Deficit Forecast Gets Cut By Nearly $100 Billion

Today, the Bush Administration reduced its forecast for the year’s budget deficit from $427 billion in February to $333 billion as a result of larger than expected tax revenues.

President George W. Bush attended a Cabinet meeting and said that the deficit would be reduced to half quicker than he previously anticipated.

“I told the Congress and told the country we’d cut the deficit in half by 2009,” Bush told reporters during the meeting. “We’re ahead of projections now. These numbers indicate that we’re going to cut the deficit in half faster than the year 2009 so long as Congress holds the line on spending.” Bloomberg News reports:

The 2005 shortfall would represent 2.7 percent of U.S. gross domestic product, compared with the 3.5 percent in February’s forecast, the White House Office of Management and Budget said today in Washington. The OMB predicted a deficit of $341 billion in the fiscal year ending Sept. 30, 2006, or 2.6 percent of the economy.

Tax payments in late April and May have been running $1 billion a day ahead of last year’s pace, and the OMB figures bring the government’s estimate in line with those of private forecasters.

Analysts are still skeptical about the large cut in the deficit because, costs like those of war spending and the rising costs of Medicare and Medicaid aren’t factored in.

“It’s good news for today, but I wouldn’t go around popping champagne corks,” said Bloomberg quoted former tax official Bruce Bartlett as saying. He says that the smaller deficit won’t last long.

Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.