Last month the Congressional Budget Office (CBO) projected a $422 billion deficit for fiscal year 2004, and a $348 billion dollar deficit for FY2005. To see an OMB Watch analysis of this baseline projection read "Beyond the Baseline: 10 Year Deficits Likely to Reach $5.5 Trillion." As it turns out, the preliminary estimate released today is approximately $7 billion less than the CBO stated last month, according to their most recent Monthly Budget Review. Now they are reporting that the federal government incurred a deficit of $415 billion in FY2004.

This preliminary deficit figure is about $41 billion more than the FY2003 deficit, and 3.6 percent of the national Gross Domestic Product (GDP). Although it was reported that annual receipts rose by approximately 5.5 percent, they remain about 7 percent below their peak level in FY2000. And, according to the monthly review, individual income tax receipts remain approximately 25 percent below their peak in 2000. The drop in those receipts can be attributed to the recession, the decline in the stock market, and the Bush administration's tax cuts, the most recent of which were passed last week in a $146 billion package.

Interestingly, over half of the increase in receipts for FY2004 came from corporate income taxes, which ended up totalling approximately $57 billion more than they did in 2003. Federal income taxes paid by corporations can effectively serve to offset government outlays, and can bring down the budget deficit. Despite this fact, a study released in late September by the Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice (CTJ) found that between the years of 2001 - 2003, 275 of the nation's largest companies did not pay their fair share of income taxes; in addition many received excessive tax rebate checks.

A copy of the ITEP/CTJ report can be found here. Perhaps if corporations paid their fair share of taxes, and if federal legislation stopped handing out so many corporate tax breaks, we would see a decline in the deficit, which has been rising consistently since 2000.

Note: The figure $415 billion is the preliminary estimate for the national deficit; the Department of the Treasury will release the actual figure later this month.

Today, House and Senate conferees engaged in final meetings to complete work on the massive corporate tax bill. In doing so they defeated a Democratic amendment on overtime rules that had been passed by a Senate committee. The amendment, sponsored by Senator Tom Harkin , proposed to restore overtime rights while preserving an inflation adjustment to the minimum salary that determines automatic overtime eligibility. The amendment would have banned the Department of Labor from enforcing new overtime pay rules.

Its passage in committee was considered a huge victory for labor rights, and showed that many Congressmen were willing to stand up against the administration's new overtime proposals.

Unfortunately, as has happened in the past, conferees blocked the Senate amendment today. The amendment had been attached to the tax bill. Senator Harkin expressed frustration that his amendment has been approved six times by both chambers, but has always been stripped out in conference.