Budget Deficit Projections Drop ... Slightly

The Congressional Budget Office has revised earlier projections of the federal budget deficit for the fiscal year ending on September 30 ... it will run somewhere around $331 billion, only the third highest ever. Last year the deficit was approximately $412 billion. The CBO's current projects have the deficit for the upcoming fiscal year decreasing even further, to $314 billion, and then increasing again to $324 billion for fiscal year 2007 and $335 billion the next year.

The reduction of this year's red ink has come from an unexpected jump in corporate tax revenue, which increased by 42% this year. The CBO's director says his analysts "don't really know" whether that increase will continue after this year but that such a trend "doesn't seem likely."

Various parts and pieces of this scenario have dribbled out over the past few days - the Times reported a couple days ago on the increase in corporate tax revenue, and I think I read first of the 'reduced' deficit in the Washington Post. David Cook puts it all together today in the Christian Science Monitor, an article which I highly recommend.

I'm certainly glad to hear that the deficit will be less disgusting than earlier estimates had it pegged at. But $331 billion is still far too much red ink, a problem which will not be helped by additional wasteful spending, like that epitomized by the recent transpor(k)tation legislation and much of the energy bill. The question now becomes, will Congress and the White House take this good budget news and get serious about reining in spending to stabilize that number and make it decrease further?

Congress we can be fairly sure of - no. They will not stop spending, because they do it shamlessly, without any thought of punishment and to the praise of their constitutents. How about the executive? Said the president's spokesman "The president is committed to the combination of strong economic growth and spending restraint that will keep us on track to cut the deficit in half by 2009." Let's just say I'll believe that when I see it.