New Bush Budget Aims to Save Tax Cuts

USNews & World Report - CapitalCommerce blog ^ | 2-5-2007 | James Pethokoukis

[DredTennis]

Call it Operation Enduring Tax Cuts. President Bush's $2.9 trillion fiscal 2008 budget attempts to balance the federal budget by 2012. According to the proposal, the U.S. government would run a $61 billion surplus that year, though the projected deficits in 2010 ($94.4 billion) and 2011 ($53.8 billion) would be so small relative to the size of a projected $18 trillion economy–0.6 percent and 0.3 percent of gross domestic product–as to be financially insignificant.

The nonpartisan Congressional Budget Office also shows the budget moving into balance after 2010, but there is a key difference from the Bush budget: The CBO assumes the 2001 and 2003 Bush tax cuts will expire, thereby bringing in a load of new tax revenue. The Bush budget assumes the tax cuts stay in place.

How does Bush propose to move Uncle Sam into the black? By slowing spending growth–he wants to hold nonsecurity, nonentitlement discretionary spending to 1 percent annual growth–and assuming slightly higher GDP growth of 3.0 percent vs. 2.8 percent over the next five years than the CBO does.

Yet a continuing faster-than-expected pace of tax revenue growth may still allow the budget to be balanced before 2012. The budget conservatively projects future revenue growth that averages 5.4 percent over the next six years, about equal to the projected overall growth in the economy.

Yet again so far this year, the government is taking in way more in tax receipts than expected. Receipts in January came in at a 13 percent year-over-year pace. As an analysis from Action Economics concludes, "Even though the CBO knocked down its [fiscal 2007] deficit forecast by a hefty $114 billion just two weeks ago [to $172 billion], it already appears that their new revenue forecasts are unrealistically pessimistic."

[DredTennis]

fast growth solves lots of problems

[Mind-numbed Robot]

What do the Democrats not understand about, "If it ain't broke don't fix it?"

[DugwayDuke]

But to a democrat, the tax system is broke unless the rich pay 'their fair share'. A democrat would sacrifice economic growth to ensure the rich are heavily taxed. If it results in less tax revenue, you can always make up the difference by raising taxes on the rich even more.

[adorno]

What do the Democrats not understand about, "If it ain't broke don't fix it?"

The politicians on the democratic party understand full well that the economy is not broken. But, if wouldn't serve their purposes of winning or retaining control of congress or the presidency if they were to go along and agree that tax cuts work and that Bush's economic policies need to remain in place. Admitting that tax cuts work, and that people know how to best manage their own money and not the government, would be political suicide for the democrats.

Even if the budget is balanced while Bush is still in office, the democrats will find a way to demagogue the "balanced budget" while many social services or entitlements didn't get the funding to "make life better for the needy or poor". In other words, balancing the budget while "people are suffering" is not the correct way to balance the budget. There is only one way that the democrats understand and that is by "raising taxes on the rich". The poor and ignorant can be sold on that type of government that's "looking out for the little guy while sticking it to the rich guy".

Never mind that raising taxes always hurts the economy. The ignorant voters have no basic understanding about economics. Ignorant voters are the major constituency of the democratic party.

[jdsteel]

Here's some "knee-slappers" that always make me chuckle from that article: "The nonpartisan Congressional Budget Office"

heh heh, sure they are!! "The CBO assumes the 2001 and 2003 Bush tax cuts will expire, thereby bringing in a load of new tax revenue."

Like that EVER works!!! Higher taxes mean LESS tax revenue, you must have learned that by now MSM! "Yet a continuing faster-than-expected pace of tax revenue growth ...".

Only faster than expected BY YOU!!! "Yet again so far this year, the government is taking in way more in tax receipts than expected. Receipts in January came in at a 13 percent year-over-year pace. "

JUST LIKE WE SAID IT WOULD. Good Lord, I think amnesia is the only excuse left for these ("useful")idiots.

[olderwiser]

When Dems propose tax hikes, almost anyone working ends up being "rich".

[hermgem]

Just assume for a silly moment that pot would turn legal.
Wouldn't those busy bee local town politicians come up with grand ideas of taxing such harmful habits?
Just imagine local law enforcement relentlessly snuffing out black market, tax evading, pot dealers.
Makes me wonder why currently these law enforcers look aside at such "harmful" pot problems.

[Mind-numbed Robot]

My question was rhetorical, intended to point out the success of the conservative principles that Bush managed to get passed. Tax cuts are the most obvious.

We are on the same page. The "Tax the Rich" mantra of the left has several purposes. One is class division, driving a wedge among Americans to create discontent. Another is to give the impression that free enterprise (Capitalism) is unfair. Still another is to increase more government control through higher taxes, accompanied by more regulation and micro management from D.C.

We know that the taxes on the "rich" are really taxes on the middle class. The poor don't pay taxes, they are paid by the government in a variety of ways, including tax rebates on taxes not paid. The rich, once they have enough money to be recognized as such, immediately form tax free foundations, trusts and other tax avoidance schemes in which to put most of their money thus escaping the "taxes on the rich." That leaves the middle class bearing the bulk of the load while discouraging upward mobility.

I know I am preaching to the choir but wanted to add by little bit.

[DugwayDuke]

There is another part to it. The democrat constituency loves that 'class warfare rhetoric'. The democrat politicians know it doesn't work for all the reasons you mentioned but they don't care, it keeps getting them elected. And, that is the most important thing to a politician. Term limits would do wonders for this 'Republic' of ours.

[Mind-numbed Robot]

I intended for One is class division, driving a wedge among Americans to create discontent. to cover the class warfare issue. I tend to be wordy in my posts so I am trying to cut down on that, perhaps too much at times.

I think term limits can deprive us of some good people. The same goal can be accomplished by defining and narrowing the rules each house is able to impose upon itself. For example, take away the power of seniority by having committee and subcommittee chairmanships rotate each session rather than automatically going to the highest seniority. That would devalue seniority and the power it brings with it thereby giving less incentive to keep getting elected.

Eliminate secret holds that members put on appointments, etc. The abuses occur because of the "courtesies" that members extend to each other. There are many others most of us don't know about.

In other words, it is a good ole boys club which enhances the ability of members to keep getting reelected. It is "You scratch my back and ... " An example is the irritating (to me) habit of addressing colleagues they can't stand as "My good friend, the Senator from the great state of ...."

Eliminate those abuses and the problem is solved without losing valuable experience and good solid politicians. Of course you are asking those who developed and perpetrate the system to change it, just like the tax code.

However, public influence can affect them and with email, faxes, and cheaper telephone calls it is much easier than before. We should do it and do it often.