Tax Cuts Deepen US Federal Budget Deficit

by Leroy Baker, Tax-News.com, New York

23 September 2003

Tax cuts signed into law this year by President Bush have begun to take their toll on the federal government's finances according to the August budget figures.

As the Treasury sent out some $9 billion worth of advance child tax credits in recent weeks, the budget deficit for the month of August was up by more than one-third compared to the August 2002 figure of $54.7 billion. Unsurprisingly, overall tax receipts received by the Treasury this year are lower than for the corresponding period in 2002, $114.26 billion in 2003 against $124.62 billion last year.

Meanwhile, the overall federal budget deficit has nearly doubled in the first eleven months of fiscal 2003, reaching $400.46 billion compared to a level of $200.18 billion in fiscal 2002.

Whilst the figures are likely to cause alarm in some quarters, they are mostly in line with forecasts from the Congressional Budget Office (CBO), which predicted a $78 billion deficit for August and a $402 billion gap in the fiscal year up to and including last month. The CBO is estimating a $401 billion deficit by the year's end, somewhat less depressing than the $455 billion forecast by the Bush administration.

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