Federal Budget Running Less Red Ink Over Last Year

The federal deficit so far this budget year is running sharply lower, driven by record revenues pouring into government coffers.

The Treasury Department reported on Friday that the government produced a deficit of $157.3 billion for the the budget year that began last Oct. 1. That's a substantial improvement from the red ink figure of $239.6 billion produced for the corresponding 10-month period last year.

The lower year-to-date deficit was the result of a record of $2.12 trillion in revenues. Spending, however, was higher — $2.27 trillion, which also marked an all-time high.

The White House predicts that the deficit this year drop to $205 billion.

But the nonpartisan Congressional Budget Office predicts the government will produce even less red ink this year. It recently said the deficit will be "toward the lower end" of a $150 billion to $200 billion range.

Democrats and the Bush administration have been at odds over the nation's fiscal situation. Democrats believe the shrinking deficits won't last. President Bush, meanwhile, has called on the Democratic-controlled Congress to show some restraint in its spending.