The Congressional Budget Office (CBO) has just lowered its estimate of the Fiscal Year 2006 budget deficit by about $111 billion. So for now, FY 2006, which ends on September 31st, will probably result in a budget deficit of $260 billion. The CBO estimate puts the deficit about $30 billion lower than the Office of Management and Budget (OMB), which revised its estimate in July. See here, here and here for more information on OMB's gimmicky deficit numbers. Spending estimates account for almost all of the difference between the OMB and CBO reports. CBO projects about $10 billion less in Medicare and Medicaid spending, and $10 billion less in defense spending. Why the difference? They don't say. We'll have to wait until August 17th, when CBO comes out with its full report, for the explanation. Unexpected gains in tax receipts are mostly responsible for the lower deficit, as they were when OMB revised its figures. Most of the new revenues come from corporate and capital gains taxes, which are generally income sources for the well-off. Tax receipts from the middle and working class, though, will rise far less. In other words, it's just more evidence of the widening income and wealth gap in this country. One last thing- any readers out there want to calculate how much lower the deficit would have been if the 2003 capital gains and dividends tax cuts hadn't been in effect? Just asking...