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Federal deficit falls to smallest level in 4 years
Decline seen helped by higher tax revenues
Updated: 1 hour, 26 minutes ago
WASHINGTON - The federal budget deficit, helped by a gusher of tax revenues, fell to $247.7 billion in 2006, the smallest amount of red ink in four years.
The deficit for the budget year that ended Sept. 30 was 22.3 percent lower than the $318.7 billion imbalance for 2005, handing President Bush an economic bragging point as Republicans go into the final four weeks of a battle for control of Congress.
Bush called the 2006 outcome a “dramatic reduction” in the deficit which allowed him to fulfill his 2004 campaign pledge of cutting the deficit in half earlier than his original 2009 target date.


“These numbers show that we have now achieved our goal of cutting the federal deficit in half and we’ve done it three years ahead of schedule,” Bush told reporters at a Rose Garden news conference. “The budget numbers are proof that pro-growth economic policies work.”

The pledge to cut the deficit in half was based on the administration’s forecast that the 2004 deficit would hit $521 billion, a figure that proved to be too pessimistic by more than $100 billion. However, the administration has continued to use the forecast number as its benchmark for deficit reduction.

Bush said he would continue to urge Congress to make permanent his first-term tax cuts, all of which are due to expire by the end of 2010.

Republicans are hoping to appeal to voters in the upcoming election as the party that champions tax cuts while casting Democrats, who contend that those tax cuts primarily benefited the wealthy, as the party which would increase taxes.

“The fact that some are trumpeting this year’s deficit number as good news shows just how far we’ve fallen. Our budget picture is extremely serious by any measure,” said Sen. Kent Conrad, the senior Democrat on the Budget Committee.
The nonpartisan Congressional Budget Office projects that the deficit for the current budget year will rise to $286 billion. Over the next decade, the CBO forecasts that the deficit will total $1.76 trillion.

Extending the Bush tax cuts, which are currently scheduled to expire at the end of 2010, would add another $2.2 trillion to the deficit through 2016, the CBO estimates.

The 2006 deficit was the smallest deficit since a $159 billion imbalance in 2002, a shortfall that came after four straight years of budget surpluses, the longest stretch that the government had finished with surpluses in seven decades.