This year's budget deficit is going to be significantly lower than estimated, due to a boost in tax revenues. That's good news. At only $251 billion for the first 9 months (can you believe it's possible to describe a $251 billion 9-month deficit as "only"?), we're not likely to approach the full-year estimate of more than $425 billion. Last year's deficit was $412 billion.
So, what is driving this new intake? A brilliant economy? The NYTimes proposes 2 reasons: 1) "higher stock market gains and the business income of relatively wealthy taxpayers"; and 2):
the expiration of a temporary tax break that allowed companies to write off their investment in new equipment much more rapidly than normal.So, capital gains of the wealthy and corporate taxes on loan from last year kept us out of the range of record-setting obscene debt, instead frolicking openly in the arena of the merely obscene.
That tax break reduced revenue by about $61 billion in 2004, but it merely postponed taxes that companies would have to pay once their equipment was fully depreciated.
Really makes you feel like we're experiencing an economic recovery helping the incomes of average workers, doesn't it? Decidedly no. Instead of building the revenue base through increased wages across the board, we get a stock-market spike and an accounting shift in the tax code, and get to compare it to 2004, the largest national debt in the history of humankind. Congratulations everyone, in barely beating it. Still, this dubious set of accomplishments brings my July nomination for understatement of the year, in the same article:
A senior White House official cautioned that it was too early to make definitive judgments about whether the tax cuts had fulfilled the promises of "supply side" economics, a Reagan era concept that posits a direct relationship between lower tax rates and faster economic growth.Ya think? Nice of them not to declare absolute victory.