Federal deficit appears on track to fall below $300 billion

[Goldmember]

WASHINGTON (AP) — The federal deficit appears on track to register less than $300 billion for the budget year ending Sept. 30, as surging tax revenues continue to signal significant improvement over White House estimates released in February — though only modest gains over last year.

The non-partisan Congressional Budget Office, which makes estimates for lawmakers, said Friday that the deficit for the first three quarters of fiscal 2006 came in $41 billion less than the red ink recorded for the same period in 2005.

 

The 2005 deficit registered $318 billion. It would take major erosion in the fiscal picture in the final three months of the budget year for the deficit to exceed $300 billion.

 

The administration is poised Tuesday to put its own spin on the deficit picture as it updates its earlier estimate of $423 billion for the 2006 deficit. President Bush is expected to tout the numbers as proof of the success of Bush-sponsored tax cuts in reviving economic growth and, in turn, tax revenues.

 

Indeed, tax collections are surging at a 13% growth rate, reflecting particularly strong growth in taxes paid on corporate profits and income taxes paid by wealthier people and small businessmen who pay taxes quarterly instead of having them withheld by employers.

 

White House critics say the Bush team always inflates its February numbers so as to trumpet good news later in the year. And they say that seemingly intractable deficits in the $300 billion range are nothing to celebrate.

 

The improvements in the deficit picture come despite the high cost of the wars in Iraq and Afghanistan and continuing federal outlays related to Hurricane Katrina and other disasters last year.

 

http://www.usatoday.com/news/washington/20...it_x.htm?csp=34

[southsider2k5]

But, but, supply side economics doesn't work... Its all the housing market... Its all the stock market... Tax cuts don't pay themselves off

 

/cliches

[NUKE_CLEVELAND]

But, but, supply side economics doesn't work... Its all the housing market... Its all the stock market... Tax cuts don't pay themselves off

 

/cliches

 

 

pwn3d!!!!

[jackie hayes]

But, but, supply side economics doesn't work... Its all the housing market... Its all the stock market... Tax cuts don't pay themselves off

 

/cliches

All those commies who have attacked the ideas must feel damn foolish. Bush 1, Greg Mankiw, Bruce Bartlett, whoever wrote pages 57-58 of the 2003 Economic Report of the President... Ha!

 

And since public borrowing dampens private investment, it's a good thing this WH has cut public spending so dramatically. Wait...

 

Supply side economics = intelligent design, just for the rich. Maybe it comforts someone, but it's still total bs.

[NUKE_CLEVELAND]

All those commies who have attacked the ideas must feel damn foolish. Bush 1, Greg Mankiw, Bruce Bartlett, whoever wrote pages 57-58 of the 2003 Economic Report of the President... Ha!

 

And since public borrowing dampens private investment, it's a good thing this WH has cut public spending so dramatically. Wait...

 

Supply side economics = intelligent design, just for the rich. Maybe it comforts someone, but it's still total bs.

 

 

You can call it what you want to..........and so can they.......but it is clearly working.

[jackie hayes]

You can call it what you want to..........and so can they.......but it is clearly working.

Not really, but you can see what you want to.

[Gregory Pratt]

But, but, supply side economics doesn't work... Its all the housing market... Its all the stock market... Tax cuts don't pay themselves off

 

/cliches

 

You know, attacking the other party's economic policies is always a chic thing to do, but it's so dishonest. I'll be the first Democrat here to say that, yeah, Bush's economic policies have worked. The employment situation here is getting better, and is at a good, acceptable spot. But, when you're talking about economics, there are all sorts of choices to be made, and all of them are justifiable, to a point. Clinton's economic policies worked; so have W. Bush's. If I were the one making the choices, I'd do it Clinton's way, but it's not as if Bush has sent the country down a spiral economically. That said, I don't care for his Economic policy -- which consists entirely and wholly of, "Cut this tax, that tax, oh, here's one that needs the scissors put to it!"

 

I do think that it's cheesy and cliched to say, "Tax cuts don't pay themselves off" sarcastically. They don't. Ronald Reagan's debt is something we may never be able to pay off, and the debt added by Bush is going to be hard to erase, too. That is, primarily, my problem with deficit spending. As for supply side economics, it always struck me as a crude concept. It's like having two dogs, and filling a bowl for one of them, then deciding that, if the smaller dog wants food from the bigger dog, he can wait until the big dog drops a crumb or two here or there.

 

Supply side economics = intelligent design, just for the rich. Maybe it comforts someone, but it's still total bs.

 

Bill Maher said it was the equivelant of being peed on by the rich. I thought you'd like that.

 

Not....being peed on.....but....the comment....

[jasonxctf]

wow, Bush must be doing a great job. $300 billion dollar deficit... way to go!!!

[Balta1701]

Earlier this week, the Wall Street Journal posted an article which unfortunately is only available to subscribers as far as I can tell, but Here's a summary of the math, albiet from a left-leaning web blog. Anyone who finds the actual article somewhere where it's freely available, I'd love to read it somewhere without subscribing to the Journal.

 

So, the deficit is decreasing, beyond what was projected. How is this happening? Well, it could be happening from additional growth beyond the standard economic predictions, but according to the Journal piece, this is not what happened.

 

What is actually happening is that more and more earnings are being concentrated in the folks who earn the highest wages already. While the median income has stagnated, the upper incomes have continued to soar. This has the odd result of actually producing more tax revenues for the government, because despite Bush's tax cuts, the tax code is still somewhat progressive, and higher wage earners do pay higher taxes. This has the effect of slightly lowering the deficit, despite the fact that the reduction is entirely due to increasing income inequality.

[NUKE_CLEVELAND]

Earlier this week, the Wall Street Journal posted an article which unfortunately is only available to subscribers as far as I can tell, but Here's a summary of the math, albiet from a left-leaning web blog. Anyone who finds the actual article somewhere where it's freely available, I'd love to read it somewhere without subscribing to the Journal.

 

So, the deficit is decreasing, beyond what was projected. How is this happening? Well, it could be happening from additional growth beyond the standard economic predictions, but according to the Journal piece, this is not what happened.

 

What is actually happening is that more and more earnings are being concentrated in the folks who earn the highest wages already. While the median income has stagnated, the upper incomes have continued to soar. This has the odd result of actually producing more tax revenues for the government, because despite Bush's tax cuts, the tax code is still somewhat progressive, and higher wage earners do pay higher taxes. This has the effect of slightly lowering the deficit, despite the fact that the reduction is entirely due to increasing income inequality.

 

 

Increased economic activity + steady job growth + falling unemployment + rich guys making a bigger killing = more tax dollars. Id leave it to a leftist blogger to play the class warfare card while trying to spin positive news into something negative.

 

Rich guys making more money is part of it but not the entire reason like this douche says.

Edited July 21, 2006 by NUKE_CLEVELAND

[jackie hayes]

Increased economic activity + steady job growth + falling unemployment + rich guys making a bigger killing = more tax dollars. Id leave it to a leftist blogger to play the class warfare card while trying to spin positive news into something negative.

 

Rich guys making more money is part of it but not the entire reason like this douche says.

"this douche" = the WSJ???

 

Cool, now the WSJ is part of the vast left-wing conspiracy. It gets better and better. Can we add it to the axis of evil too?

 

I was able to find the article free here. It's listed as "today's free feature" -- hopefully they just mean, from "today's" paper, and continue to have it up.

Edited July 21, 2006 by jackie hayes

[Rex Kickass]

Does this deficit number have the supplemental bills involved in it by the way?

[Balta1701]

"this douche" = the WSJ???

 

Cool, now the WSJ is part of the vast left-wing conspiracy. It gets better and better. Can we add it to the axis of evil too?

 

I was able to find the article free here. It's listed as "today's free feature" -- hopefully they just mean, from "today's" paper, and continue to have it up.

Thanks a bunch for finding that! (I knew I'd gain some benefit if I posted it here)

[Balta1701]

Does this deficit number have the supplemental bills involved in it by the way?

I believe it includes the ones that have already passed.

[NUKE_CLEVELAND]

"this douche" = the WSJ???

 

Cool, now the WSJ is part of the vast left-wing conspiracy. It gets better and better. Can we add it to the axis of evil too?

 

I was able to find the article free here. It's listed as "today's free feature" -- hopefully they just mean, from "today's" paper, and continue to have it up.

 

But total economic output is expected to be just 1% larger, before adjusting for inflation, than the White House predicted.

 

 

In writing this the author misleads the public. What is not mentioned is the fact that GDP growth was 5.6% in Q1 2006 and is expected to remain strong for the forseeable future. When you have strong economic growth you get greater tax revenues. The author also failed to cite declining unemployment and the few million jobs that have been created since this latest expansion started taking hold in 2002/2003.

 

In spite of all those failings, I wasn't referring to the author as a douche but the class-warfare playing blogger who Balta cited.

[NorthSideSox72]

I honestly can say I see truth in both major themes being brought up here - Bush and Congress' economic policies have indeed created some positives, but ALSO, there is a widening gap between the haves and have-nots. Both of these are in the nature of most Republican-driven administrations. What is NOT typically Republican is the drunken-sailor spending by the government that still, even with positive economic news, is running up huge deficits.

 

So I'll take this as a nice positive for the job market and the economy generally, but a continued slap to the other 90%, and another sign that the GOP has lost track of its small-government roots.

[southsider2k5]

But total economic output is expected to be just 1% larger, before adjusting for inflation, than the White House predicted.

 

And an interesting and misleading trick this is as well. I love fun with numbers. Its funny for the author to accuse the President and his group of accounting and math tricks, but then to do the samething in his own writings. *sigh*

[jackie hayes]

And an interesting and misleading trick this is as well. I love fun with numbers. Its funny for the author to accuse the President and his group of accounting and math tricks, but then to do the samething in his own writings. *sigh*

Mind telling me what the trick is?

[Balta1701]

In writing this the author misleads the public. What is not mentioned is the fact that GDP growth was 5.6% in Q1 2006 and is expected to remain strong for the forseeable future. When you have strong economic growth you get greater tax revenues. The author also failed to cite declining unemployment and the few million jobs that have been created since this latest expansion started taking hold in 2002/2003.

 

In spite of all those failings, I wasn't referring to the author as a douche but the class-warfare playing blogger who Balta cited.

What you're missing in that stat is that the GDP number is included, as when the original federal deficit projection was made, a 4.5% growth or so was expected (a higher number than they're predicting this year.) So the 1% number would come from the fact that growth went roughly 1% beyond that amount, which is not nearly enough to account for the difference between the estimates and the reality.

[jackie hayes]

In writing this the author misleads the public. What is not mentioned is the fact that GDP growth was 5.6% in Q1 2006 and is expected to remain strong for the forseeable future. When you have strong economic growth you get greater tax revenues. The author also failed to cite declining unemployment and the few million jobs that have been created since this latest expansion started taking hold in 2002/2003.

 

In spite of all those failings, I wasn't referring to the author as a douche but the class-warfare playing blogger who Balta cited.

No, it's not a bit misleading. The deficit is lower than earlier WH projections, which assumed a particular rate of economic growth, income distribution, payroll employment, etc. The WH projections on economic growth were basically correct. So that can not be the source of the discrepancy. The payroll employment numbers are actually below WH projections. So that's definitely not the reason, either. Basically, the assumptions that were wrong involved income distribution (corp profits are larger than expected, and household labor income is absolutely more unequal). What's so hard to understand?

 

Don't listen to what the economists say. Why? Because they like math, and math is very much a part of the Axis of Evil.

[southsider2k5]

Mind telling me what the trick is?

 

TrickS.

 

 

First is the played out class warfare card. Let me make this simple, if rich people are making money, poor people have jobs. If rich people are losing money, poor people lose jobs. Its the same with corporate profits... If coroporations lose money, people lose jobs, see also the airline and auto industries of today. Guess what. Corporations are making money, and since August of 2003, 5.4 million new jobs have been created. Guess what else, corporations are paying lower rates, but paying more money in taxes, which is exactly what conservatives said would happen.

 

How about showing the increase in corporate profits as a percentage, and then comparing it to income tax collections for a comparison? For #1, corporate profits are HUGELY volitile, and a prone to large swings. #2, you can actually have negative coporate profits, while you can't have negative income tax collections. The lowest you can have is zero. #3 income tax collections are a much bigger piece of tax revenues than corporate profits, but the implication in the article is that they are somehow equal. #4, because of the size difference in between the two it takes a much smaller dollar figure move in profits to make a larger percentage difference than it does the other way around. #5, payroll taxes are incredibly stable because of the fact that there has been a nearly stable unemployement rate in this country for the past year, which means the group has not grown at all, and the simple fact remains that there can't be huge growth because the growth potential is capped by the income limit. If a guy doubles his salary from 90000 to 180000 his taxes paid rise a ton, but the amount he pays for payroll taxes only goes up 7.75% X $4200. It makes liars out of the percentages because they don't tell the whole story.

 

Another cute little trick is using whole numbers in some sections, while using percentages in others, and comparing percentages to percentages in other areas. Just because the percentages don't match up, doesn't mean there is something sinister going on. I really like the part where they adjusted for inflation in one section, and didn't in another, and then used that to make it look even more outlandish when comparing the two percentage changes. I guess total tax revenues aren't effected by inflation, just econmic output? Come on.

[Balta1701]

Couple random quibbles with that block, and then I'll get to my real question:

 

since August of 2003, 5.4 million new jobs have been created

First, just to point out, that's an average of 160,000 jobs per month created is somewhere around a few tens of thousand more jobs a month than is needed to keep up with the estimated population growth (somewhere in the 130,000 range, plus or minus 30k, depending on who you read). Which means to me that job creation still hasn't really taken a big bite out of the unemployment generated in the last recession. It's also still significantly worse than the job creation record of the Clinton Administration (a time during which the growth in income inequality was, IIRC, quite a bit slower than it is now). And on top of that, it's happening at a time when wages have failed to keep up with inflation in those jobs, such that the average worker is earning less in real dollars. So I would quibble quite strongly with your "The rich are doing better, so now so is everyone" statement, based on the fact that compared to the previous administration's record, the rich are doing much better now, but that tide is not lifting everyone else up nearly as much.

 

Anyway, here's my actual question for you, and you can attack that paragraph as you wish, but this is the answer I really care about: Do you totally disagree with the premise of that WSJ piece, and you're saying that rising inequality has nothing to do with rising tax receipts, or are you just quibbling with their actual numbers? Is this a case of them being partially right but you don't like how they went about showing it, or are they simply wrong, and do you have alternate numbers you could present to prove them wrong if their case did not satisfy you?

[Balance]

Do the budget numbers include what we're spending in Iraq? As I recall, those expenses were conveniently kept separate from the overall budget picture. Just a little wave of the Magic Accounting Wand.

[southsider2k5]

The guy has some points, and some BS. My big problem is that he rips someone for the technique they use to prove something, and then use the exact same technique. That bothers me. To be honest, you could take that set of numbers, and prove that the martians inhabited Atlantis if you really worked at it. Numbers lie all of the time, but it is pretty lowbrow for a WSJ columnist of all people, who knows how numbers get manipulated, to call this administration on it, and then do the samething himself.

 

I don't have a lot of time to give my full take on this, but I am sure it would have the same mix of fact, interpretation, and BS as anyone else's.

[Balta1701]

Do the budget numbers include what we're spending in Iraq? As I recall, those expenses were conveniently kept separate from the overall budget picture. Just a little wave of the Magic Accounting Wand.

Once the supplemental appropriations have passed, yes the budgetary numbers will include them.