The federal deficit is falling: The OMB yesterday predicted a $205 billion deficit for 2007, down from last year and half of what it was at the peak in 2004. But the fiscal good news is not likely to last, the Christian Science Monitor reports. The OMB also predicts the deficit will rise again in 2008 to $258 billion.
The deficit decline is attributed to the rise in corporate tax revenues from a boom in profits.
But revenue growth is already slowing and spending on defense programs is rising. The US faces a huge budget crunch around 2010 when baby boomers begin retiring in large numbers and relying on entitlement programs like Medicare. (Read more Office of Budget and Management stories.)