Tuesday, July 12, 2005
while the economy's momentum has led to a surge in tax revenues, progress in reducing the deficit depends on spending restraint. On that front, some remain disappointed.(Here's CBO's latest projection.) The standardized budget deficit for 2005 is projected to be $310 billion. If we come in at $325 it means the rest has to come from government reductions in spending or tax increases.
At the moment, Congress is spending the money almost "as fast as it comes in," Riedl said.
Through the first nine months of fiscal 2005, federal spending rose $128 billion, or 7.4%, to $1.85 trillion. Spending on defense and nondefense has risen at similar rates, CBO says.
Thus the debate on whether the current wave of tax collections is evidence of supply-side economics or just fortuitous timing.