A tamed US deficit, but can it last?
At $205 billion, the 2007 deficit is expected to be half its '04 peak, as corporate tax revenues surge.
from the July 13, 2007 edition
Page 2 of 3
"Over the last three years, tax revenues have grown 37 percent. That's one of the highest jumps in revenue on record," said Mr. Bush.
Now, the bad news. The OMB mid-session review also predicts that the deficit will tick back up in fiscal 2008 to $258 billion.
The administration's long-term forecasts still show the budget reaching surplus in 2012. But that estimate assumes there will be no unexpected expenses for combat in Iraq or Afghanistan, note critics of the administration's budget policies.
Plus, when Bush took office, the federal budget was in the black. The plunge in red ink, due largely to his tax cuts and post-September 11 defense spending increases, occurred on his watch.
"You can't give them credit for reducing the deficit unless you also blame them for creating it," says Stan Collender, managing director at Qorvis Communications and a veteran Washington budget expert.
And just stemming the flow of red ink isn't enough, according to Mr. Collender. The US may be like a family that's run up too many charges on its credit cards. Even if it stops buying, there is still a large accumulated debt to be paid off.
Since the beginning of the Bush administration US deficits have added $2.6 trillion to the total national debt, which now stands at over $8.2 trillion.
Collender says he is very concerned about the burden of the interest on this debt. "It's the most uncontrollable part of the budget," he says.
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