United States Dept. of the Treasury Bureau: deficit on track to shrink below the Administration’s initial target of cutting the deficit in half by '09

http://www.fms.treas.gov/bulletin/b35poe.doc

Federal budget
The Federal budget deficit was $250 billion through 9 months of fiscal year 2005, $77 billion less than in the comparable months of the previous fiscal year. The deficit has been narrowing as receipts of withheld individual income and employment taxes were up 4.5 percent from the same period in fiscal year 2004. Nonwithheld individual income and employment taxes (which are estimated and paid quarterly) jumped 28.6 percent in the first 9 months of the fiscal year compared to last year. In addition, net corporate income tax receipts have soared 41.0 percent as profits strengthened. Total receipts through the fiscal year to June have risen 14.6 percent from the same months last year, or $204 billion. Outlays were up 7.3 percent so far this fiscal year from last year, or $127 billion.

Mainly because of the boost to tax payments, the Administration cut its estimate of the fiscal year 2005 deficit to $333 billion in the Mid-Session Review (MSR) of the Fiscal Year 2006 Budget from the $412 billion recorded last fiscal year and down from the previous estimate for this fiscal year of $427 billion. The new $333 billion deficit figure is about 2.7 percent of GDP, much smaller than the 3.6 percent in 2004. Going forward, the MSR projects the deficit will fall further as a share of GDP in the next few fiscal years. The new estimates project the deficit to dip to 2.6 percent of GDP in fiscal year 2006, decline to 1.7 percent in 2007, and then drop to 1.1 percent of GDP from fiscal years 2008 to 2010. A deficit of 1.1 percent of GDP would be well below the 40-year average of 2.3 percent of GDP. That puts the deficit on track to shrink below the Administration’s initial target of cutting the deficit in half by fiscal year 2009.