WASHINGTON – The federal budget deficit estimate for the fiscal year just completed has dropped to $250 billion, congressional estimators said Friday, as the economy continued to fuel impressive tax revenues.
The Congressional Budget Office's latest estimate is $10 billion below CBO predictions issued in August and well below a July White House prediction of $296 billion.
The improving deficit picture — Bush predicted a $423 billion deficit in his February budget — has been driven by better-than-expected tax receipts, especially from corporate profits, CBO said.
The 2005 deficit registered $318 billion; the record $413 billion deficit was posted in 2004.
At $250 billion, it would be the lowest since the $158 billion figure in 2002, the first deficit following four years of surpluses.
The CBO estimate continues a positive trend on the deficit after a grim deficit performance during President Bush's first term, and comes despite soaring war costs and $50 billion in emergency spending for hurricane relief.
House Budget Committee Chairman Jim Nussle, R-Iowa, credited the improving deficit numbers to "a responsible budget blueprint and pro-growth policies," even as Democrats pointed out that at $250 billion, the deficit is still one of the largest in history.
"Though today's estimates for 2006 are not as pessimistic as some earlier estimates, it is clear that the budget remains on the wrong track," said top budget panel Democrat John Spratt Jr. of South Carolina. "The Congressional Budget Office and even the Bush administration are estimating that deficits will be even larger next year."
But when measured against the size of the economy, which is the comparison economists think is most important, the deficit picture looks even better.