Deficit diminishes because of rising tax revenues
The shrinking deficit is part of Bush's promise to cut the deficit in half by 2009.
WASHINGTON (AP) -- The government ran a deficit of $35.3 billion in May, a little over half the imbalance of a year ago, thanks to a continuing surge in tax revenues, the Treasury Department said Friday.
The government's monthly budget report showed that the May imbalance was down 43.5 percent from an imbalance of $62.5 billion in May 2004. This year's deficit was the smallest May imbalance since a deficit of $27.9 billion in May 2001, the last year the government ran a budget surplus.
Through the first eight months of this budget year, which began Oct. 1, the deficit totals $272.2 billion, an improvement of 21.4 percent from the $346.3 billion in red ink run up through the first eight months of the 2004 budget year.
The Congressional Budget Office now says it expects this year's deficit to decline to around $350 billion, a significant improvement from the all-time high in dollar terms of $412.8 billion set last year.
The Bush administration in February was forecasting the deficit would hit a new record of $427 billion this year but administration officials now say the red ink will be well below that figure. The administration will release its new forecast later this summer when it presents Congress with a mid-session review of the budget.
The improvement in the country's balance sheet will help President Bush meet his campaign pledge to cut the deficit in half as a percentage of the total economy by 2009, the year he will leave office.
The budget improvement is coming from a gusher of tax revenues, reflecting the economy's improving fortunes with more people working and businesses reporting higher profits.
Through the first eight months of this budget year, revenues totalled $1.37 trillion, an increase of 15.5 percent from the same period a year ago. Government spending went up as well, but at a slower pace, rising by 7.1 percent to total $1.64 trillion.
For May, spending totaled $188 billion, up 5.7 percent from May a year ago, while revenues totaled $152.7 billion, a sizable 32.3 percent jump from May 2004.