The US government has reported a $67.70 billion budget deficit in May; marking a 58 percent increase from the deficit of $42.91 billion posted a year before in May 2006. The US Treasury Department has informed on Tuesday that so far during the first eight months of fiscal 2007 that ends on September 30, the cumulative deficit has decreased by 35 percent to $148.45 billion from $227.0 billion in the comparable eight-month period in fiscal 2006. The increase in the deficit was mainly due to faster processing of tax returns in April, as well as timing differentiation on expenditures. May is characteristically a budget deficit month, coming after the April filing deadline for individual income-tax returns that every time fetches a flood of last-minute revenue to Treasury.
Since the beginning of the fiscal year, the budget deficit totaled at about $148.5 billion, down 35 percent from a shortfall of $227 billion a year back. The US Congressional Budget Office has stated in May this year that for all of this year the shortfall could narrow to $150 billion. If the projection stands true then it would be the smallest deficit in this decade. In fiscal 1998-2001, the Treasury had posted yearly budget surpluses. The Treasury has been flooded in cash because of increased tax revenue from increasing wages and stock market gains. In April, the government had reported a surplus of $177.7 billion, marking the highest in six years and 50 percent higher than the April 2006 surplus.
The increase in revenues has been supported by continued strength in corporate profits and low unemployment, which has helped to push individual income taxes higher. So far this fiscal year, federal revenues have shot up by 8 percent from a year back to a record high of 1.6688 trillion dollars, at the same time outlays have increased at a slower rate of 2.5 percent to 1.8172 trillion dollars, also marking a record.
However, Democratic critics argue that Bush’s spending blueprint, projected that the government can return to a surplus by 2012 even if his first-term tax cuts are made permanent, was based on impractical assumptions and overlooked most important spending avenues such as the full costs of the Iraq war. They also dispute that the present development in the deficit will be only short-lived as the 78 million baby boomers retire, thrusting spending on Social Security and Medicare up in coming years.
Military spending has been so far in current totaled $349.1 billion compared with $328.3 billion last fiscal year of 2006. Expenditure on Medicare has been hovering around $249.2 billion against $214.4 billion a year back. In addition, expenses on Social Security have been to the tune of $407.3 billion against $385.7 recorded in last fiscal.
