A must read given today’s headlines is this piece by Lawrence Kudlow Pssst . . . the deficit’s shrinking
At this pace, the 2005 deficit is on track to drop to $355 billion from $413 billion in fiscal 2004. As a fraction of projected gross domestic product, the new-year deficit will fall to 2.9 percent, compared with last year’s 3.6 percent.
Wire reports are loaded these days with accounts of an expanded trade gap (driven mostly by slower exports to stagnant European and Japanese economies, along with higher oil imports due to the energy price peak). But not a report I can find mentions the sizable narrowing in U.S. fiscal accounts.
Behind this really big budget story is the even-bigger story: The explosion in tax revenues has been prompted by the tax-cut-led economic growth of the last 18 months.