Tax Cuts Helping To Shrink Deficit, Says Bush

by Mike Godfrey, Tax-News.com, Washington

13 July 2007

Higher economic growth spurred by tax cuts has helped to pull in more tax revenues for the US Treasury and will help to shrink the deficit this year, according to President George W. Bush.

Bush has given an upbeat assessment of the government's finances after new Treasury estimates predicted that the budget deficit for the fiscal year ending September 30, 2007, will be $205 billion, down from $248 billion last year, and substantially lower than the record $413 billion deficit in 2004.

"We began cutting the taxes in 2001, and America's economic growth - and America's economy has grown for more than five years without interruption. Real after-tax income has increased nearly by 10%," Bush stated in a talk concerning the mid-session budget review on Wednesday.

"A growing economy has led to growing tax revenues. Because people are making more money, they're also paying more taxes. That pie is growing. The tax rates remain the same, but the pie is growing, which has yielded more federal revenues," Bush added.

According to the Treasury, the mid-session review shows that this year's federal tax receipts are expected to be $167 billion higher than last year's, a rise of 7%. Over the last three years, tax revenues have grown 37%. Corporate profits have been a major component in this increase, having risen to equal 2% of the US economy in 2006 - the highest level since 1978.

Earlier this year, Bush proposed a budget that he claimed would eliminate the deficit by 2012 without raising taxes.

Bush then went on to round on the Democrat budget proposals, which he said contained "the same old tax-and-spend policy that the Democrats have tried before" and warned would bring about "the largest tax increase in history".

"Tax-and-spend policies are policies of the past, and I'm going to use my veto to keep it that way," he declared.

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