Deficit Numbers Show the Positive Impact of Tax Relief

The numbers released by Treasury yesterday demonstrate the positive impact that tax relief can have on our economy and our fiscal outlook. By lowering the tax burden and encouraging more business investment and hiring, Congress helped create the conditions for economic growth, which has led to a surge in revenue flowing into the Treasury. (FY 2005 revenues were 14.5 percent higher than the year before and FY 2006 tax receipts are 11.8 percent above last year.) Due to these pro-growth policies, the deficit is dropping, but we must do even more to restrain spending so that we can balance the budget. This is especially critical in preparing the way as we work to address the budgetary challenges that face us in the near future with the retirement of the baby-boom generation.

The Treasury numbers for FY 2006 show:

* The FY2006 budget deficit was $248 billion, or 1.9 percent as a share of the economy (GDP) -- below the average of the past 40 years of 2.3 percent of GDP.

* This year's deficit has fallen by $71 billion from last year's actual deficit of $318.7 billion.

* The FY2006 deficit is 41 percent lower than the OMB's original projection of $423 billion in February of this year.