Budget deficit hits five-year low

WASHINGTON – The Bush administration reported Thursday that the federal budget deficit fell to $162.8 billion in the just-completed budget year, the lowest amount of red ink in five years.

The administration credited the president’s tax cuts for helping generate record-breaking revenues but warned of an approaching “fiscal train wreck” unless Congress deals with unsustainable growth in Social Security, Medicare and Medicaid.

President Bush, appearing with his economic team to trumpet the news, noted that the deficit turned out to be $81 billion lower than it was projected to be in February.

He said the deficit represents 1.2 percent of gross domestic product – less than the average of the last 40 years.

“By keeping taxes low we can grow the economy, and by working with Congress to set priorities we can be fiscally responsible and we can head toward balance,” Bush said after the meeting across the street from the White House. “And that’s exactly where we’re headed.”

The deficit for the 2007 budget year that ended on Sept. 30 was 34.4 percent lower than the $248.2 billion deficit recorded in 2006, reflecting faster growth in revenues than in government spending.

The Congressional Budget Office projects that the deficit will improve further in the 2008 budget year, which began on Oct. 1, projecting a decline to $155 billion before the imbalance starts to rise again in 2009.

Administration officials said the government was on track to accomplish Bush’s goal of eliminating the deficit by 2012.

But Democrats said the improvement in the deficit this year did not mask the fact that Bush’s economic policies transformed the budget surpluses of the Clinton years into record deficits and an unprecedented increase in the national debt.

Senate Budget Committee Chairman Kent Conrad, D-N.D., said that Bush would “go down in history as the most fiscally irresponsible president ever.”

“The fact is that the nation’s debt has exploded on his watch – rising by $3 trillion since 2001, to $9 trillion today,” he said.

Bush recently signed into law a measure increasing the government’s borrowing ceiling to $9.815 trillion. It was the fifth debt increase of his presidency. The national debt is the accumulation of the annual deficits.

During the Clinton administration, the federal budget ran a surplus for four consecutive years, something that had not been accomplished for seven decades.