An economic rebound in the second quarter of 2007 has generated increased tax receipts and dramatically improved the budget outlook, according to the United States Treasury.
The Treasury Department's latest economic update revealed that tax receipts have grown 11.2% so far in fiscal year 2007, on top of an 11.8% increase in fiscal year 2006, and a 14.6% increase in fiscal year 2005.
Real wages rose by 1.2% in the twelve months to the end of April 2007, translating into an additional $400 above inflation for the average full-time production worker, the government's figures said. Meanwhile, real after-tax income per person has risen 11% - an extra $3,100 per person – since President Bush took office, the Treasury added.
Real GDP growth was 0.6% in the first quarter of 2007, and 1.9% over the past 4 quarters. Capital investment by businesses turned up in the first quarter, boosted by outlays for commercial structures and equipment and software.
The Treasury attributed much of the economic good fortune to President Bush's pro-growth tax policies, particularly his 2001 and 2003 tax cuts.
"Pro-Growth policies will enhance long-term US economic strength," the Treasury said. "Economic growth has generated increased tax receipts and dramatically improved the budget outlook."
The Treasury says that President Bush's 2008 budget plan reduces the deficit as a percentage of GDP every year through 2012.
The update also urged both parties to cooperate in Congress to bring about greater transparency in the budget process, particularly with regards "earmarks" - rules which allow lawmakers to insert narrowly-targeted special interest tax breaks into the text of legislation.
"The time has come for both political parties to work together on comprehensive earmark reform that produces greater transparency and accountability to the congressional budget process, including full disclosure for each earmark and cutting the number and cost of all earmarks by half," the Treasury said.
The administration has proposed a budget that reaches a small surplus in 2012.
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