Budget Deficit

Summary

The U.S. recorded a budget deficit of $248 billion in the fiscal year ended September 30, $48 billion less than the government predicted in August and the narrowest spending gap since 2002. Revenue increased 12 percent from the previous fiscal year, led by a 27 percent gain in corporate income taxes. Spending rose 7.4 percent to a record $2.65 trillion. George W. Bush is delivering two years early on his promise to cut the deficit below 2 percent of gross domestic product, down from 3.6 percent in 2004. In February the Bush administration predicted a fiscal 2006 deficit of $423 billion, and then slashed the estimate to $296 billion in August amid record tax revenue. The Treasury on Sept 15 took in an unprecedented $85.8 billion in taxes, including a one-day record $71.8 billion in corporate taxes. Bush credited the "strong and growing" economy as helping to reduce the federal deficit.

Reaction

When I read this article it surprised me. I was surprised by the article itself, but also that news like this hasn't received more discussion. A shortfall of 2 percent of GDP is what I would consider front page news. A narrowing of more than 1 Ð... percentage points in such a short time is news within itself. This 2 percent is big when compared to the debt level during other times of war. When the U.S. poured itself into WWII the deficit widened more than 20 percent. The change between the spring of 2006 and summer 2006 has been taxes. More workers are paying into Social Security and Medicare. Higher earners pay higher taxes. Extra corporate taxes flowed in and are 27 percent higher. I was very surprised that the government was able to lower the federal debt. The economy is facing many difficulties right now with the war, higher energy prices, and a cooling housing market. With the difficulties the U.S. is facing it is good to see that the current administration may