Budget deficit falls $85 billion to five-year low due to strong economy
Washington, DC - With today's news that the federal budget deficit continues to shrink, Idaho Senator Mike Crapo, a member of the Senate Budget Committee, noted that economic strength fueled by federal tax relief has resulted in the federal budget deficit falling to its lowest level in five years. Crapo, also a member of the Senate Finance Committee overseeing federal tax policy, said that today's announcement by the U.S. Treasury strengthens what he and others on the committee have been saying for years-that tax increases are not a fix for budget deficits, and that tax reductions help fuel deficit reduction.
The Treasury Department announced today that the 2007 Fiscal Year-end budget deficit would be $163 billion, $85 billion less than last year's total. This is the third straight year the federal deficit has been reduced under pro-growth tax policies enacted by the Congress and the President in 2001 and 2003. Those policies, which include the elimination of the marriage penalty, lowering of the tax rate on capital gains and dividends, and elimination of the death tax, are set to expire by 2010 unless Congress acts to extend them.
"The news today from the Treasury Department proves once again that economic activity, brought about by tax relief-induced activity from the private sector, will bring the deficit down without the need to raise taxes," Crapo said. "Tax increases will stop this activity and grow the deficit once again. We must stay on the path of providing incentives for economic growth and then stop the growth of federal spending. Those actions taken together can end federal budget deficits."
As a member of the Senate Budget Committee, Crapo (along with fellow members) set a ceiling for discretionary spending in the federal budget each year. The Committee then enforces efforts to spend money above the cap during the appropriations cycle when final budgets are set. President Bush has threatened to veto spending bills that break the caps set by the President's budget request.