Down Goes the Deficit

Jerry Bowyer reported Last week, Josh Bolten, the director of the Office of Management and Budget, announced that the budget forecast has been revised. The projected deficit, it seems, is sinking like a stone.

The prior estimate had been $427 billion, the new estimate is down $94 billion to $333 billion. Knowledgeable observers braced themselves for the “rosy scenario” charges that pop up any time the Bush administration says that something might be going better than expected. But something happened that rendered this line of attack impotent: The government released its monthly cash-flow statement, and it told the same story as Bolten’s forecast — revenues are rising and the deficit is falling.

Just as Hillary Clinton was trying to thrill her base by blasting the GWB Tax Cuts, we see that they are working, just as they did for JFK, and just as they did for Reagan (the only problem with Reagan is he let the Dems talk him into increased spending. GWB has been a bit loose with the excess spending himself, and I hope he can get that under control, but we do see the increased revenues that resulted from the tax cuts, and hopefully Congress will make them permanent.

The Treasury budget is not a guess, a hope, or a forecast. It is a simple accounting of the dollars that have flowed into the federal government from tax revenues and the dollars that have flowed out through expenditures. Here’s what it shows: Total revenues were up 15 percent through the first nine months of fiscal year 2005 compared to the year-ago period. During the first nine months of fiscal 2005, the federal government ran a deficit of $249.8 billion, 24 percent lower than the deficit during the same period last year. Sometimes the economic statistics printed in the newspaper look so-so; sometimes they look good, and sometimes they look great. That’s the problem with economic statistics. In the worst of times some of them are looking up, and in the best of times some of them are looking down. So what’s an investor to do? For starters, it’s always a good idea to find out whether the numbers you’re reading are based on somebody’s guess or somebody’s oath.