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US budget deficit 317 billion dollars in just-ended fiscal year
Yahoo News/AFP
October 6, 2005

WASHINGTON (AFP) - The US federal budget deficit narrowed to a better-than-expected 317 billion dollars in the fiscal year ended September 30, as corporate tax payments exceeded forecasts, congressional officials said.

The CBO said the deficit for the 2005 fiscal year completed September 30 amounted to about 2.6 percent of the gross domestic product (GDP), down from 3.6 percent in 2004.

Revenues were up 17.5 percent in the fiscal year compared with a 16.3 percent gain in fiscal 2004, CBO said.

The CBO said hurricanes Katrina and Rita had relatively little effect on the 2005 budget results because they occurred so late in the fiscal year.

But many analysts expect the deficit to balloon in the current fiscal year, in large part from the reconstruction costs associated with the vast storms.

A big part of the increase in revenues came from higher-than-anticipated corporate taxes.

CBO said corporate receipts accounted for about 29 billion of the 45 billion dollar revenue increase.

The deficit was not as large as the 331 billion dollars forecast by the congressional office in August, but some of that was due to special factors including 14 billion dollars in payments made in September instead of October because the first day of the month fell on a weekend, CBO said.

Total federal receipts amounted to 2.154 trillion dollars, or about 17.5 percent of GDP and showed the first increase in this percentage since 2000, according to CBO.

Overall federal expenditures rose to 2.470 trillion dollars, from 2.293 trillion in fiscal 2004, roughly 20 percent of GDP.

The largest single expense -- 514 billion dollars -- was for social security payments, followed by defense (474 billion) and the Medicare health program for the elderly (335 billion). Debt service accounted for 191 billion dollars.

Corporate receipts were 2.3 percent of GDP, the highest point since 1980, after a 48 percent increase. Individual income taxes rose a more modest 14.8 percent but still accounted for the largest share of revenues, 809 billion dollars.

"The strength in receipts reflects economic activity in both 2004 and 2005," the CBO said.

"It also results from the expiration at the end of 2004 of provisions enacted in 2002 and 2003 that allowed additional first-year depreciation deductions for investments in equipment."

The deficit is 3.6% of GDP. From 1947 - 2000 we've had 10 years of deficits this high or higher. Nine of those 10 came AFTER the Reagan tax cut of 1981 with a majority coming during the Reagan years. Clearly anyone who wants balanced budgets or fiscal sanity MUST know by now that tax cuts devastate our economy and budget - and they're also the ONLY way republicans can win elections. Borrowing money and giving it away is not sound fiscal policy but voters don't care. At least not yet. But someday the bill will come due and America will cease to exist as we know it.

This is the single issue that can destroy the GOP. Since the Reagan tax cut we went from less one trillion dollars of debt to almost eight trillion today. This is insanity.