The usually reliable Financial Times (subscription required) reported: US budget deficit forecast cut by a third By Christopher Swann and Krishna Guha in Washington Published: July 11 2006 16:11 | Last updated: July 11 2006 19:58 The Bush administration on Tuesday cut its forecast for this year?s budget deficit by almost a third, following a surge in tax revenues. The Office of Management and Budget said that the deficit for 2006 was likely to come in at $296bn (?232bn) or 2.3 per cent of gross domestic product rather than the $423bn or 3.2 per cent of GDP estimated in February. [...] Tax revenues are forecast to rise by 11 per cent over the year. This accounts for 90 per cent of the improvement in the deficit projection. The remaining 10 per cent of the improvement is explained by a $12bn fall in forecast government spending to $2,696bn. [...] The climb in expected tax receipts appears to be driven by another bumper year for owners of capital and high earners. Corporate income tax revenues are forecast to rise by 19 per cent and individual income tax by 15 per cent. Standard payroll taxes for social insurance and retirement, a better gauge of the earnings of middle and low income groups, rose by a more modest 5 per cent. Experts said that a large part of the rise in individual income tax might be due to profits accruing to small business owners who file tax on profits under the individual code. [...] Teemu's comment: Cherry picking a fiscal year estimate revisal and jumping to conclusions does not a convincing argument make. And while the FT is too polite to say it aloud, who in their right mind expects spending to decrease on an election year? That there are some cases where lower taxes may lead to higher revenue is well known, no one serious including GOP economists believes this is the case with Bush tax cuts. See http://delong.typepad.com/sdj/2006/07/nell_henderson_.html for example Cheers, Teemu Helsinki, Finland --- Ursula Stange <Ursula@xxxxxxxxxx> wrote: > Can someone explain to me what the junk economics is > here. > I have a hard time believing this good news story > (even more so considering the Ann Coulter and Robert > Novak ads). > But I don't know enough economics to see the spin. > U. > > http://www.humanevents.com/article.php?id=16031 > > ------------------------------------------------------------------ > To change your Lit-Ideas settings (subscribe/unsub, > vacation on/off, > digest on/off), visit > www.andreas.com/faq-lit-ideas.html > __________________________________________________ Do You Yahoo!? Tired of spam? Yahoo! Mail has the best spam protection around http://mail.yahoo.com ------------------------------------------------------------------ To change your Lit-Ideas settings (subscribe/unsub, vacation on/off, digest on/off), visit www.andreas.com/faq-lit-ideas.html