Oh, and when we say “outperform,” keep in mind that we’re still talking about the fourth-largest budget deficit in history. And according to the Washington Post, “Even the White House acknowledges that in the long run, the nation’s fiscal outlook remains bleak.”

L.A. Times:

WASHINGTON — When President Bush releases the traditional midsummer update on the budget today, he is expected to announce that federal revenue has soared above predicted levels and that the deficit is headed for a welcome decline from earlier estimates — as much as 30%, or $125 billion, below the level projected just five months ago.

And the president will likely attribute the windfall to his tax cuts, which the administration says are stimulating economic activity and generating the torrent of tax revenue.

But the apparent good news will not strike some economists as surprising: This will be the third year in a row that the administration put forth relatively gloomy deficit forecasts early on, only to announce months later that things had turned out better than expected. To some skeptics, it’s beginning to look like an economic version of the old “expectations” game.

Even economists who hesitate to accuse the White House of playing games say the claims of good news on the budget are unfortunate because they make people unjustifiably sanguine about the government’s current fiscal health.

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