U.S. Budget Deficit May Drop to $325 Bln This Year, Agency Says
July 8 (Bloomberg) -- Rising tax payments and a growing economy may push the U.S. federal deficit down to $325 billion or lower, a 24 percent decline from the previous estimate, the Congressional Budget Office said.
The agency, in a monthly snapshot for fiscal 2005 that ends on Sept. 30, said tax payments and spending were running ahead of the year-ago pace. As a result this year's deficit ``will be significantly less than $350 billion, perhaps below $325 billion.''
The White House is scheduled to issue its revised estimates on tax collections, spending and the deficit on July 13. In February, White House budget director Joshua Bolten forecast a deficit of $427 billion, about 3.5 percent of the nation's gross domestic product.
``Treasury receipts have been skyrocketing since April,'' and in June ``corporate receipts will lead this boon,'' said Ellen M. Beeson, an economist at the Bank of Tokyo-Mitsubishi Ltd. in New York, in an interview before the report. Her firm expects the July 13 report to forecast a 2005 deficit of $315 billion to $330 billion.
``The stock market will certainly like the lower-than- expected deficit as it will mean less financing will be needed to cover U.S. debt,'' Beeson said.
Last year the deficit reached a record $412 billion.
Tax Revenue Up 15%
In its monthly report, the nonpartisan Congressional Budget Office said federal tax collections from people and corporations are up about 15 percent from the same period a year ago, and spending is up about 7 percent.
For the first three quarters of the spending year, the deficit reached an estimated $251 billion, down from $327 billion at this time a year ago.
``The deficit picture is improving and it's a result of better economic growth, stronger revenue going into the Treasury,'' Bolten said in a Bloomberg news interview on June 24.
In June, the government ran a surplus of $21 billion, the CBO said, about $2 billion more than June 2004.
President George W. Bush set a goal of cutting the deficit in half from the estimate of $521 billion when the pledge was made in 2004.
``I think we will be headed well on the path to cutting the deficit in half by 2009 as the president has committed,'' Bolten said last month.
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