Shrinking deficit
"The Treasury Department's tax-collection data for April puts the federal deficit over the 12-month period ending April 30 at $144.7 billion. This leaves the deficit at about 1 percent of GDP, and declining, which is not a significant economic problem," Peter Ferrara writes at National Review Online (www.nationalreview.com).
"The decline is due to surging tax revenues from a booming economy. The deficit is down about $120 billion, or 45 percent, since last April. It has declined by $309 billion, or 68 percent, over the last three years from the peak of $455 billion in April 2004. This experience shows that combining pro-growth tax cuts with just moderate spending restraint can sharply reduce, and, indeed, eliminate the deficit," said Mr. Ferrara, a senior fellow at the Free Enterprise Fund, director of entitlement and budget policy at the Institute for Policy Innovation, and general counsel for the American Civil Rights Union.
"The deficit has declined now for 26 consecutive months and will continue to do so over the next 5 months until the end of the fiscal year. The deficit will consequently soon be well below 1 percent of GDP. Even with some modest slowdown in economic growth, this deficit could be eliminated over the next two years with reasonable restraint in the growth of federal spending.
"But any such reasonable restraint in spending is not going to happen with the new Democrat Congress. Their emerging budget plan calls for even more rapid increases in federal spending, sopping up all projected increases in revenues, which will leave no scope for continued deficit reduction in the next fiscal year. They tout a plan to eliminate the remaining rapidly shrinking deficit over a ridiculous five years, and that only with tax increases." |
