The U.S. federal budget deficit, helped by increasing tax revenues, fell to $247.7 billion in 2006, the lowest level in four years, the Treasury Department reported on Wednesday. The deficit for the budget year that ended September 30 was 22 percent lower than the $318.7 billion deficit for 2005. Both spending and tax revenues rose to record highs. The sharp narrowing of the deficit reflected the fact tat revenues climbed by 11.7 percent, outpacing the 7.3 percent increase in spending. The 2006 deficit was far lower than the $423 billion figure the Bush administration had projected last February and also represented an improvement from a July revised estimate of $295.8 billion. It was the smallest budget deficit since a $159 billion imbalance in 2002, a deficit that came after four consecutive years of budget surpluses, the longest period that the government had not run a deficit in 70 years. Since that time, the government has recorded three of the biggest deficits in history in dollar terms, including a record of $413 billion in 2004. The Bush administration credits its tax cuts for the improving economy, contending they helped the country withstand the 2001 recession, terrorist attacks, and a series of corporate accounting scandals. Democrats, however, contend that this year's improvement in the deficit will be temporary, and government imbalances will explode over the next decade as the post-World War II generation begins to retire. President George W. Bush on Wednesday said he would continue to press Congress to make his tax cuts permanent. At a White House news conference, he said his tax policies had led to a “dramatic reduction” in the fiscal year 2006 budget deficit. “Good tax policy has a lot to do with keeping our economy strong, and therefore we'll continue to urge the Congress to make the tax cuts permanent,” Bush told reporters.
