About a month after the White House released its highly misleading and overly optimistic budget projections, the Congressional Budget Office (CBO) released their projections today. The CBO report projects a $331 billion deficit for FY05, a $33 billion reduction since they released an initial estimate earlier this year in March. CBO also has increased their estimate of the total deficits over the next ten years by more than $1.1 trillion to $2.1 trillion. These estimates are much more worrisome than OMB projections released last month as CBO and OMB differ over the ten-year deficits from 2006 - 2015 by more than $600 billion. Unlike the OMB numbers, CBO finds very little reason to be optimistic about the future health of the federal government. They write, "Although the deficit for 2005 is lower than previously expected, the fiscal outlook for the coming decade remains about the same as what CBO described in March." In March, CBO described a very dark future if current policies are continued. This CBO report casts further doubt on administration claims that their economic policies are working to spur strong economic growth and will continue to shrink deficits. CBO has confirmed what many private analysts have reported - that the recent jump in federal revenues are due to short-term and temporary factors that are unsustainable and that over the long-term, the country still faces many large and difficult fiscal challenges. CBO concludes, "Over the long-term, then, growing resource demands...will exert pressure on the budget that economic growth alone will not eliminate." Most strikingly, the CBO report states that if the tax cuts from the administration's first term are extended (with the exception of policies related to the alternative minimum tax), as President Bush has been strongly advocating, deficits over the next decade would increase $1.6 trillion on top of their current projections. The Senate Budget Committee's most senior Democrat Kent Conrad (D-ND) believes the nation needs a "serious fiscal wake-up call" if we are to correct the long-term budget shortfalls that "threaten our economic security." It's time for President Bush to be straight-forward with the American people and begin an honest conversation about adopting alternative policies that will return the country to a sound and sustainable fiscal foundation.

July's employment numbers released by the Bureau of Labor Statistics (BLS) showed that the nation's employers have picked up their hiring pace, as payrolls expanded by 207,000 jobs. This was significantly better than both May and June's numbers and bumped the average monthly growth rate for jobs to 191,000 in 2005. There remain many problems with the economy and job market as we continue to slowly move through this economic recovery. First, almost all of the new jobs created in July were in the service industries (generally lower paying jobs with worse benefits) as the employment picture is still very bleak in the manufacturing and good producing sectors (generally higher paying jobs with better benefits). The lack of a rebound in the manufacturing sector continues to be a large problem, particularly for Americans who have been unable to find sufficient employment to replace wages lost when they were laid off their manufacturing job. Second, and perhaps more importantly, job creation is still lagging significantly behind population growth. If job creation and population growth continue along at their current pace, the employment outlook will continue to worsen with each passing month. Read More...

• July Employment Summary from the BLS
• Statement from the Center for American Progress
• July Jobs Picture Analysis by the Economic Policy Institute

The House Ways and Means Committee is planning on taking up Social Security reform legislation when Congress returns to Washington, DC in September. This legislation is likely to include aspects of President Bush's privitization plan and groups working in opposition to those plans recently released new polling information compiled from the districts of nine Republican members of the Ways and Means commmittee. The polling data was released on August 4 by USAction Education Fund, one of the leading groups in the fight against Social Security privitization. The data show nearly 70 percent of responding registered voters in those nine districts oppose the president's plans for Social Security and 68 percent of respondents would be less likely to vote for a candidate who supports the plans. Full poll results can be found on the USAction Education Fund website

The Treasury Department has told Democratic senator Max Baucus (D-MT) that the $8.184 trillion ceiling on government borrowing will not need to be raised this year, confirming speculation that the improvement in tax receipts seen in 2005 will allow Congress to avoid the politically charged issue for the first year since 2001. Despite this seemingly good news, Baucus called attention to the continually disturbing broader financial picture, noting that the debt limit has been raised four times and over $3 billion since 2002. "In the face of record deficits, the government needs to show more fiscal discipline," Baucus said in a news release. Taxing Internet Porn Speaking of tax receipts, Senator Blanche Lincoln (D-AR) and eight other democratic senators have introduced the Internet Safety and Child Protection Act of 2005 (S.1507), which would impose a 25 percent tax on "Internet pornography transactions." The revenues would be dedicated to a fund to support law enforcers and organizations that combat Internet and pornography-related crimes against children. News Coverage: Arkansas News Bureau Washington Post