Washington – The federal deficit is running sharply lower through the first nine months of this budget year as the growth in revenues continues to outpace spending growth.
The Treasury Department reported Thursday that the government ran a surplus of $27.5 billion in June, up sharply from the $20.5 billion surplus recorded in June 2006. The government normally runs a surplus in June, a month when individual taxpayers and corporations make quarterly payments to the Internal Revenue Service.
With the June surplus, the total deficit through the first nine months of the budget year, which began Oct. 1, is $121 billion, down 41.4 percent from the same period a year ago, when the deficit totaled $206.5 billion.
The Bush administration this week announced a deficit projection for this year of $205 billion, down from the $244 billion deficit it forecast in February, reflecting the fact that revenue growth has continued to come in at higher-than-expected levels.
That imbalance would be the lowest in five years and an improvement from the $248.2 billion deficit recorded in the 2006 budget year, which ended Sept. 30.
When Bush took office in 2001, both the White House and the Congressional Budget Office projected cumulative surpluses of $5.6 trillion over the next decade. But the 2001 recession, terrorist attacks that year and the spending needed to fight a global war on terrorism erased those surpluses.
The administration credits Bush’s 2001 and 2003 tax cuts with fueling the current surge in revenue, but Democrats argue that the stimulative effect of the tax cuts has now waned and the economy is being slowed by the drag from the increased borrowing needed to finance the deficits.
For June, the surplus of $27.5 billion ranks as the eighth-highest surplus for that month. The largest surplus for June was $56 billion, recorded in 2000 when President Clinton was in office.
At that time, revenues were being swelled by gains from a booming stock market that peaked earlier that year before going into a nose dive as the speculative frenzy over Internet companies faded.
