For the year, revenue and spending are both at record levels. Revenue gains are up 8 percent while outlays are up at a slower pace of 2.5 percent, compared to the same period a year ago. Growth in spending has been slower this year in part because of the absence of last year's huge outlays for hurricane relief.What's weird about this? It completely ignores why the federal government spends money. With strong corporate profits, low unemployment and (although the article doesn't mention this) incomes increasing, not only is there more tax revenue, but there's less need for government handouts. This "float the boats" effect, and welfare reform, are a big reason that the budget has been decreasing, and the deficit has been plummeting, as a percentage of GDP. Now we just need to straighten out social security, and we'll be all set.
The increase in revenues has been supported by continued strength in corporate profits and low unemployment, which has helped to push individual income taxes higher.
For the 2007 budget year, which ends on Sept. 30, the Congressional Budget Office is projecting a federal deficit of $177 billion. That would be down 28.7 percent from last year's imbalance of $248.2 billion, which had been the lowest deficit in four years.
The federal budget was in surplus for four years from 1998 through 2001 as the long economic expansion helped push revenues higher.
13 June 2007
Where's A Cocktail Napkin When You Need One
OJ points us to an AP article on the plummeting federal deficit. I was particularly struck by this passage: