Deficit Hits $415 Billion With Tax Revenue Less Than in 2000By Edmund L. Andrews
The New York Times -- WASHINGTON
Even after a year of solid economic growth and booming corporate profits, federal income tax revenues were lower in the fiscal year that just ended than in the year before President Bush took office, according to estimates by the nonpartisan Congressional Budget Office.
In a sign that Bush’s tax cuts have had a bigger impact on the federal deficit than administration officials have often suggested, personal and corporate income taxes are both lower than they were in 2000 even though personal income and corporate profits are both substantially higher.
Based on the Treasury Department’s tax receipts through Sept. 30, the last day of the 2004 fiscal year, the budget office estimated that the deficit hit a record of $415 billion. The deficit was slightly smaller than the most recent congressional and administration forecasts, mainly because corporate tax revenues shot up by 43 percent as profits climbed at the fastest pace in decades.
Republicans have cited the jump in business tax revenues as vindication for the four tax cuts that Bush has pushed through Congress since he took office.
“The deficit is still too large, but we are moving in the right direction,” said Rep. Jim Nussle, R-Iowa, and chairman of the House Budget Committee.
But the four-year budget record is less comforting. Spending, particularly military spending, has climbed rapidly since Bush took office. Largely because of the war in Iraq, but also because of Pentagon modernization projects, defense spending has climbed about 40 percent since 2000 to $437 billion. Military spending climbed 12.3 percent in 2004 alone, faster than Medicare and Medicaid entitlement programs and about three times faster than other discretionary programs.
More striking is the decline in tax revenues since 2000. Tax revenues plunged when the stock market bubble collapsed in 2000 and continued to decline as a result of the recession in 2001 and the high unemployment that followed.