Washington Thanks to a rush of tax revenue, President Bush disclosed Wednesday that the federal deficit shrank to $247.7 billion for the fiscal year that ended Sept. 30, small in comparison with the administration's original projection of $423 billion but still one of the largest red-ink displays in U.S. budget history.
The president credited his tax cuts and business tax incentives for the better-than-expected showing in revenues, which drove the deficit to the lowest level in four years. With profits booming, corporate taxes brought in $76.8 billion more than initially anticipated, and individual income taxes came in $46.3 billion higher.
"These budget numbers are proof that pro-growth economic policies work," he said, adding that he succeeded in cutting the deficit in half three years sooner than he had promised in 2004. But that halving came from a projected $521 billion deficit that also proved to be much too high when all the accounting was done.
Democrats belittled the sharp reduction in the deficit for the last fiscal year, with some saying that the White House deliberately exaggerated its initial projection to show a better result close to the Nov. 7 elections for control of Congress.
"No one should be fooled by the game being played here," said Sen. Kent Conrad, D-N.D. "Cutting the deficit in half from an intentionally inflated high point is a misleading goal and certainly no measure of success."
Bush trumpeted these developments at a press conference and in a later speech, but he also said the deficit will come under increasing pressure in coming years because of a growth in federal entitlement programs, including Medicare, Medicaid and Social Security.
"My hope is in the last two years of this administration that we can set aside needless politics and focus on what's right for the United States of America and solve these entitlement programs once and for all," he said.
The deficit for the 2006 fiscal year has both economic and political significance. The nearly $248 billion in red ink is the seventh-largest deficit in U.S. history. It would be enough money to give every man, woman and child in America a check for more than $825. At the same time, it is only 1.8 percent of total annual economic output, or gross domestic product.
"There's a difference of opinion in the campaign about taxes," the president said, adding that he would like to make his tax cuts permanent while "the Democrats will raise taxes."
But Rep. Carolyn Maloney of New York, the ranking Democrat on the Joint Economic Committee, countered: "Only a president with such a historically bad economic record would be this excited about a $248 billion budget deficit. What he is leaving out of his happy talk is the fact that we were running record surpluses when he took office."