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http://www.msnbc.msn.com/id/15220076/
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>Federal deficit falls to smallest level in 4 years
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>Decline seen helped by higher tax revenues
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>Updated: 10:47 a.m. CT Oct 11, 2006
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>WASHINGTON - The federal budget deficit, helped by a gusher of tax
>revenues, fell to $247.7 billion in 2006, the smallest amount of red ink
>in four years.
>
>The deficit for the budget year that ended Sept. 30 was 22.3 percent lower
>than the $318.7 billion imbalance for 2005, handing President Bush an
>economic bragging point as Republicans go into the final four weeks of a
>battle for control of Congress.
>
>Bush called the 2006 outcome a "dramatic reduction" in the deficit which
>allowed him to fulfill his 2004 campaign pledge of cutting the deficit in
>half earlier than his original 2009 target date.
>
>"These numbers show that we have now achieved our goal of cutting the
>federal deficit in half and we've done it three years ahead of schedule,"
>Bush told reporters at a Rose Garden news conference. "The budget numbers
>are proof that pro-growth economic policies work."
>
>The pledge to cut the deficit in half was based on the administration's
>forecast that the 2004 deficit would hit $521 billion, a figure that
>proved to be too pessimistic by more than $100 billion. However, the
>administration has continued to use the forecast number as its benchmark
>for deficit reduction.
>
>Bush said he would continue to urge Congress to make permanent his
>first-term tax cuts, all of which are due to expire by the end of 2010.
>
>Republicans are hoping to appeal to voters in the upcoming election as the
>party that champions tax cuts while casting Democrats, who contend that
>those tax cuts primarily benefited the wealthy, as the party which would
>increase taxes.
>
>Both spending and tax revenues climbed to all-time highs in 2006. The
>sharp narrowing of the deficit reflected the fact that revenues climbed by
>11.7 percent, outpacing the 7.3 percent increase in spending.
>
>The 2006 deficit was far lower than the $423 billion figure the
>administration had projected last February and also represented an
>improvement from a July revised estimate of $295.8 billion.
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>Republicans said the big improvement showed that Bush's economic policies
>were working to stimulate growth and boost tax revenues. But Democrats
>said the narrowing of the deficit would be temporary as the pending
>retirement of 78 million baby boomers will send costs of the government's
>big benefit programs soaring.
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>"The fact that some are trumpeting this year's deficit number as good news
>shows just how far we've fallen. Our budget picture is extremely serious
>by any measure," said Sen. Kent Conrad, the senior Democrat on the Budget
>Committee.
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>The nonpartisan Congressional Budget Office projects that the deficit for
>the current budget year will rise to $286 billion. Over the next decade,
>the CBO forecasts that the deficit will total $1.76 trillion.
>
>Extending the Bush tax cuts, which are currently scheduled to expire at
>the end of 2010, would add another $2.2 trillion to the deficit through
>2016, the CBO estimates.
>
>The 2006 deficit was the smallest deficit since a $159 billion imbalance
>in 2002, a shortfall that came after four straight years of budget
>surpluses, the longest stretch that the government had finished with
>surpluses in seven decades.
>
>Since that time, the government has recorded three of the biggest deficits
>in history including including an all-time record in dollar terms of $413
>billion in 2004.
>
>The reason for the improvement this year was a second consecutive big jump
>in revenues, propelled by strong economic strongth. The 11.7 percent
>increase in revenues was the second biggest percentage gain in history.
>
>The administration credits its tax cuts for the improving economy,
>contending they helped the nation withstand the 2001 recession, the
>terrorist attacks and a wave corporate accounting scandals.
>
>Democratic critics, however, contend that this year's improvement in the
>deficit will be only temporary. They contend the deficit is set to explode
>over the next decade as the baby boomers begin to retire and demands on
>Social Security and Medicare increase.
