Finally Turned The Corner

The Big Tea Party Balloon will begin to deflate starting just about now:

The federal deficit is running significantly lower than it did last year, with the budget gap for the first half of fiscal 2010 down 8 percent over the same period a year ago, senior Obama administration officials said Monday.

The officials attributed the results to higher tax revenue and to lower spending than projected on bailing out the financial system. If the trend continues for the rest of the year, it would mean the annual deficit would be $1.3 trillion -- about $300 billion less than the administration's projection two months ago for 2010.

But by suggesting the deficit may have peaked, administration officials are taking a political gamble. If the favorable number does not hold up in coming months and the budget shortfall surpasses the $1.4 trillion recorded last year, voters in the November midterm elections could punish the Democrats for offering false hope.

...A senior administration official acknowledged that the lower deficit number would not substantially ease the budget problems facing the government. But the favorable trend could allow Democrats to say they have turned the corner, and the number is one they would want to highlight for voters souring on Obama because of the government's red ink.

...Government initiatives to bail out the financial system are also costing far less than officials had expected. The deficit figure for March, for instance, was down sharply from a year earlier, and most of that reduction came from a lower estimated cost for the Troubled Assets Relief Program, according to a Treasury report.

During the six months that ended in March, $10 billion was spent out of TARP. In contrast, that bailout program spent $186 billion for the same period ending March 2009. A separate program to aid mortgage financiers Fannie Mae and Freddie Mac used $25 billion in taxpayer dollars in the six months ending in March, compared with $119 billion for the same period a year ago.