Yesterday, December 8th, President Bush asked Treasury Secretary John Snow to remain in his position for the next two years, at least. After meeting breifly with the President, he agreed. Snow first joined the Bush administration in February 2003 after former Treasury Secretary Paul O'Neill was ousted; prior to that, he headed CSX, a large railroad company. Snow's position as Treasury Secretary puts him in one of the nation's most central economic policymaking posts.

This announcement is particularly noteworthy because of the rumors that have been circulating recently regarding whether Snow would remain on board in the second term. On Monday, the New York Times even reported that "President Bush has decided to replace John W. Snow as treasury secretary and has been looking closely at a number of possible replacements, including the White House chief of staff, Andrew H. Card Jr., Republicans with ties to the White House say."

Despite the rumors, Snow will remain to help the administration sell its second term economic agenda to the public and Congress. This decision comes at a time of considerable economic uncertainty, as we are faced with an increasingly weaker dollar, a growing deficit, and looming discussions of both tax reform and an overthrow of the social security entitlement program. Mr. Snow, as today's New York Times states, is largely seen as a "salesman for White House policies."

For more information on Snow as Treasury Secretary, click here and here.

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.