Budget Deficit Drops to $250 Billion

AP ^ | October 6, 2006 | ANDREW TAYLOR

[West Coast Conservative]

The federal budget estimate for the fiscal year just completed dropped to $250 billion, congressional estimators said Friday, as the economy continues to fuel impressive tax revenues.

The Congressional Budget Office's latest estimate is $10 billion below CBO predictions issued in August and well below a July White House prediction of $296 billion.

The improving deficit picture _ Bush predicted a $423 billion deficit in his February budget _ has been driven by better-than-expected tax receipts, especially from corporate profits, CBO said.

[remember]

"Another idiot supply-sider..."

Yep. That would be Ronald Reagan, G.W. and me.

As you wish. So, getting back to the topic of this thread, please provide a link to one of the libs who, in your words in post #157, "said the revenue growth, would not, could not happen if taxes were cut".

[olderwiser]

Hey Remember, maybe you should get yourself a freerepublic tagline:

"Ronald Reagan was an idiot."

Or:

"Don't blame me for the lousy economy--I voted Kerry in '04!"

Or:

"I tried to vote for Pete Peterson for Prez (but I found out 2 years later he wasn't running)"

Or:

"Remember--I'm a lib idiot weasel."

[remember]

Hey Remember, maybe you should get yourself a freerepublic tagline:

"Ronald Reagan was an idiot."

Why should I? I don't blame Reagan for your flawed arguments. In any case, it appears that you have no intention of backing up your statement in post #157, that "libs said the revenue growth, would not, could not happen if taxes were cut". Hence, I'll just repeat the initial request to which you did not respond. The following graph shows real revenues, outlays, and deficits since 1981:

The actual numbers and sources are at http://home.att.net/~rdavis2/mts.html. As you can see, real revenues are only back to where they were in 2000. Also, note that revenues continued to go down after the 2001 tax cuts. Please point to the proof that this recovery from a deep drop in revenues is some sort of explosion of revenues caused by tax cuts.

[100-Fold_Return]

why was i pinged???

[olderwiser]

So now Reagan wasn't an idiot supply sider?

Wait--I think I get the gist of your argument. Maybe you believed Reagan was an idiot supply sider before you believed he wasn't an idiot supply sider.

That's the ticket! I'm sure John Kerry thinks just like you do on this.

Weasel.

[olderwiser]

I pinged some people with earlier posts whose comments suggested they believed GW's tax cuts were a good thing.

The thing is, these threads often get hijacked by negative spinners seeking to undermine core conservative beliefs in tax cuts, etc.

Thought you might be interested.

[remember]

So now Reagan wasn't an idiot supply sider?

Wait--I think I get the gist of your argument. Maybe you believed Reagan was an idiot supply sider before you believed he wasn't an idiot supply sider.

That's the ticket! I'm sure John Kerry thinks just like you do on this.

Weasel.

Let me try to follow your logic. Following is the entire conversation involving "idiot supply-siders":

olderwiser in post #177: And there you have it folks. Another lib weasel outed.

remember in post #179: You've only outed yourself as another idiot supply-sider unable to discuss the issues.

olderwiser in post #180: Yep. That would be Ronald Reagan, G.W. and me.

remember in post #181: As you wish.

olderwiser in post #182: Hey Remember, maybe you should get yourself a freerepublic tagline: "Ronald Reagan was an idiot."

remember in post #183: Why should I? I don't blame Reagan for your flawed arguments.

olderwiser in: post #185: So now Reagan wasn't an idiot supply sider? Wait--I think I get the gist of your argument. Maybe you believed Reagan was an idiot supply sider before you believed he wasn't an idiot supply sider.

As best as I can figure, your logic is as follows:

1) olderwiser = another idiot supply-sider
2) Reagan = another supply-sider
3) THEREFORE Reagan = another idiot supply-sider

I suggested item one in direct response to your "lib weasel" insult. You brought up Reagan and jumped to items 2 and 3 on your own.

In any case, this is getting tiresome. If you have no intention in discussing the topic of this thread, I suggest that we end the conversation here.

[olderwiser]

Your dumb links won't save you. You voted for Kerry in '04, and you accepted the description of GW and Reagan as idiot supply siders.

But your Kerry vote is no one's business on a conservative political forum, and now you're afraid to fully admit what you believe about "Reaganomics."

[olderwiser]

You're petrified to say to voted for Kerry because it would completely expose your political motivations.

But I'll say it again: I voted for George W. Bush in 2004. I happily own what is the best barometer of my political leanings--how I voted.

And I can say I completely agree with the tax cuts enacted by Reagan and GW Bush. I think they were good policy.

[expat_panama]

"... revenues tend to increase over the long-run, regardless of tax cuts or tax hikes. This is because they are positively affected by numerous factors such as real wage growth and population growth."

At least we're all in agreement that revenues increase after tax-cuts.

Older and I say there's a causal relationship and you don't.  No problem.  At least we can all agree that tax-cuts haven't kept things from getting better.   Let's move on to the fact that tax hikes are bad. [stop here if you love tax-hikes and please explain why]  Democrats love those horrible tax-hikes and hate the tax-cuts that we've agreed don't do any harm.

So let's all vote Republican next month.

[olderwiser]

Vote Republican? Shhh! Don't tell me who you're voting for. That's supposed to be a secret!

[expat_panama]

lol!

"secret" my tush!  --we all know how everyone's voting here...

[remember]

"secret" my tush! --we all know how everyone's voting here...

If you want to join in the "we all know how everyone's voting" game, that's fine. Over the years, I've voted for candidates from both major parties. However, my opinions on budget and tax matters, the main issues that I discuss here, are closer to those of the Concord Coalition than either of the two parties. Hence, my home page at http://home.att.net/~rdavis2/budget.html has long had a link to the Concord Coalition but not to any political party. As you likely know, the Concord Coalition is a nonpartisan organization. Following is their self-description from http://www.concordcoalition.org/about.html:

The Concord Coalition is a nationwide, non-partisan, grassroots organization advocating fiscal responsibility while ensuring Social Security, Medicare, and Medicaid are secure for all generations. The Concord Coalition was founded in 1992 by the late former Senator Paul Tsongas (D-Mass.), former Senator Warren Rudman (R-N.H.), and former U.S. Secretary of Commerce Peter Peterson. Former Senator Bob Kerrey (D-Ne.) was named a co-chair of the Concord Coalition in January 2002.

Their president is Pete Peterson who I mentioned earlier. He was Secretary of Commerce under Nixon and has written a number of books on fiscal matters, the most recent being Running On Empty. The subtitle of the book is "How The Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It".

[remember]

"... revenues tend to increase over the long-run, regardless of tax cuts or tax hikes. This is because they are positively affected by numerous factors such as real wage growth and population growth."

At least we're all in agreement that revenues increase after tax-cuts.

Of course, if you look back at post 174, I immediately followed that sentence with the following:

A tax cut will often cause a one-time drop in revenues as can be seen following the 1981 and 2001 tax cuts.

The question then is whether some tax cuts may increase revenue growth enough to cause revenues to 1) eventually recover to where they would have been without a tax cut, limiting the loss of tax revenues to what has been lost to that point and/or 2) surpass the level where they would have been without a tax cut, causing the cumulative revenues to equal or surpass what they would have been otherwise.

Older and I say there's a causal relationship and you don't. No problem. At least we can all agree that tax-cuts haven't kept things from getting better.

I agree only that they haven't stopped revenues from continuing to grow from the lower levels that were caused, in part, by the tax cuts. However, I have not seen anything written by any serious economist to suggest that cumulative revenues are not still below where they would have been without a tax cut. In fact, I have not seen a single serious economic study that purports to show that any income tax cut has ever paid for itself. If you know of any, please post a link to it.

[expat_panama]

Hey, sorry if the old "how everyone's voting here" ticked you off; it wasn't meant for you anyway, I was just making snide wisecracks behind your back --ah, er, about someone else.  Yeah, that's it, in fact I was making fun of Olderwiser!   But none of that's important now; this thread's supposed to be about whether having the budget deficit's drop by $250 billion is good news or bad news.  

Please help me follow your reasoning on whether there's a connection between tax-cuts and revenue.  What I'm getting is that you're reporting historical evidence that a typical tax-cut precedes a short term drop in revenue, and that a greater increase in revenue happens later.  I'd admit that I can share that view.  Your view (once again, please correct me if I characterize you unfairly) is that the short term revenue drop is caused by the tax-cut and not other factors, and the long term revenue increase is brought about by other factors --not the tax-cut. 

The fact that you're not convincing anyone here with this line doesn't necessarily mean that you're wrong.   I'd say it just means that your inability to explain yourself means that you'd never be much good in sales.   Don't feel bad; one thing for sure is that my inability to point out a contradiction as blatant as this means that I'd never make it in sales either.

We've got a lot in common here, thanks for your posts!

[olderwiser]

Uh-huh. The Concord Coalition wasn't a candidate for President in 2004. Neither was Pete Peterson (I think we cleared that up). But John Kerry was and you voted for him.

Don't like that argument? It's "old"? Too bad for you. The fact that you--or lib reporters in the lamestream media--like to tap around it, proves just how valuable a braometer it is for determining political motivations.

The beautiful thing about "new media" like talk radio (really not so new), blogs, and forums like FR, is that the new media doesn't attempt to hide political allegiences. Rush, Hannity, or Coulter, or Malkin, or KOS for that matter, are plain about where their coming from. So: I think admitting one's biases is refreshingly "new".

Much more honest than the pretended "objectivity" of outlets like the NY Times, WP, and CBS/ABC/NBC, and even FOXNEWS.

I have no problem relating the best barometer of my current politics: my most recent vote for President.

Why are your biases relevant? You came on to this thread, part of this conservative political forum, about good news for GW Bush--higher than forecast tax revenues--and spun it into a negative.

Now. Conservatives may disagree about the overall economic record of George Bush. But NO CONSERVATIVE believes that John Kerry would provide better solutions.

[expat_panama]

My take is that we can say the Concord Coalition "non partisan" and "conservative" all we want.  What matters is policy, and if the policy advocated by the non-partisan conservatives at the Concord Coalition is flawed, then we we want to reject it, and if John Kerry suddenly votes for lower taxes and smaller government then I'll applaud him.

If I remember my college logic course correctly, saying that an economic theory is valid because it comes from nice people is what's called fallacy of argumentum ad hominem.

[remember]

Please help me follow your reasoning on whether there's a connection between tax-cuts and revenue. What I'm getting is that you're reporting historical evidence that a typical tax-cut precedes a short term drop in revenue, and that a greater increase in revenue happens later.

No, I only reported historical evidence that "a tax cut will often cause a one-time [not short term] drop in revenues as can be seen following the 1981 and 2001 tax cuts". Regarding a later greater increase in revenues, I said "the question then is whether some tax cuts may increase revenue growth...". As to my own analysis of the numbers, you can see it at http://home.att.net/~rdavis2/taxcuts.html. As you can see, the evidence suggests that the Reagan tax cuts caused revenues to be lower than they would have been otherwise in the short to medium term. The long-term, of course, is much harder to judge. But, as I concluded, the "figures don't provide any strong evidence that the Reagan tax cuts permanently affected the GDP one way or the other". That pretty much agrees with every economic study that I have ever come across. That's why I keep asking supply-siders for an analysis that purports to show that any income tax cut has ever paid for itself. So far, I have received none.

I'd admit that I can share that view. Your view (once again, please correct me if I characterize you unfairly) is that the short term revenue drop is caused by the tax-cut and not other factors, and the long term revenue increase is brought about by other factors --not the tax-cut.

No, the numbers suggest simply that there is a one-time loss in revenues following a tax cut. A portion of the drop in revenues starting in 2001 was likely due to the recession, the market crash, and other factors. However, even according to the administration's own budget documents, both the tax cuts and spending have contributed to the deficits. For example, Table 7 in the 2005 Mid-Session Review breaks down the increase of over $2 trillion in the deficit since the 2002 Budget. It states that 49 percent of this swing was due to reestimates, 29 percent was due to tax relief, and the remaining 22 percent was due to the war, homeland, and other spending. In any case, after the one-time loss, revenues continue their usual growth but do so from a new, lower level.

The fact that you're not convincing anyone here with this line doesn't necessarily mean that you're wrong. I'd say it just means that your inability to explain yourself means that you'd never be much good in sales. Don't feel bad; one thing for sure is that my inability to point out a contradiction as blatant as this means that I'd never make it in sales either.

On the contrary, the suppy-side argument that tax cuts pay themselves does not appear to have convinced a single economist, at least not enough to publish a study that purports to show this to be the case. For example, the most recent study that I've seen on the subject is a Congressional Budget Office study titled "Analyzing the Economic and Budgetary Effects of a 10 Percent Cut in Income Tax Rates". Following is its conclusion:

The various economic estimates imply changes in government revenues and interest payments. As noted above, the conventional estimate (without macroeconomic feedbacks) is that the tax policy, if implemented, would reduce revenues by a total of $466 billion over the first five years and an additional $775 billion over the second five years. Under various assumptions, the supply-side economic effects of the tax cut are estimated to offset between 1 percent and 22 percent of that revenue loss over the first five years and add as much as 5 percent to that loss or offset as much as 32 percent of it over the second five years (see Table 3). According to models that account for both supply-side and demand-side effects, those effects might offset somewhat less than 15 percent of the revenue loss over the first five years.

Once again, if you know of a single serious economic study that purports to show that any income tax cut has ever paid for itself, please post a link to it. Tnanks.

[olderwiser]

"But, as I concluded, the "figures don't provide any strong evidence that the Reagan tax cuts permanently affected the GDP one way or the other"."

..."That pretty much agrees with every economic study that I have ever come across. That's why I keep asking supply-siders for an analysis that purports to show that any income tax cut has ever paid for itself. So far, I have received none."

You, see, Kerry Voter, you need to look back at actual history, to find how lower taxes nt only improve GDP, provide government legiitmate and adequate funding, bu also put more of PEOPLE'S OWN MONEY BACK IN TEIR POCKETS.

You want proof that that Reaganomics worked? Look at Carter.

You want proof of lower taxation vs. higher taxation? Look at the American economy vs. the current Eurpoean one, or those EU countries which have lowered taxes vs. those that haven't. Or look at the wreck of the Soviet Union, or...

But socialist utopias are your dream. No, the Jfk, Reagan, GWB tax cuts will never "pay for themselves".

Oh wait! I have the definitive study that proves all these tax cuts paid for themselves! I'll post it for you--as soon as you come out and say "Okay, I DID VOTE FOR JOHN KERRY IN '04! AND I'M PROUD OF HIM!"

Otherwise, this is about your political motivations for coming on this thread on a conservative political forum and spinning a positive story into a negative in the lead-up to the mid terms.

[expat_panama]

"...I'd never make it in sales either.                      On the contrary, the suppy-side argument that tax cuts pay themselves..."

Remember, you've earned my sincere thanks for all the work you did; you've given me great links and you've thoroughly covered all the bases.  Here's where we've gotten to:  we agree that the deficit is lower and tax revenue is as high now as it was before the 2002 tax-cut;  what we don't agree on this idea that a tax-cut is supposed to pay for itself. 

We should be able to agree that Kennedy's tax-cuts left America with a much better economy than the one the Republican's gave us, just like today's economy is much better than it was under Carter before Reagan's tax-cuts.  I guess I'll go with the idea that my keeping my own money does not make me poorer, and that it's the taxes that must be justified, not the tax-cut.

I'm proud to say I voted for McGovern because he told the truth more than Nixon did.  It was that same principle that made me vote for Bush and Dole.  I go for principle, not politics.  I just filled out my absentee ballot and got it ready for Monday's mail --I voted for increased Republican control of congress to keep taxes low, and I voted for Democrat control of the county offices so I can keep getting my absentee ballots in the mail.

Hey Older, my company may have some openings in sales soon; let me know if you're available...