American Budget Deficit Falls To Lowest Level in Five Years
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WASHINGTON — The American government posted the smallest budget deficit in five years as tax revenue reached a record and spending rose at the slowest pace in President Bush’s presidency.
The deficit narrowed to $162.8 billion in the fiscal year that ended September 30, the third straight annual decline and lowest since $158 billion in 2002, the Treasury Department said yesterday in Washington.
Total spending rose 2.8% for the year, compared with an average annual increase of 6.8% since 2001, the year Mr. Bush took office. Revenue in 2007 increased 6.7%, helping to reduce the annual budget gap more than one-third from $248.2 billion last year.
“This year’s budget results demonstrate the remarkable strength of the U.S. economy,” Treasury Secretary Henry Paulson said in a statement. “We must keep taxes low and restrain federal spending.”
For the month of September, the government posted a surplus of $111.6 billion, almost double the $56.2 billion surplus from the same month in 2006, the Treasury said.
Economists expected the annual shortfall to total $162.5 billion, according to the median of eight estimates in a Bloomberg News survey. The Congressional Budget Office on October 5 predicted a $161 billion shortfall.
The White House budget chief, Jim Nussle, predicted last week a 2007 budget deficit of between $165 billion and $170 billion. The administration in July predicted a $205 billion shortfall.
Corporate tax receipts grew by 4.6% during the 12- month period, a fraction of the 39% pace on average in the past three years.
Slowing growth in tax revenue from corporate income may stem from weaker profits, Bank of America Securities LLC said this week, and slower economic growth may threaten Mr. Bush’s goal of balancing the budget by 2012.
“The real question is how long is this expansion going to Last,” said Richard Kogan, a senior fellow and budget analyst at the Center on Budget and Policy Priorities, a research group in Washington. “The rate of growth in corporate tax receipts could be one of many leading indicators of a slowdown or a recession.”
Spending totaled $2.731 trillion for the fiscal year, compared with revenue of $2.568 trillion. While both figures were records, they fell short of White House projections. In July, Mr. Bush’s budget office forecast 2007 revenue of $2.574 billion and spending of $2.779 billion.
