Budget Deficit Shrinking Unexpectedly Quickly

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(excerpt)"Bush's Budget Update May Show Deficit Goal Being Reached Early

July 11 (Bloomberg) -- President George W. Bush's administration will report this week that surging tax revenue is shrinking this year's budget deficit from the record 2004 level, possibly by as much as $90 billion, giving him a shot at fulfilling his deficit reduction promise three years early.

With tax revenue running $1 billion a day ahead of the 2004 pace in late April and May, the deficit will likely decline to about $325 billion from $412 billion last year, according to the Congressional Budget Office and private forecasters such as Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut.

``An expanding economy, creating more receipts, is putting us on a very good path to deal with our deficit,'' Treasury Secretary John Snow said at a press conference in Calgary on July 8. ``It's pretty clear now the path we are on will take us below the president's initial target.''

Bush promised during his election campaign last year that he would pare the annual deficit to about 2.25 percent of the nation's gross domestic product by 2009.

As recently as February, the government was projecting the deficit would rise this year to $427 billion, or about 3.5 percent of the nation's gross domestic product. Some economists, including Mike Englund of Boulder, Colorado, research firm Action Economics LLC, now predict the shortfall will drop to 2.5 percent of GDP this year and as low as 2.0 percent next year. That would mean a deficit next year as low as about $250 billion. (end excerpt)"

http://www.bloomberg.com/apps/news?p...d=aZgwyLsWjDDc

Just some timely facts for those who tend to view economics as a purely zero-sum game.

Higher tax rates do not imply greater tax revenues, nor do lower tax rates imply lesser tax revenues.