This is incredible! If congress can just show restraint come budget time, the U.S. might actually run a surplus next year. Since April, the U.S. govt. has been running a surplus which has shed about $100 billion off the projected deficit this fiscal year.
According to the Dept of Treasury website, there was a 45 billion deficit in the period April-June and July is not posted yet. Where did the surplus number cited come from? DS
The big question regarding the mid-July reports on the U.S. budget deficit concerns its long-term implications. After three months of substantial surpluses, the White House's Office of Management Budget announced a $94 billion deficit reduction with only three months left in the 2005 fiscal year. This brought the previously projected deficit down from $427 to $333 billion. Such a new deficit figure was also $79 billion lower than 2004's previous record fiscal year deficit. In 2001, the Sept. 11 tragedy had combined with a subsequent recession and President Bush's draconian tax cuts to produce record budget deficits well into the future. This seemed to assure a possible widening of last year's record numbers with no end in sight. A further drag on the federal budget was the continued cost of U.S. intervention in Iraq and Afghanistan, the deteriorating Medicare and drug benefit cost problems, and the possibility of further tax reductions, such as the elimination of the alternative minimum tax. So how could the budget deficit problem have improved so quickly and dramatically? The first inkling of subsequent improvement came in May with an unexpected surge in April 15 tax collections. Although considered a possible blip at the time, a follow-up surge in May appeared to presage the real thing. With another solid surplus in June, the director of the Office of Management of the Budget, Josh Bolten, made his dramatic mid-July announcement. If the 2005 fiscal year validates these results, the improvement would not only better the original forecasts by $100 billion, but reduce the deficit percentage of the gross domestic product to 2.5percent. This would be lower even than the European Union's budget deficit restrictions, infrequently met by its own membership. Although budget results are a matter of controversy in today's highly charged political atmosphere, the following factors seem to lend verification of the budget deficit turnaround: 1) Tax revenue collections are having a banner year, running 15 percent ahead of last year. Much credit has been given to President Bush's 2003 tax cuts and subsequent reduction of capital gains and dividends. 2) The repatriation of overseas profits accumulated by American multi-national corporations at a preferred rate are proceeding posthaste in 2005. This is adding a special element to this year's tax collections. 3) The accelerating of business equipment expenditures due to special depreciation allowances last year has added substantially to corporate profits of participating companies. 4) Personal, as well as corporate, income and expenditures have exceeded predictions, adding significantly to federal coffers. The jury is still out, however, on the permanence of these reductions. The Democratic opposition is skeptical about these claims. They cite the deferment of military expenditures and the need to revise the alternative minimum tax, which will further reduce tax collections by tens of billions of dollars. Democratic leaders also cite $173 billion of Social Security tax surpluses, which they claim mask the reported budget improvement. They further indicate the need to address the deteriorating Medicare and Medicaid problems and the unresolved long-term Social Security and energy questions. Also, with the global terrorism situation heating up, and the trade deficit headed for a new all-time record, even a continued strong economy may not be able to achieve the OMB's rosy fiscal promises. === http://www.businessweek.com/ap/financialnews/D8BAMNA83.htm JUL. 13 3:29 P.M. ET The government recorded the largest June budget surplus in three years, reflecting a continued surge in government tax collections, the Treasury Department reported Wednesday. In its monthly budget statement, Treasury said the excess of government tax collections over spending rose to $22.4 billion last month. That compared with a surplus of $19.1 billion recorded a year ago and was the largest June surplus since $29 billion in 2002. The report came on a day when the Bush administration lowered its estimate for the budget deficit for this year to $333 billion, down from the $427 billion estimate it had made in February. The administration credited surging revenues from a rebounding economy for the improvement. For June, the amount of receipts totaled $234.8 billion, the highest figure, after adjusting for inflation, since June 2000. So far this year, government revenues total $1.6 trillion, a 14.6 percent gain from the $1.4 trillion collected during the first nine months of the 2004 budget year. Government spending during the budget year that began last Oct. 1 totals $1.85 trillion, a 7.3 percent rise from the $1.73 trillion spent during the same period in the 2004 budget year. The difference between tax collections and spending left a deficit of $249.8 billion so far this budget year, 23.7 percent better than last year's deficit of $327.2 billion at the same point in the budget year. The deficit for 2004 totaled $412.8 billion, the highest ever recorded but not a record as a share of the overall economy. If the administration's projection of a $333 billion deficit for 2005 comes true, it would represent a 19.3 percent improvement from last year. It would mark the first time the budget deficit has declined since President Bush took office. ------ On the Net: Treasury's Financial Management Service: http://www.fms.treas.gov
CBO Update from CBO's July 7, 2005, Monthly Budget Review: In the first three-quarters of fiscal year 2005, the federal government incurred a deficit of about $251 billion, CBO estimates, $76 billion smaller than the shortfall recorded in the same period last year. Both revenues and spending are running ahead of last year's pace, up by about 15 percent and 7 percent, respectively. With robust growth in revenues in May and June, CBO now expects that the 2005 deficit will be significantly less than $350 billion, perhaps below $325 billion, assuming that no other legislation is enacted that affects spending or revenues. CBO will release updated budget projections for the 2005-2015 period on August 15. ----------- If you make the initial deficit projection worse than what you expect it to be, then coming under it makes everything look better.
Not sure but I don't think the current deficit includes the cost of the war on terror/Iraq. I know the projections don't include that or the tax cuts, Medicare and Social Security deficits. This talk of better or worse about the current deficit is all a pipe dream when the other stuff is factored in.
That's because you're looking at the wrong source. Bill Clinton had $100 billion+ surpluses yet the national debt still rose every year he was in office according to that site.