US deficit reduced 23%

[southsider2k5]

http://www.bloomberg.com/apps/news?pid=100...23an5M&refer=us

 

For some odd reason the tax revenues are increasing at a rate way higher than projected, even after everyone said tax cuts wouldn't raise revenues and create jobs...

 

And for a little fun with numbers, a look at tax revenues before and after the tax cuts.

 

http://www.poorandstupid.com/2005_07_10_ch...111027505546464

[Cerbaho-WG]

I'd believe that the narrowing of the trade deficit with every country except China and the lowering of T-Bills are more in play here than the tax cuts. Also, I really didn't like this quote:

 

Tax payments this year have been ``super strong,'' but ``our long term situation is unsustainable because of entitlements,'' said Phillip Swagel, former chief of staff at the White House Council of Economic Advisers and now a scholar the Washington- based American Enterprise Institute.

 

Wow, a member of AEI being critical towards neo-cons, I never thought I'd see the day.

[Balta1701]

Sadly, the data doesn't support the "Tax cuts are wonderful and generate more revenue" idea here. Why? Because the government is still taking in LESS revenue than it did before the first tax cuts.

 

The idea of the laffer curve is that there is a point at which increasing taxes will lead to less total revenues because of stunted growth, but there is also a point at which decreasing taxes will lead to less total revenues because the rate is too low. We cut taxes, and the government immediately started taking in less revenue. It has taken in less revenue since those tax cuts every single year.

 

There is also probably more to the story of this deficit number than meets the eye.

 

But the fact is that revenue remains far lower than anyone would have predicted before the tax cuts began. In January 2001 the budget office forecast revenues of $2.57 trillion in fiscal 2005. Even with the recent increase in receipts, the actual number will be at least $400 billion less.

 

And nonpartisan budget experts, such as Ed McKelvey of Goldman Sachs, believe that even the limited good news on the budget is a temporary blip, not a turning point. Douglas Holtz-Eakin, the director of the Congressional Budget Office, warns us to take the new revenue figures with a "grain of salt," and declares that "if you take yourself to 2008, 2009 or 2010, that vision is the same today as it was two months ago."

 

A close look at the tax data explains why these experts believe that we're seeing a temporary uptick in revenues, not a sustained change in the trend. Taxes that are closely tied to the number of jobs and the average wage, such as payroll taxes and income taxes automatically withheld from paychecks, aren't showing any big pickup. This confirms other data showing that the economy as a whole is, if anything, doing worse than one would expect at this stage of an economic recovery.

 

It turns out that all of the upside surprise in tax receipts is coming from two sources. One is tax payments from corporations, up both because last year corporate profits grew much more rapidly than the rest of the economy and because the effective tax rate on corporations went up when a temporary tax break, introduced in 2002, expired. Both are one-time events

 

The other source of increased revenue is nonwithheld income taxes - taxes that aren't deducted from paychecks but are instead paid by people receiving additional, nonsalary income. The bounce in nonwithheld taxes probably reflects mainly capital gains on stocks and real estate, together with bonuses paid in the finance and real estate industries. Again, this revenue boost looks like a temporary blip driven by rising stocks and the housing bubble.

[Rex Kickass]

Also, does the deficit take into account supplementary spending like Iraq/Afghanistan? Just curious because that would bring that number inching back up to 400 billion dollars.

[Balta1701]

Also, does the deficit take into account supplementary spending like Iraq/Afghanistan? Just curious because that would bring that number inching back up to 400 billion dollars.

In most cases it takes into account supplementary spending that has been passed, but not any expected supplementals that are thrown in along the way. I.e. if they passed a supplemental earlier in the year before the budget was passed it would be included, but if Congress was still debating the exact numbers or if it they were still working on the last supplemental, no it wouldn't.

 

Going along with that question, in the last budget/supplemental submission, it was pretty obvious that the military was taking things that usually would be bugeted for in the normal budget submitted to Congress and holding them back until the supplemental bills came along. Things like normal repair work, purchases totally unrelated to Iraq/Afghanistan, etc.

[Chisoxrd5]

Three words:

 

Alternative Minimum Tax

 

There is your additional tax revenue ladies and gentlemen

[Balta1701]

Three words:

 

Alternative Minimum Tax

 

Actually I would disagree with you on that...the Alternative Minimum Tax right now is only hitting enough of the Middle Class so that if it were reformed, the savings would be on the order of $10 billion or so. It's not enough to make up the difference.

 

However, the amount of taxpayers hit by the AMT is going to go up rapidly in the next few years, to the point that if we have this discussion again in 2007 or 2008, you'll be correct.

 

Here's an economist piece showing how the deficit would be expected to vary given different changes in the laws. You'll note that they nailed this year right on the head, given that the Medi-can't drug benefit doesn't start spending money until 2006.

 

Edited July 13, 2005 by Balta1701

[JUGGERNAUT]

The last part of the article tells the real story:

1-rapid rise in corp profits led to unexpected corp tax rcpts

: unsustainable

2-corp tax breaks expired leading to unexpected corp tax rcpts

: unsustainable - they will lobby those breaks back in

3-increase in energy prices brings in an increase in tax rev (% based).

: expected

4-increased real estate assesments & taxes

: expected

5-increased state & local taxes

: expected

 

If 3,4,5 are sustainable we're headed for s***sville in America. I think the average American does not understand that a large portion of the Federal deficit comes from state budget deficits. When states like CA run $50B into the red who pays to keep them afloat? All of us. How many major market states are operating in the black these days? Very few.

 

The Democrats need to stop counting the profits on their oil stocks & start standing up for the workers in America before it's too late. Corporate America holds no loyalty to us. That loyalty lies in the region where they can earn their most profits. Regions were ethics & humanitarian causes & reforms are an afterthought.

[JUGGERNAUT]

This is a small microcosm of this whole issue:

Comcast SN in the Baltimore area is suing Angelo's Orioles. Apparently Angelo worked a deal with MLB prior to the Wash Natl that gave him rights to the Expo's games on his sports cable net (Mid-Atlantic Sports Net). The agreement with Comcast is set to expire this year. Comcast has refused to air MASN games because of course it wants the Nat's on CSN.

 

What's interesting is that CSN's rhetoric continues to paint Angelos as not being fair & the O's rhetoric continues to label Comcast a monopoly that shouldn't exist.

 

It remains to be seen how this is going to play out or whether CSN has a legal leg to stand on here but anti-Comcast sentiment in America is growing.

 

The courts have supported Comcast of late by stating they do not have to provide access to their infrastructure to their competitors. But the eminent domain ruling has an interesting twist here. What is infrastructure? Private Property. Though the ED ruling was thought mostly in terms of houses it's greatest impact could be on infrastructure. Backed by the USSC a competitor could now entice the state of IL & or city of Chicago in annexing portions of that infrastructure that would both weaken Comcast & allow them to build their own.

 

The transformation of the Public Use Clause into the Public Purpose Clause could become the state's best weapon against monopolies.

[RibbieRubarb]

http://www.bloomberg.com/apps/news?pid=100...23an5M&refer=us

 

For some odd reason the tax revenues are increasing at a rate way higher than projected, even after everyone said tax cuts wouldn't raise revenues and create jobs...

 

And for a little fun with numbers, a look at tax revenues before and after the tax cuts.

 

http://www.poorandstupid.com/2005_07_10_ch...111027505546464

 

I was told, when joining Soxtalk, that there'd be NO math.

[Balta1701]

I was told, when joining Soxtalk, that there'd be NO math.

If somehow you think you can divorce baseball from math (and hence; statistics), then you're gonna run into some problems along the way.

 

[southsider2k5]

I was told, when joining Soxtalk, that there'd be NO math.

 

Read the fine print SUCKER!!!!

 

BAHAHAHAHAHAHAHAHAHAHAHAHAHA!

[RibbieRubarb]

If somehow  you think you can divorce baseball from math (and hence; statistics), then you're gonna run into some problems along the way.

 

 

 

My mistake for thinking it was too obvious for green.

[Balta1701]

My mistake for thinking it was too obvious for green.

My mistake in thinking mine was also.

[RibbieRubarb]

My mistake in thinking mine was also.