Deficit Improvement

In dramatic contradistinction to the track record of his office to date, the Bush II Administration is projected to post a small improvement in the size of its budget deficit for the 2005 fiscal year. The source of the improvement is, according to the New York Times, "an unexpected leap in tax revenue."

Recall that the Bush II Adminstration has produced an increasingly negative budget balance every year since taking over from Clinton (Update: New Canafornida). I think the captions in the table are misleading. The projected reversal of this trend is attributed by the NYT to a sharp increase in corporate tax revenues (accounting only for an additional $58b). More significant, in my opinion, is an increase in individual income tax revenues, accounting for an additional $105b. To wit: "the increase in individual tax receipts appears to have come from higher stock market gains and the business income of relatively wealthy taxpayers. The biggest jump was not from taxes withheld from salaries but from quarterly payments on investment gains and business earnings, which were up 20 percent this year."

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