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January 14, 2005

First Entry in 2005 List of Biggest Stories Suppressed by MSM: The Deficit’s Shrinking

And the reason for it is that the Bush tax cuts are powering the economy and increasing actual dollars collected in income tax.

From NRO Economics Editor Larry Kudlow:

Heres one story you wont find on tomorrows front pages: The U.S. Budget Deficit Is Shrinking Rapidly. The headline would be accurate, but the mainstream media is much more interested in talking down this booming economy than telling it like it is.

This weeks Treasury report on the nations finances for December shows a year-to-date fiscal 2005 deficit that is already $11 billion less than last years. In the first three months of the fiscal year that began last October, cash outlays by the federal government increased by 6.1 percent while tax collections grew by 10.5 percent. When more money comes in than goes out, the deficit shrinks.

...Wire reports are loaded these days with accounts of an expanded trade gap (driven mostly by slower exports to stagnant European and Japanese economies, along with higher oil imports from the peak in energy prices). But theres not a single report I can find that mentions the sizable narrowing in U.S. fiscal accounts. Behind this really big budget story is the even-bigger story: The explosion in tax revenues has been prompted by the tax-cut-led economic growth of the past eighteen months.

With 50 percent cash-bonus expensing for the purchase of plant and equipment, productivity-driven corporate profits ranging around 20 percent have generated a 45 percent rise in business taxes. At lower income-tax rates, employment gains of roughly 2.5 million are throwing off more than 6 percent in payroll-tax receipts. Personal tax revenues are rising at a near 9 percent pace.