 4:24:41 PM PDT by Willie Green (Some people march to a different drummer - and some people polka)
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To: listenhillary

LOL! And if the ChiComs want their money back from the bonds they've been buying... stiff 'em!


19 posted on 07/07/2005 4:30:18 PM PDT by Incorrigible (If I lead, follow me; If I pause, push me; If I retreat, kill me.)
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To: Skylab
How can this be?
Didn't the Dems warn us the tax cuts would be a disaster?
20 posted on 07/07/2005 4:35:28 PM PDT by Jorge
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