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1.13.2005

National Economy 2005: Off to a great start

Kudlow is offering great news on the economy. It's worth the time to read the whole thing, but here is a sampling:
Here's one story you won't find in tomorrow's front pages: The US budget deficit is shrinking rapidly. Today's Treasury report on the nation's finances for December shows a fiscal 2005 year-to-date deficit that is already $11 billion less than last year's. After the first three months of the fiscal year beginning last October, cash outlays increased by 6.1% overall, while tax collections grew by 10.5%. Consequently, the 2005 deficit is on track to drop to $355 billion from $413 billion in FY 2004.At this pace the new year deficit as a fraction of projected GDP will descend to 2.9% compared to last year's deficit share of 3.6%. While wire reports today were loaded with accounts of an expanded trade gap (driven mostly by slower exports to stagnant European and Japanese economies, along with higher oil imports from the peak in energy prices), not a single report I could find mentioned the sizable narrowing in US fiscal accounts. The really big budget story is the explosion in tax revenues prompted by tax-cut led economic growth over the past eighteen months. Under 50% cash bonus expensing for the purchase of plant and equipment, productivity-driven corporate profits ranging around 20% generated a 45% rise in business taxes. At lower income tax-rates, employment gains of roughly 2.5 million are throwing off over 6% in payroll tax receipts.Personal tax revenues are rising at a near 9% pace. Meanwhile, non-withheld revenues from individuals-- including investor dividends and capital gains now taxed at only 15%-- have jumped by over 14% in the wake of strong back-to-back yearly stock market advances.
[Emphasis mine]

Hmm, is Bush's economic plan working? I think so...

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