According to Obama's 2012 Budget Proposal, under Historical Tables, the budget deficit under George Bush first peaked in 2004 at 412 billion dollars. Between 2005 and 2007 the budget deficit declined by 252 billion dollars to reach its low, under Bush, at 161 billion dollars. If the tax cuts and wars, both occurring in 2001 and 2003, caused our current financial situation, how did the deficit fall between 2004 to 2007? Because Tax Cuts increase revenue to the government by allowing people and business to invest more of their own money. As people invest they conduct taxable transactions which bring in revenue to the government.