Friday, July 15, 2005


Bush tax cuts deliver as advertised

Continued economic good news, still being largely ignored by the mainstream media, bears out what people who understand economics knew all along: the Bush tax cuts were good for the economy, as are tax cuts generally, and tax cuts ultimately result in an increase, not a decrease, in government revenues. Tax cuts do not cause deficits. Overspending causes deficits. However, when you couple the increased revenues from sizeable tax cuts with a reduction in spending growth, what you get is shrinking deficits and economic expansion.

Jun. 10, 2005 - The government ran a deficit of $35.3 billion in May, a little over half the imbalance of a year ago thanks to a continuing surge in tax revenues, the Treasury Department said Friday.

The government's monthly budget report showed that the May imbalance was down 43.5 percent from an imbalance of $62.5 billion in May 2004. This year's deficit was the smallest May imbalance since a deficit of $27.9 billion in May 2001, the last year the government ran a budget surplus.

Through the first eight months of this budget year, which began Oct. 1, the deficit totals $272.2 billion, an improvement of 21.4 percent from the $346.3 billion in red ink run up through the first eight months of the 2004 budget year.

The Congressional Budget Office now says it expects this year's deficit to decline to around $350 billion, a significant improvement from the all-time high in dollar terms of $412.8 billion set last year.

Don’t expect to find any of this prominently displayed, or explained, on the tv news. After all, it doesn’t fit in with their predetermined agenda of trying to portray the Bush tax cuts as benefiting only the rich and causing ruinous deficits. But the facts are otherwise:

The improvement in the country's balance sheet will help President Bush meet his campaign pledge to cut the deficit in half as a percentage of the total economy by 2009, the year he will leave office.

The budget improvement is coming from a gusher of tax revenues, reflecting the economy's improving fortunes with more people working and businesses reporting higher profits.

Through the first eight months of this budget year, revenues total $1.37 trillion, an increase of 15.5 percent from the same period a year ago. Government spending is up as well, but at a slower pace, rising by 7.1 percent to total $1.64 trillion.
For May, spending totaled $188 billion, up 5.7 percent from May a year ago, while revenues totaled $152.7 billion, a sizable 32.3 percent jump from May 2004.

And this is not an isolated incident. We noted the same facts for the month of April, also ignored by the mainstream media. The source linked in this article was not, predictably enough, one of ABC’c “lead stories”. It was buried in the financial news section. Gee, if the deficit were growing at this rate, do you think you’d have to work to find a report of that?

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