UPDATE 1-Snow says tax revenue helping U.S. budget deficit
Fri Jul 8, 2005 07:26 PM ET
(Recasts, adds Snow comments, background)
By Mark Felsenthal
CALGARY, Alberta, July 8 (Reuters) - U.S. Treasury Secretary John Snow said on Friday the U.S. budget deficit is shrinking faster than expected because of high tax revenues.
"It's pretty clear now that the path we're on will take us below the president's initial target, that is below 2 percent of GDP and beyond that going forward," Snow said at a press conference with Canadian Finance Minister Ralph Goodale.
The administration has pledged to achieve that goal by the time it leaves office in 2009.
"The outlook for the fiscal deficit for the next couple of years is excellent," Snow said.
In addition to stronger-than-anticipated revenues due to a strong economy, spending constraints have also helped rein in the deficit, he said.
"Fortunately the last couple of years we've seen spending under control, too," Snow said.
Even so, in the last fiscal year, the U.S. budget deficit widened to a record $412 billion. Governments of major industrial economies have expressed concerned the U.S. deficit is contributing to "global imbalances" that are risks to economic growth around the world.
The White House Office of Management and Budget is due to publish its "midsession" update of budget figures on Wednesday, July 13.
Earlier this year, the White House projected a $427 billion deficit for fiscal year 2005 that ends Sept. 30.
Some private analysts are now projecting a deficit of around $350 billion based on figures showing stronger-than-expected tax revenues in the spring.
Snow suggested forecasts of an improved fiscal picture may be accurate.
"I was able to share some good news with the minister that the U.S. deficit is clearly moving in the right direction. We'll be announcing the final numbers and I'll wait to do that until the middle of next week," he said.
Snow said President Bush's tax-cut policies were behind the robust economy.
"The way you deal with budget deficits is, one, have a strong growing economy, and since the president's tax cuts took effect in May of '03 we've had the American economy grow strongly," Snow said. The second deficit-cutting tool is tighter spending, he said. |
