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Revenue collections hit record high in April
Government spending also at an all-time high
Federal revenue collections hit an all-time high in April, contributing to a further improvement in the budget deficit for the year.
Releasing its monthly budget report, the Treasury Department said Thursday that through the first seven months of this budget year, the deficit totals $80.8 billion, significantly below the $184.1 billion imbalance run up during the first seven months of the 2006 budget year.
So far this year, tax revenues total $1.505 trillion, an increase of 11.2 percent over the same period last year. That figure includes $383.6 billion collected in April, the largest monthly tax collection on record.
Tax collections swell in April every year as individuals file their tax returns by the deadline.
For the first seven months of this budget year, which began Oct. 1, revenue collections and government spending are at all-time highs.
However, the spending total of $1.585 billion was up at a slower pace of 3.2 percent from the previous year.
The difference in the growth of tax collections and spending is the reason for the narrowing deficit.
The Congressional Budget Office said that it now expects the deficit for all of 2007 to total between $150 billion and $200 billion. That would be a significant improvement from last year’s deficit of $248.2 billion, which had been the lowest imbalance in four years.
The federal budget was in surplus for four years from 1998 through 2001 as the long economic expansion helped push revenues higher. But the 2001 recession, the cost of fighting a global war on terror and the loss of revenue from President Bush’s tax cuts sent the budget back into the red starting in 2002.
The administration’s budget sent to Congress in February projects that the deficit will be eliminated by 2012 even if the president achieves his goal of getting his tax cuts made permanent. They are now due to expire in 2010.
However, critics say the improvement in the deficits will be only temporary with deficits expected to balloon again with the higher Social Security and Medicare payments needed as 78 million baby boomers retire.
While Bush sought to make entitlement reform the centerpiece of his domestic agenda in a second term, his proposals to bolster Social Security with personal savings accounts has gone nowhere in Congress.
White House Budget Director Rob Portman said the surge in tax revenues over the past two years was directly related to the economic rebound spurred by the Bush tax cuts. He said Congress should reject efforts to roll back the tax relief.
“With strong economic growth and spending restraint, we can continue to reduce budget deficits and balance the budget as the president has proposed,” Portman said in a statement.
For April, revenue receipts totaled $383.64 billion while spending totaled $205.97 billion, leaving a surplus for the month of $177.7 billion.