WASHINGTON -- President Bush touted new deficit figures yesterday indicating considerable improvement upon earlier administration predictions, saying they show the wisdom of his tax cuts.
Bush himself announced the figures -- a task that for the most part has been left to lower-ranking officials in the past. The new figures show the deficit for the budget year ending Sept. 30 will be $296 billion -- much better than the $423 billion that Bush predicted in February and a slight improvement over 2005.
Bush said the improvement is due to tax cuts he pushed in 2001 and 2003 and his clampdown on domestic agencies funded by Congress. ``These tax cuts left nearly $1.1 trillion in the hands of American workers and families and small-business owners. And they used this money to help fuel an economic resurgence that's now in its 18th quarter," he said. ``Economic growth fueled by tax relief has sent our tax revenues soaring."
Impressive profits and big income gains by the wealthy are largely responsible for the surge in revenues and the deficit drop.
However, the results are less impressive when compared with the $318 billion deficit posted last fall for fiscal 2005. Despite strong revenues, the high costs of the Iraq war and Gulf Coast hurricane relief have weighed on the deficit -- as have higher interest payments paid on the national debt.
But when measured against the size of the economy -- at 2.3 percent of gross domestic product -- the 2006 deficit would be lower than the deficits of 17 of the past 25 years. And if recent patterns hold, this year's deficit figure should improve even more by the time final figures are announced.
The deficit for next year would ease back up to $339 billion, reflecting war costs and cautious revenue projections. The White House predicts it will drop to $188 billion in 2008, but that assumes a sharp slowdown in war spending.
``The 2006 deficit may be a bit lower, but it represents a $600 billion swing from the surplus projected in 2001. And a deficit of $296 billion is still a large deficit. In nominal terms, it's one of the four largest in history," said Representative John Spratt Jr. of South Carolina, top Democrat on the Budget Committee.
``Let's not boast about a $300 billion deficit," said Senate minority leader Harry Reid. ``Any statistic you look at recognizes the rich in America are getting richer, the poor are getting poorer, and the middle class is getting squeezed."