Today the U.S. Treasury Department released its year-end budget numbers for fiscal year 2006 (FY 2006) showing the actual budget deficit for the year at about $248 billion – just below last week’s Congressional Budget Office (CBO) estimate of $250 billion and considerably lower than the Office of Management and Budget’s (OMB’s) July deficit estimate of $296 billion.
The declining deficit means that the President and Congress have met the goal of cutting the deficit in half three years ahead of schedule. In February 2004, while unveiling the President’s budget, the Administration pledged to cut the deficit in half by 2009 from $521 billion, which was the projection at that time for the fiscal year 2004 deficit.
Over the past three years, sustained economic growth fueled by tax relief has generated 6.5 million new jobs and increased revenues flowing into the federal Treasury. This rapid growth in tax receipts has been the driving force behind significant deficit reduction.
“Treasury’s numbers demonstrate the positive impact that tax relief can have on our economy and our fiscal outlook. By lowering the tax burden and encouraging more business investment and hiring, Congress helped create the conditions for economic growth, which has led to a surge in revenue flowing into the Treasury. Due to these pro-growth policies, the deficit is dropping, but we must do even more to restrain spending so that we can balance the budget,” said Wisconsin’s First District Congressman Paul Ryan.
The Treasury numbers for FY 2006 show:
The FY2006 budget deficit was $248 billion, or 1.9% as a share of the economy (GDP) – below the average of the past 40 years of 2.3% of GDP.
This year’s deficit has fallen by $71 billion from last year’s actual deficit of $318.7 billion.
The FY2006 deficit is 41% lower than the OMB’s original projection of $423 billion in February of this year.