Posted on 07/07/2005 5:17:51 AM PDT by expat_panama
The good news this week is the unexpected surge in federal tax revenues that is slashing the federal budget deficit by about $100 billion. This is especially welcome news to supply-side tax-cutters who argued all along that lower tax rates spur stronger economic growth, which, in turn, creates more jobs that increases tax revenues. That is happening now. It's embarrassing news for President Bush's diehard Democratic critics, who predicted his tax cuts would worsen the budget deficits and drive the government deeper into debt. They argued throughout last year's elections that the tax cuts failed to grow the economy, create jobs or improve fiscal health.
(Excerpt) Read more at insider.washingtontimes.com ...
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The comparison of the budget to the size of the economy is more important than flat numbers. George Washington had a deficit of about one 10 millionth of what we have today, but they were close to default because the US economy back then was so tiny.
The debt burden has gone down over the past decade even though revenue dropped more than spending. The reason is that the economy grew so much.
$100 billion off what, though? They've been saying this for some time. Is it a new $100 billion, or the old $100 billion?
The Founders were actually in default. They eventually made good on the debts one way or another, but creditors had to wait, and that means they were in default.
Add me to your ping list.
Could you explain that chart a little more, please.
Yep, the young United States was like an IPO with no earnings, no revenue, and a mountain of debt. The one good thing going for it was growth potential.
15 , 30, 45% of GDP etc.
The new is that the latest reports are "slashing the federal budget deficit by about $100 billion." I'd have thought this was good news but you're concerned about just how big are the remaining numbers. If it were info you wanted you could just look here.
I take it that your question is rhetorical-- so I'll just answer like I'm guessing you want: "Yeah that's right! WHAT!!!"
Did I guess right?
Some fiscal experts now predict the deficit could come in at around $300 billion. My own belief is it will be even lower because the economy is growing much faster than expected. Last week, the U.S. Commerce Department reported that, for the first three months of the year, the economy was growing at an annualized 3.8 percent, instead of the 31/2 percent they initially reported. This revised estimate, in the face of Wall Street fears of economic slowing, provided "more ammunition for Republican boasts that their tax cuts are the cause of this performance," Mr. Weisman reported.
I got the original numbers from the budget spreadsheets here, and you can use the link to get both the raw numbers for spending, taxes, deficit, and gdp, or you can also get the budget numbers as a percentage of gdp to show just how serious they are. Next, I put them into this table and plotted them into the chart.
Good morning Foo, I don't have a 'ping list' although you're sure welcome to start one (please put me on it) but the next time I'm starting one of these food fights I'll be sure to invite you to join in the fun.
That sounds like a good debate topic; but I find it easier to believe the idea that when the question came up, the decision was to reject default. The central government chose a bona fide timely bond redemption.
The comparison to a company is nice when you think of Federal assets. The value of federal land alone could easily cover the national debt.
I agree that it depends on how you define default. But there were a lot of creditors of the government at the time, and they weren't getting paid in a timely manner.
Utlimately, they decided to sell off some of the western lands to pay the debts. At the time the Constitution was amended to allow the income tax, the NYT ran an editorial in which it touted the income tax as the solution to the federal government's financial problems. It described the federal government as in a perpetual state of bankruptcy.
It worked for a while, but eventually, the Peter Principle (is that the right one?) caught up: Every budget expands to absorb all available funds.
They could easily balance the budget in 06, if they had the will.
No question about that. Just freeze the budget and you will probably get there if not in 2006 but by 2007 for sure.
Is this the kind of news that could motivate congress into making permanent Bush's tax cuts? The evidence that tax cuts stimulate growth, and revenue, is unequivocal.
I remember many scoffing at supply side champion, Jack Kemp, when he predicted this would happen last year. The supply siders have always been right and this article supports their claims.
More Kemp from last year:
Looking ahead to the next four years, our goal should be economic growth rather than reducing deficits per se. If growth is the goal, then tax increases, trade restrictions and nationalized health care are the wrong choices. If long-term growth is our goal, then we will reject tax-and-spend redistributionist policies masquerading as fiscal discipline; and, if long-term growth is our goal, we will continue to pursue lower tax rates on all Americans, free trade, less regulation, tort reform and entitlement reform. Those are the right choices.
This seems to show that, since 9/30/04, we've added $463 Billion to The National Debt.
I love that site.
Bear in mind, that the site is talking about "public debt" and not the budget like this article is. Just the same, IMHO it's the public debt that matters more than the budget deficit, because the budget is only what we're planning, and the public debt is the actual amount of money we owe on our assets.
There's lots of ways of looking at it and (again) IMHO they all look pretty good. One way is to see how the total public debt isn't growing as fast as family wealth is. Another is the value of gov't assets-- federal land alone could pay off the debt if we wanted, but I for one wouldn't want to.
Bottom line: we're doing fine.
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