October 12, 2006
Thanks to a burst of September revenue, Treasury reported yesterday that the deficit fell to $247.7 billion, or 1.9 percent of gross domestic product (GDP).
A couple of other notable budget facts:
- Revenues again rose faster than the economy, so tax receipts have now climbed to 18.4 percent of GDP; that's higher than in all but 15 years since 1962, according to the Congressional Budget Office.
- Seven of those years were in the Clinton era, when revenues rose to a postwar high of 20.9 percent in 2000, thanks in part to the confiscatory tax rates that voters elected to reduce with their Presidential choice that same year.
In other words, to the limited extent the deficit remains a problem, it is all about spending, not a lack of revenues, says the Wall Street Journal.
The incredible shrinking deficit means that the federal government's overall debt has also begun to decline as a share of the economy:
- The final figures aren't available, but the Journal estimates that debt held by the public (the figure that counts because the feds have to pay it back) will have fallen in 2006 back to 37 percent of GDP or lower.
- The debt burden fell to 33 percent in 2001 but began climbing again as deficits grew in the wake of recession and spending to fund the war on terror; now it's falling once more.
Source: Editorial, "Declining Debt," Wall Street Journal, October 12, 2006.
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