Tax Cuts for the Rich Reduce U.S. Budget Deficit

[Gravitymaster 0]

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July 11 (Bloomberg) -- President George W. Bush's administration will report this week that surging tax revenue is shrinking this year's budget deficit from the record 2004 level, possibly by as much as $90 billion, giving him a shot at fulfilling his deficit reduction promise three years early.

With tax revenue running $1 billion a day ahead of the 2004 pace in late April and May, the deficit will likely decline to about $325 billion from $412 billion last year, according to the Congressional Budget Office and private forecasters such as Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut.

``An expanding economy, creating more receipts, is putting us on a very good path to deal with our deficit,'' Treasury Secretary John Snow said at a press conference in Calgary on July 8. ``It's pretty clear now the path we are on will take us below the president's initial target.''

Bush promised during his election campaign last year that he would pare the annual deficit to about 2.25 percent of the nation's gross domestic product by 2009.

As recently as February, the government was projecting the deficit would rise this year to $427 billion, or about 3.5 percent of the nation's gross domestic product. Some economists, including Mike Englund of Boulder, Colorado, research firm Action Economics LLC, now predict the shortfall will drop to 2.5 percent of GDP this year and as low as 2.0 percent next year. That would mean a deficit next year as low as about $250 billion.

Revised Estimate

Joshua Bolten, director of the White House Office of Management and Budget, will release the government's revised estimate for the fiscal 2005 budget deficit on July 13. The Bush administration's estimate likely won't be any lower than the $325 billion forecast by CBO, said Pete Davis of Davis Capital Investments. Bush's administration has a record of overestimating deficits ``and I don't see any particular reason that he would deviate from that practice,'' Davis said.

``CBO always is more accurate, both short term and long term,'' said Stanley Collender, managing director in Washington of Financial Dynamics, a business-consulting firm. ``OMB doesn't get credit for being right. Their job is to show the president in the best possible light.''

In the first eight months of the fiscal year the deficit was $272.2 billion, down from $346.3 billion at the same time last year, the Treasury said in a June 10 report. The monthly deficit fell to $35.3 billion in May, a bigger improvement than economists expected and the smallest gap for the month since 2001. Revenue rose 32 percent, with tax receipts from individuals surging 88 percent from May 2004, the biggest jump in five years. Spending increased 5.7 percent.

``Given the pace of income, wage and salary growth, there'll be plenty of money in the coffers,'' said Rich Yamarone, director of research at Argus Research Corp. in New York. ``I wouldn't be surprised with a $100 billion narrowing.''

Deficits Since 2002

The U.S. has run deficits each fiscal year since 2002 amid increased defense spending after the September 2001 terror attacks, tax cuts and rising costs for social services such as Medicare. The government reported annual budget surpluses from 1998 to 2001.

Bush and his Republican allies can claim bragging rights for bringing the budget down in time for midterm elections, said Michael T. Darda, chief economist at MKM Partners LLC in Greenwich, Connecticut. Darda credits economic growth brought on partly by the 2003 tax cuts, which reduced the tax rate on capital gains to 15 percent from 20 percent and cut the rate on corporate dividends to 15 percent from 38.6 percent.

After the 2003 tax cuts, ``that's when the economy really kicked into high gear,'' he said. The White House, he said, is ``definitely entitled to crow a little bit. You'd think they'd do a victory lap.''

Not Assured

A huge decline in the deficit next year isn't assured. One reason for the surge in tax revenue this year was a 10 percent increase in compensation in last year's fourth quarter because of large year-end bonuses, which probably won't be repeated this year, Lehman's Harris said.

There is a danger that a shrinking deficit may lessen the resolve in Congress to restrain spending, or that expenditures required by law will erase any gains. Defense spending is up because of the wars in Iraq and Afghanistan, and another supplemental war spending request is expected later this year. Congress is considering an extra $1 billion for veterans health care, Medicare expenses are rising because of an aging population, and interest rate increases are raising the government's debt costs.

Government spending rose 9.2 percent in June compared with the same month a year ago, the Congressional Budget Office said July 7.

Weren't there one or two people on here who said tax cuts for the rich were a bad idea? What say you now?

[AlexCrowley 0]

I am in no way good with economics, certainly not at a level where I could defend an alternate position. However, the criticisms of the way the tax cuts were structured, from my possibly incorrect recollection of various pundits at the time, was that they would be damaging over the long term, and that a short term measurable gain might be seen. Of course, I'm not sure what a 'short term measurable gain' might include either.

Perhaps someone with a better memory of the original criticisms (from educated sources) or grasp of the economics can provide some additional insight or correct my recollection in a way that someone without a degree in accounting can understand :)

TV's got them images, TV's got them all, nothing's shocking.

[Gravitymaster 0]

I'd rather have those who were opposed to the tax cuts explain to us again why they thought the cuts were bad. I'd also like to hear what they think the long term outlook is based on this and the fact that the unemployment rate is now at 5%. Thats the same rate it was at before 9/11/01.

[TomAiello 26]

That's ok. I am good with economics, and I'm a conservative, and I think taxes are pretty much the worst thing that can be done to a man. But I still don't buy the central premise of that article.

Taxes ought to be reduced (in my dream world, eliminated) because they are a fundamental affront to human freedom--not because I can wiggle some figures enough to say that doing so actually makes the government money.

-- Tom Aiello

Tom@SnakeRiverBASE.com
SnakeRiverBASE.com

[EBSB52 0]

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I'd rather have those who were opposed to the tax cuts explain to us again why they thought the cuts were bad. I'd also like to hear what they think the long term outlook is based on this and the fact that the unemployment rate is now at 5%. Thats the same rate it was at before 9/11/01.

Unemployment rates are as believable as Bush. the Unemp rate calculates the portion/rate of people collecting benefit, when their benefits run out they fall off the U.R. list.

Actually the UR was at many decade lows during the Clinton years and was starting to edge up right b4 Bush 2 took office.

Furthermore, this Nazi in Chief has rejected every proposal of unemployment extensions that have crossed his desk, so that keeps the UR low. Bush 1, a man that I despised at the time, looks grand as compared to this creep. Furthermore, Bush1 was a war hero like McCain and others, wheras this former drunk/druggie did all he could to dodge going over or even training here for his entire term.

Point is, these stats are as manipulable as these corporate-run presidents.

I'd rather have those who were opposed to the tax cuts explain to us again why they thought the cuts were bad.

I'd rather argue with people who oppose me rather than some carbon copy of myself, but I guess you are looking for support rather than opposing views.

[EBSB52 0]

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That's ok. I am good with economics, and I'm a conservative, and I think taxes are pretty much the worst thing that can be done to a man. But I still don't buy the central premise of that article.

Taxes ought to be reduced (in my dream world, eliminated) because they are a fundamental affront to human freedom--not because I can wiggle some figures enough to say that doing so actually makes the government money.

and I think taxes are pretty much the worst thing that can be done to a man.

We have 3 main tx ideologies:

1) Supply side / trickle down

-In supply side economics, the rich get the tax grants as with Hoover, Reagan, Bush2, etc... They then "trickel down" whatever they want to the masses and devise their economic schemes to best benefit the corps, not the people.

2) Consumer side (as I call it) / Socialism

-Here, the people have a lot more control of the tax structure and spending, which is the most important part (spending). Consumers control the market much more and in a general Capitalistic market as we have in the US, it worls well until the rich get ahold of it and skew it.

In this market scheme, taxes that are collected are redirected to the poor, who spend it immediatley. The market tends to continually move which can cause inflation, but increased interest rates can slow the market while ensuring enough activity to be healthy. As we've all seen recently, you can run the interest rates thru the floor and it may not spur the economy, but raising them will certainly slow the economy if needed.

3) Then there's Communism, where the gov controls everything.


The central theme is about who will control the economy/market

1. Corporations

2. Citizens

3. Government


I know which I want and which party plays the most into it.


But I still don't buy the central premise of that article.



Ya, it the, "Ice cream causes rape" argument all over again.

Taxes ought to be reduced (in my dream world, eliminated) because they are a fundamental affront to human freedom--not because I can wiggle some figures enough to say that doing so actually makes the government money.

Who would pay for the war? Is it ok that kids are w/o medical attention? Job retraining? If the tax rates were lowered, would we see any difference in our society? If social spending was reduced/eliminated, would we see a difference in our tax structure?

Tom, don't buy into this, "If people quit making false insurance claims our insurance rates would drop" argument.

Kind of ironic that the Repubs don't believe that social programs help to improve the economy by the hiring of people for gov positions, which generate tax revenue. But to forcibly procure a person's house is a good thing for tax revenue.

Oh well, things have a way of 'adjusting' themselves.

[Gravitymaster 0]

I said:

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I'd rather have those who were opposed to the tax cuts explain to us again why they thought the cuts were bad.

Then you said:

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I'd rather argue with people who oppose me rather than some carbon copy of myself, but I guess you are looking for support rather than opposing views.

If you read it again you will be able to noodle out that I was looking for opposing views. But never mind I'm not up for a Bushbashfest.

[EBSB52 0]

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I said:

Quote

I'd rather have those who were opposed to the tax cuts explain to us again why they thought the cuts were bad.

Then you said:

Quote

I'd rather argue with people who oppose me rather than some carbon copy of myself, but I guess you are looking for support rather than opposing views.

If you read it again you will be able to noodle out that I was looking for opposing views. But never mind I'm not up for a Bushbashfest.

I guess after reading this:

Weren't there one or two people on here who said tax cuts for the rich were a bad idea? What say you now?

I just assumed you have predisposed bias against taxes, so when I read your statement I assumed you were looking for support against taxes.

Now, I haven’t picked apart this article, but in a very general sense I have defined the 3 main forms of economic governments; what’s your take on that?

As for the stats we could have Greenspan in here spinning that shit around talking GNP and projected taxes/projected deficits till the end of time and we wouldn’t get anywhere. I thought the justice system was easy to spin, it has zero on the economy.

As for a Bush-bash, it's kind of hard not to include the things he's done, as well as this extreme Congress and Sup Ct.

Are you going to talk about the 90's and taxes w/o bringing in Clinton? There is a correlation.

[kelpdiver 2]

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I'd rather have those who were opposed to the tax cuts explain to us again why they thought the cuts were bad. I'd also like to hear what they think the long term outlook is based on this and the fact that the unemployment rate is now at 5%. Thats the same rate it was at before 9/11/01.

Tax cuts might have been fine if they weren't coupled with a jacked up spending budget at the same time. A large portion of the reason I picked Bush over Gore was that I expect Gore to raise spending, and it's much easier to repeal a tax cut than to undo new spending. Bush failed the country. In '04, neither party got my vote.

Bragging about a 325B deficit just a few years after a surplus is pathetic, man. Getting the unemployment back to the same level isn't an accomplisment either. It's actually much like Reagan's first term in office. For 2 years the economy got worse, then it recovered to the initial levels just in time for reelection. It wasn't Reagan's tax cuts that made the difference, it was the heavy increase in federal spending that primed the economy.

[kallend 2,148]

What amazing SPIN.

We have record deficits due to Bush's tax cuts and Bush's war, but not quite as bad as originally forecast, so Bush must have been right.

Someone seems to have forgotten that there was a surplus just 5 years ago.

Wanna buy a bridge?

...

The only sure way to survive a canopy collision is not to have one.

[lawrocket 3]

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Kind of ironic that the Repubs don't believe that social programs help to improve the economy by the hiring of people for gov positions, which generate tax revenue. But to forcibly procure a person's house is a good thing for tax revenue.

You're right. If I am an Avon distributor and I buy $1,000.00 worth of stuff from myself, I will have earned a few bucks in commission. Those commissions are great for my economic future.

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taxes that are collected are redirected to the poor, who spend it immediatley.

Sounds like the definition of robbery. Recall that Robin Hood didn't steal from the rich to give to the poor. He stole from the nobility who lived well off of the taxes they collected. It turned out that the poor were taxed into being poor. Such arguments call for equal misery among all.

My wife is hotter than your wife.

[rushmc 23]

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What amazing SPIN.

We have record deficits due to Bush's tax cuts and Bush's war, but not quite as bad as originally forecast, so Bush must have been right.

Someone seems to have forgotten that there was a surplus just 5 years ago.

Wanna buy a bridge?

Tax cuts = government revenue increases!!

It happened under Kennedy, Reagan and now Bush.

This is a Fact!

...as for the surplus.....or was it a "projected" surplus? The same as a "projected" deficit.

If you hadn't bought a bridge, you wouldn't have one to sell

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[EBSB52 0]

Quote

Quote

I'd rather have those who were opposed to the tax cuts explain to us again why they thought the cuts were bad. I'd also like to hear what they think the long term outlook is based on this and the fact that the unemployment rate is now at 5%. Thats the same rate it was at before 9/11/01.

Tax cuts might have been fine if they weren't coupled with a jacked up spending budget at the same time. A large portion of the reason I picked Bush over Gore was that I expect Gore to raise spending, and it's much easier to repeal a tax cut than to undo new spending. Bush failed the country. In '04, neither party got my vote.

Bragging about a 325B deficit just a few years after a surplus is pathetic, man. Getting the unemployment back to the same level isn't an accomplisment either. It's actually much like Reagan's first term in office. For 2 years the economy got worse, then it recovered to the initial levels just in time for reelection. It wasn't Reagan's tax cuts that made the difference, it was the heavy increase in federal spending that primed the economy.

it was the heavy increase in federal spending that primed the economy.


That's honestly great to see a consevative guy see this truth. I'm not saying the Dems have it all right, and to pipe off millions to the lazy mother fuckers isn't so appealing either, but we have choices.

The Repubs general protocol is to increase spending to military programs and cut taxes - no $$$ left for social programs. Now, where does teh money go? To rich corps. WHat do they do with it? Decide how mich they want to embezzle/swindle, decide how much they need to spend in the way of jobs to attain the correct write-off.

The Dems raise taxes slightly in most cases and pump the social programs full helping all people, yes, including lazy ones - so what. Generally I've noticed a drop in crime when the gov does this. People can work, train. etc. so they will. When the economy is slowed, the coprs hang on to much of teh wealth deciding when to tricklle it down, people hurt. When the economy is sped up, job are plentiful and wages increase;corps don't do as well as they have to compete for labor.

This is why I'm a fiscal liberal, no other reasons like Jerome needs his crack money so he gets his ho to sell her food stamos for fiddy cents on the dollah. I don't love or embrace these people, but to deny them is to deny many times the number of needy people actual benefits so they can better their lives.

There will be corrpution with either system, but to choose between some fat-cat greedy POS sitting on millions/billions so he can slowly spend it nausiates me far more than some trailer trash POS figuring a barter system so he can turn food stamps into beer.

Yes, Reagan did spend us out of the recession of the early 80's. The B-1B was the best example of that. 100 acft @ 300 million each for a worthless POS. Yes, I worked on the B1 in manufacturing and the B-52 in the military and the latter blows away the former.

What the Repubs seem to do is to tie in morality with the economy, which to me are strange bedfellows.

[EBSB52 0]

Quote

Quote

Kind of ironic that the Repubs don't believe that social programs help to improve the economy by the hiring of people for gov positions, which generate tax revenue. But to forcibly procure a person's house is a good thing for tax revenue.

You're right. If I am an Avon distributor and I buy $1,000.00 worth of stuff from myself, I will have earned a few bucks in commission. Those commissions are great for my economic future.

Quote

taxes that are collected are redirected to the poor, who spend it immediatley.

Sounds like the definition of robbery. Recall that Robin Hood didn't steal from the rich to give to the poor. He stole from the nobility who lived well off of the taxes they collected. It turned out that the poor were taxed into being poor. Such arguments call for equal misery among all.

You're right. If I am an Avon distributor and I buy $1,000.00 worth of stuff from myself, I will have earned a few bucks in commission. Those commissions are great for my economic future.


I get the analogy and it's close, but we have a system of many people so that distances it somewhat.

Sounds like the definition of robbery.

You're going to have robbery either way. Do you want the CEO of Worldcom to embezzle 11 billion or a bunch of trailer trash to embezzle 200 each totallingfar less than the 11 billion collectively? BTW, the latter immediatley turns his money back into the economy, the former hides his to see if he can get away with it, slowing the economy. I'm not justifying either, just establishing what happens to it once either side takes it.

Recall that Robin Hood didn't steal from the rich to give to the poor. He stole from the nobility who lived well off of the taxes they collected.

Ya know, I don't know that - I don't read fairy tales. I was under the impression that he did steal from the poor.

It turned out that the poor were taxed into being poor.

Was that Limbaugh's rendition of Robin Hood? Sounds revised.

Such arguments call for equal misery among all.

Because poor people get financial help and 10% of them scam the system that's misery? Especially considering the alternative that we now see with all the corporate swindling.

[kallend 2,148]

Quote

Quote

What amazing SPIN.

We have record deficits due to Bush's tax cuts and Bush's war, but not quite as bad as originally forecast, so Bush must have been right.

Someone seems to have forgotten that there was a surplus just 5 years ago.

Wanna buy a bridge?

Tax cuts = government revenue increases!!

It happened under Kennedy, Reagan and now Bush.

This is a Fact!

...as for the surplus.....or was it a "projected" surplus? The same as a "projected" deficit.

If you hadn't bought a bridge, you wouldn't have one to sell

The Bush voters bought the bridge. He duped you, just like Reagan did!

The surplus was ACTUAL.

Attached graph from the CBO.

...

The only sure way to survive a canopy collision is not to have one.

[rushmc 23]

Oh yah, I keep forgetting that Bush, and the majority that voted for him are all stupid

Since the American voters can't be trusted to vote the "correct way", (we were all duped) when are those that believe as you going to change the law so only your points of view will be supported when voting is done?

Maybe you can have a test to make sure everyone meeting your inteligance levels before they can vote.

You are a hoot!!

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[EricTheRed 0]

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Oh yah, I keep forgetting that Bush, and the majority that voted for him are all stupid

True enough.

The majority of people that voted for Kerry are are also stupid. Unfortunately there are just a whole lot of stupid people in this great country

illegible usually

[rushmc 23]

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Quote

Oh yah, I keep forgetting that Bush, and the majority that voted for him are all stupid

True enough.

The majority of people that voted for Kerry are are also stupid. Unfortunately there are just a whole lot of stupid people in this great country

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[kallend 2,148]

Quote

You are a hoot!!

And Bush's deficit is REAL.

We had a surplus, now we don't.

...

The only sure way to survive a canopy collision is not to have one.

[rushmc 23]

So what?

Most economists say that it is not a big deal! It is also smaller when compared to the GNP than in the past.

It is a non issue........... and it is changing!X

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[DrewEckhardt 0]

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With tax revenue running $1 billion a day ahead of the 2004 pace in late April and May, the deficit will likely decline to about $325 billion from $412 billion last year, according to the Congressional Budget Office and private forecasters such as Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut.

To put this in perspective:

1. The debt will increase by over $3400 a family (the 2000 census enumerated 281M citizens with an average family size 3.14; the current population estimate is just shy of 296M). This is on top of the $83,000 the government already owes for each family.

2. Clinton had a $39B _surplus_ in FY 1998, $123B in 1999, $236B in 2000, and $127B in 2001 (revenues declined 127B in FY2001).

[TomAiello 26]

I find it interesting that a bunch of the same folks who are saying the Bush administration is just wiggling the numbers to their advantage are also taking the Clinton numbers as gospel.

Honestly, I think that pretty much every administration (Clinton, Bush, whoever) mashes those numbers as hard as they can to put themselves in the best light.

-- Tom Aiello

Tom@SnakeRiverBASE.com
SnakeRiverBASE.com

[Gravitymaster 0]

The lefties also like to forget that Clinton wanted to nationalize healthcare which would have blown a hole in the US economy that we may never have recovered from. They also like to conveniently forget that Clinton didn't want a balanced budget and the only reason we had surpluses was that he was dragged kicking and screaming by a Republican controlled Congress and forced to balance the budget. I guess ignorance really is bliss.

[Gravitymaster 0]

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I find it interesting that a bunch of the same folks who are saying the Bush administration is just wiggling the numbers to their advantage are also taking the Clinton numbers as gospel.

Honestly, I think that pretty much every administration (Clinton, Bush, whoever) mashes those numbers as hard as they can to put themselves in the best light.

What I think is funny is how when the numbers show a deficit when a Republican is in office, they believe them but when they show a surplus, then the numbers have been manipulated.

[EBSB52 0]

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Oh yah, I keep forgetting that Bush, and the majority that voted for him are all stupid

Since the American voters can't be trusted to vote the "correct way", (we were all duped) when are those that believe as you going to change the law so only your points of view will be supported when voting is done?

Maybe you can have a test to make sure everyone meeting your inteligance levels before they can vote.

You are a hoot!!

Why not address the graph instead of writing that vile rhetoric?

Maybe you can have a test to make sure everyone meeting your inteligance levels before they can vote

Well, Kallend is probably the most intelligent person on the board, so your point???????

Address the graph......

Refute the graph......

Do something.....