U.S. Deficit Estimated To Drop to $205 Billion
The federal deficit will fall to $205 billion in the fiscal year that ends in September, a considerably smaller figure than earlier estimates and one that is less than half of the peak deficit, in 2004, according to new White House projections.
President Bush plans to announce the new figure at a news conference today. The new number, if correct, means the deficit would shrink to just 1.5 percent of the nation's total economic output this year, a smaller portion of the overall economy than in 18 of the past 25 years, administration officials said.
White House budget officials have been predicting for months that this year's deficit would fall short of the $244 billion projected in February because of stronger-than-expected revenue collections. The deficit was $248 billion last year and hit a peak of $413 billion in 2004.
Yesterday in Cleveland, Bush credited his signature tax cuts for the improved fiscal outlook, a position that has been challenged by many economists.
The deficit is "going to be substantially lower than it was three years ago," Bush told Cleveland business leaders. "We kept your taxes low, which caused the economy to grow, which yielded more tax revenues. And because we set priorities, the deficit is shrinking."
-- Lori Montgomery