Today, the Office of Management and Budget (OMB) released its annual Mid-Session Budget Review, and has lowered by $127 billion the projected FY 2006 budget deficit - from $423 billion estimated earlier this year to $296 billion. The reduction is attributed to an unexpected rise in corporate and personal income tax receipts and revenues from capital gains taxes. Beneath the increased tax revenue, however, is a frightening reality: the ever-widening gap between the very rich and the rest of us. Moreover, OMB's lowering of its initial projections is consistent with the White House agency's strategy of predicting drastically over-inflated deficits in order to release revisions that give the appearance of improving fiscal health. The revised deficit figures are already being spun by the administration as good news and a mandate for their economic policies, but the short-term outlook obscures important facts about budget forecasts, revenue growth, and the long-term health and sustainability of current federal budget policies. Nothing in the new report provides optimism surrounding these concerns or the long-term budget outlook. The mid-session report shows that for the first nine months of the fiscal year tax receipts increased by 13 percent, with corporate tax payments increasing 19 percent. Not only have corporate profits skyrocketed, but so have capital gains, which typically result when upper income earners liquidate large assets. Even as the upper end of the income scale prospers, average wages for workers have failed even to keep pace with inflation, lagging more than 1 percent behind inflation over the last year, further adding to growing income disparity in our society. Budget deficits, while not always easy to pinpoint, can be predicted with some measure of accuracy. OMB is but one of several offices within the federal government that make such projections, and its predictions of the annual deficit earlier this year differed greatly from those of other analysts. In March, the Congressional Budget Office predicted a $336 billion deficit for FY 2006 , much more in line with private analysts' expectations than OMB's figures. When compared to CBO’s projection, OMB's unexpected $127 billion in extra revenues is actually only a $40 billion "surprise." OMB's failure to accurately predict the budget deficit this year is far from a one-time occurrence. Over the last several years, OMB has made it a practice to play an artificial expectations game in its budget analysis. The current review is the latest example of the Bush administration overshooting budget deficits and then announcing, with much fanfare, that the deficit will be less than originally projected. The news is then used as evidence to support the president's misguided economic policies. At the beginning of 2004, OMB projected a $521 billion deficit for FY 2004, and Bush was pleased to announce later that the deficit was only $412 billion at year's end. The next year a similar situation occurred: OMB forecast a $427 billion deficit, but later, when it became apparent that the projection was unrealistic, the president announced that the deficit would be only $318 billion for FY 2005. In both instances, the president mistakenly gave credit for the improved outlook to his tax cutting policies. When discussing his fiscal policies and the federal budget deficit, President Bush often omits critical information that belie his claims of national fiscal health. Notably, when Bush announces progress in his quest to 'cut the deficit in half by 2009', he omits two critical pieces of information. First, the deficit that he endeavors to cut in half is wildly-off-the-mark and just a projection used in OMB's expectations game. The OMB-projected FY 2004 deficit of $521 billion, for instance, never materialized because the analysis that produced it was deeply flawed. Second, and perhaps more importantly, Bush consistently fails to mention what happens to the budget deficit after 2009. His FY 2007 budget, released in February, forecasts that the deficit will only be reduced to $183 billion in 2010, but will increase to $205 billion in 2011. In other words, the White House has no plan for even coming close to eliminating the budget deficit, and, in fact, the result of Bush policies will create increasing and sustained budget deficits over the long-term. While a declining budget deficit is certainly a positive development, the short-term picture in OMB's mid-session review obscures a looming budget crisis. When the president or tax cutters in Congress talk about budget deficits, they usually refer to the "unified budget deficit." In short, the unified budget deficit refers to the difference between how much the government spends and how much revenue it brings in through taxes, fees, and other sources. This deficit includes extra money brought in by payroll taxes collected to fund the Social Security trust fund in the future. Money from the fund is loaned to the federal government, which will need to pay back the loan when funds are needed to pay Social Security benefits to retiring Baby Boomers. By invoking budget figures as defined by this method of accounting, the president omits $170 billion in deficit spending - the money brought in this year for the Social Security program that must eventually be paid back. So, when the president's budget heralds a $318 billion deficit, he is actually boasting about a $488 billion deficit. The federal budget is on an unsustainable track and our nation's long-term fiscal outlook, rather than looking brighter, is actually growing dimmer. Although OMB and the president will trumpet the positive news about short-term budget prospects, they obscure or outright hide several important facts in their discussions of the deficit. Erroneous and overtly simplistic assertions about the relationship between tax rates and economic expansion, glib talk about revenue "surprises", and convenient omissions of the long-term fiscal outlook do nothing to motivate solutions to fixable deficit problems. The current policies that have created structural deficits endanger the ability of the government to repay its obligations right now, but especially in the future. The longer this administration puts off straight talk about the budget and the deficit, the more daunting future challenges will be.