The nonpartisan Congressional Budget Office predicted on Wednesday that the federal budget deficit would shrink again this year and could actually swing into a surplus in 2012 -- but only if President Bush's tax cuts expire in 2010.
The agency predicted that the deficit for 2007 would decline to about $200 billion. It would be the third big annual decline in a row, and it would come even though spending on the war in Iraq is expected to remain high this year.
The decline of the deficit comes on the heels of unexpectedly large increases in tax revenue over the last two years and slower-than-expected increases in spending on Medicare.
Much of that increased revenue came from taxes on sharply higher corporate profits and big gains in the stock market, even though Congress reduced the tax rate on capital gains and stock dividends in 2003.
The agency's ''baseline'' estimate -- one that assumes current law does not change -- is that the deficit will decline to $172 billion this year, from $248 billion in the past fiscal year, which ended Sept. 30, 2006. As a practical matter, officials said, the actual deficit will probably be about $200 billion because of outlays for the war.
Corporate profits have been so high that even with the massive tax cuts they got from the Bush administration, they've actually been paying more taxes. Wow! So why are the Republicans still stalling on minimum wage? Oh yeah, that's right, because they don't care about us. Oh well, nothing new about that.
White House officials boasted that the projections validated Mr. Bush's strategy of cutting taxes to stimulate the economy and ultimately generate higher tax revenues.
''Two years ago, the president laid out an ambitious goal to cut the deficit in half by 2009, and we met that goal three years early,'' said Rob Portman, the White House budget director. ''We are now on a solid path toward the president's new goal to achieve a balanced budget by 2012, while making the tax cuts permanent and better constraining spending.''
But Congressional budget officials cautioned that the projections were not as sunny as they looked, in part because they assume that Congress will let President Bush's tax cuts expire in 2010, along with many corporate tax breaks, and will not try to shield millions of families from a big increase in their tax bills because of the alternative minimum tax.
Mr. Bush and most of his Republican allies in Congress have pushed to make the tax cuts permanent, rather than letting them expire at the end of 2010 as they are scheduled to do. Even some Democrats favor extending the tax cuts that benefit middle-income families.
Extending the tax cuts would cost the Treasury $1.4 trillion in the next 10 years and increase the deficit in 2017 alone by more than $400 billion.
It doesn't get any more clear than that. The Bush tax cuts have been disastrous. We wouldn't be running in deficit in the first place if he hadn't passed the stupid things. And now, the only way the deficit will end is if the cuts expire. But do you hear the Republicans talking about fiscal responsibility anymore? Hey, if they argue against welfare for the poor, I think it's fair to talk about ending welfare for the rich.