In contrast to a number of recent disappointing reports on the economy, last month's job market performance was surprisingly upbeat. According to the report from the Bureau of Labor Statistics, employment grew by 274,000, easily beating forecasters' expectations of gains of around 170,000. Furthermore, job gains for February and March were revised up by a combined amount of 93,000. With these additions, the average monthly growth of payrolls over the past year has been 181,000. While this rate of job growth is less robust than during past recoveries (monthly employment growth over a comparable period in the last recovery was over 300,000 according to the Economic Policy Institute) it is at least strong enough to keep pace with population growth. Even though businesses are adding more jobs (a sign of increased demand and profits), workers are not necessarily benefiting with higher wages. Read EPIs Senior Economist Jared Bernstein's analysis

Yesterday, the Congressional Budget Office released a monthy budget update for FY 2005, in which they said the budget deficit could drop to as low as $350 billion (the deficit last year reached a record-high $412 billion). CBO states this drop is attributable to non-witheld income and payroll tax receipts jumping by 33 percent (the highest rate in four years) and corporate tax receipts jumping 47 percent, increasing overall revenue well beyond projections. While Republicans claim the CBO estimate means their fiscal policies to reduce deficits are working, Democrats counter the deficit would still be rampant, whether or not it fell, and that continuous deficits are adding to the deterioration of the fiscal health of the nation. The updated projections that the deficit may drop by $65 billion this year does not alter the fact Bush came into office with a projected 10-year $5.6 trillion surplus and quickly instituted structural deficits through irresponsible tax and spending policies. Despite historically large deficits, the president has continued to push some of the same policies that brought the U.S. so far into the red, including his debt-financed Social Security proposal and extension of the first term tax cuts. While CBO is predicting in their monthly budget review the budget deficit may be smaller than originally thought, it is important to remember this is a short timeframe. Looking at the effect of the president's tax policies beyond the narrow five-year window included in the congressional budget resolution, we see the costs of those policies explode. So while news of increased tax receipts is good for a government running large deficits, it is important to remember the future costs of some of Bush's economic policies to put in context the direction the deficit is headed.