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May 22, 2007

Less red ink

Federal budget deficits have become so common that the best question to ask each year is "how much?" N.C. State University economist Mike Walden looks at the deficit statistics for 2006.

"We did run a federal budget deficit last year in 2006. That's the bad news I guess," says Dr. Walden, of the College of Agriculture and Life Sciences. "Hut the good news is that it actually got smaller.

"Now the way that economists look at this is not so much in terms of the dollar amount -- although in this case the dollar amount did get smaller," he continues. "But we look at the budget deficit as a slice, if you will, of our total economic pie -- our total economic output

"And looked at in that way, in 2005 the deficit took 2.5 percent of the total U.S. economic pie. Last year 2006, the slice was down to 1.2 percent –- so almost cut in half.

"The main reason was not necessarily a slowdown in the growth of federal expenditures. It was a big increase in federal revenues as a result of the fact that the economy is doing very well.

"So Uncle Sam still has to borrow, but at least last year relative to the economy he had to borrow much less."

Posted by deeshore at May 22, 2007 08:46 AM