When politicians talk about the federal budget, they like to focus on "the deficit," or (once in a great while) the surplus. This is a political disguise that lets them avoid discussing the components of the budget -- spending and revenues -- lest the voters react in horror and ask them to tax and spend less.
So we thought our readers might like to know that so far this year federal tax revenues are booming. Overall, in the first seven months of Fiscal Year 2005 through April 30, they climbed by $146 billion to a total of $1.216 trillion. That's an increase of 13.6% over a year earlier, some four or five times the inflation rate, and the kind of raise that most American families can only dream about. Income tax receipts are driving this windfall, with individual revenues up $66 billion, or 16%, to $547 billion. Corporate income taxes are rolling in even faster, tsunami-like in fact, rising 48% to $134 billion.
Not even Congress can spend all of this in just a few months, though it is trying. According to the Congressional Budget Office, spending in the first seven months of FY 2005 rose 7.1%, more than twice the inflation rate, or about $97 billion, to $1.451 trillion. Defense outlays rose 7.6%, including money for Iraq and Afghanistan, down from the double-digit increases of the last couple of years. But Medicare outlays grew by 9.6%, and this even before the GOP's prescription drug benefit kicks in next year.
Nonetheless, CBO concluded that the revenue surge means the federal deficit for the year will fall substantially, perhaps to "the vicinity of $350 billion." That would be down from some $412 billion last year, and well below the White House budget office estimates.... |