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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.
The deficit may indeed be shrinking, but Bush and the republicrats are spending like drunken sailors. There is little difference between the democrats and the republicans despite the rhetoric. Did you know that even Canada taxes a smaller portion of their GDP than we do? I always thought they were supposed to be a high tax rate country, but no we are higher. While it is true they don't have a military to speak of, it still burns me up. Bush hasn't vetoed a single spending bill.
http://www.jmaximus.blogspot.com
#3Good point.
Kudlow is not telling the whole story. The fact is, the deficit and individual income tax receipts have just begun to recover from their lows reached in late 2003 and early 2004. The only "roaring" to be heard has been in spending and, to a lesser extent, those receipts whose tax rates have not been cut. See the full analysis of Kudlow's article at the URL attached to this message ( http://home.att.net/~rdavis2/kudlow3.html ).