http://www.investors.com/editorial/issues.asp?v=10/22A Deficit In Decline
INVESTOR'S BUSINESS DAILY
Budget: President Bush's rivals have criticized him severely for his growing deficits. But — surprise — recent data show they're getting better, not worse.
Data for the just ended fiscal year show a budget deficit of $374 billion. That's far bigger than last year's $158 billion deficit.
So that's a bad thing, right? Maybe not. The deficit is already shrinking from what budget experts expected just months ago. In July, the White House said it expected the deficit to come in at $455 billion. And just last month, the Congressional Budget Office forecast red ink of $401 billion.
So what happened?
It seems growth and a bit of luck on spending performed their magic. A revived economy added $12 billion in unexpected tax revenues to the Treasury. And even spending was $55 billion less than expected. Add in some other changes, and the deficit is actually lower by $81 billion than forecast just three months ago.
But you might not have heard this bit of good news.
Instead, you heard Bush's tax cuts are causing ever-growing deficits. Indeed, a study from the Media Research Center shows 66 of 123 stories on CBS, NBC and ABC in the last year highlighted Bush's tax cuts as the cause of the deficits. Just 12, or less than 10%, focused on nonwar spending.
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http://www.investors.com/ As Office of Management and Budget data show, only 23% of the deficit is a result of tax cuts; 77% of the deficit stems from higher spending and the weak economy inherited by Bush. Without those, the deficit basically shrinks to nothing.
That won't stop the continued misreporting of the deficit. Already, we've heard the news litany of a "record" $374 billion deficit expanding to as much as $500 billion next year.
Well, even at $374 billion, the deficit is just 3.5% of GDP — only a bit above its long-term average. And that — not the raw number itself — is the most important way to measure the deficit's impact.
Yet based on such fear-mongering, some people want to reverse Bush's tax hikes just to cut the deficit. That would be a sad mistake.
The Heritage Foundation, using a widely respected econometric model, Tuesday estimated repealing the tax cuts would kill 174,000 jobs, slash Americans' disposable incomes by $52 billion and trim $14.3 billion from GDP each year through 2008.
While the deficit, most economists agree, is little more than an accounting device, tax hikes have a real impact on the economy.
Is it really a good idea to sacrifice hundreds of thousands of jobs and billions in output to satisfy the accountants?
