Some good news, economically

[Bob Slydell]

I'd prefer to see spending decreasing as well as revenues increasing, but at least this is a start...

http://news.yahoo.com/s/ap/20061011/ap_on_go_ot/budget_deficit

Federal deficit now lowest in 4 years

The federal budget deficit, helped by a gusher of tax revenues, fell to $247.7 billion in 2006, the smallest amount of red ink in four years.

The deficit for the budget year that ended Sept. 30 was 22 percent lower than the $318.7 billion imbalance for 2005, handing President Bush an economic bragging point as Republicans go into the final four weeks of a battle for control of Congress.

Both spending and tax revenues climbed to all-time highs. The sharp narrowing of the deficit reflected the fact that revenues climbed by 11.7 percent, outpacing the 7.3 percent increase in spending.

The 2006 deficit was far lower than the $423 billion figure the administration had projected last February and also represented an improvement from a July revised estimate of $295.8 billion.

It was the smallest deficit since a $159 billion imbalance in 2002, a shortfall that came after four straight years of budget surpluses, the longest stretch that the government had finished in seven decades.

Since that time, the government has recorded three of the biggest deficits in history in dollar terms including an all-time record of $413 billion in 2004.

The reason for the improvement this year was the big jump in revenues, propelled by strong economic strongth.

The administration credits its tax cuts for the improving economy, contending they helped the nation withstand the 2001 recession, the terrorist attacks and a wave corporate accounting scandals.

Democratic critics, however, contend that this year's improvement in the deficit will be only temporary. They contend the deficit is set to explode over the next decade as the baby boomers begin to retire and demands on Social Security and Medicare increase.

 

[sajetto]

Yep. Pres Bush is on the t.v. yacking about it right now. It is good news for once.

 

[NewJersey]

It's definitely a start!

 

[DawnCt1]

It happens every time. Lower taxes and leave people more of their own money, it stimulates the economy and produces more revenue for the federal government.

 

[TheDoctor]

I hate to rain on the parade. http://www.chron.com/disp/story.mpl/ap/politics/4251808.html

But Robert Greenstein, head of the liberal-leaning Center on Budget and Policy Priorities, said the big revenue increases in the past two years followed three consecutive years in which revenues fell, reflecting the impact of a recession and Bush's earlier tax cuts.

"This temporary improvement has little to do with a tax-cut driven surge in revenues or the economy," he said. "What stands out is that both revenue growth and the economy have performed markedly worse in the current recovery than in average recoveries of modern times."

 

[Patch'sD]

Trully a lot of double speak from the left.

 

[TheDoctor]

It happens every time. Lower taxes and leave people more of their own money, it stimulates the economy and produces more revenue for the federal government.

Wrong. No one who knows anything about economics believes this. The theory that you are advocating has been called snake oil salesmen selling a miracle cure by Bush's former head of COE.
http://www.cbpp.org/3-8-06tax.htm

Studies by the Congressional Budget Office, the Joint Committee on Taxation, and the Administration itself show that tax cuts do not come anywhere close to paying for themselves over the long term. CBO and Joint Tax Committee studies find that, if financed by government borrowing, tax cuts are more likely to harm than to help the economy over the long run, and consequently would cost more than conventional estimates indicate, rather than less. Moreover, in its recent “dynamic analysis” of the impact of making the President’s tax cuts permanent, the Treasury Department reported that even under favorable assumptions, extending the tax cuts would have only a small effect on economic output. That small positive economic impact would offset no more than 10 percent of the tax cuts’ cost.....

While serious economists are divided on the question of whether and under what circumstances tax cuts are good for the economy, there is no such debate on the question of whether tax cuts pay for themselves. Economists from across the political spectrum reject the latter assertion.

In recent testimony before Congress’s Joint Economic Committee, Edward Lazear, current chairman of President Bush’s Council of Economic Advisors, stated, “I certainly would not claim that tax cuts pay for themselves.”[12]

N. Gregory Mankiw, former chairman of President Bush’s Council of Economic Advisors and a Harvard economics professor, wrote in his well-known 1998 textbook that there is “no credible evidence” that “tax revenues … rise in the face of lower tax rates.” He went on to compare an economist who says that tax cuts can pay for themselves to a “snake oil salesman trying to sell a miracle cure.”[13]

Commenting on President Bush’s claim that tax cuts pay for themselves, the Economist magazine recently wrote, “Even by the standards of political boosterism, this is extraordinary. No serious economist believes Mr. Bush’s tax cuts will pay for themselves.”[14]

The President’s own Council of Economic Advisors concluded in its Economic Report of the President, 2003, that, “although the economy grows in response to tax reductions (because of the higher consumption in the short run and improved incentives in the long run) it is unlikely to grow so much that lost revenue is completely recovered by the higher level of economic activity.”[15] The CEA chair at the time was conservative economist Glenn Hubbard.

There is simply no proof whatsoever for Dawnie's claim.

 

[TheDoctor]

Trully a lot of double speak from the left.

Wrong. http://msnbc.msn.com/id/15227738/

Some economists expressed skepticism that the tax cuts had generated the economic growth, and pointed out that much of the recovery in tax revenues – up by $253bn in 2006 - appeared to be linked to record corporate profits. They also warned that 2006 could mark a low in budget deficits before rising next year.

James Horney, senior fellow at the Center on Budget and Policy Priorities, said the new forcast was a "blip in a bleak fiscal outlook", and that the administration did not deserve "any credit" for halving the deficit.

He suggested the goal had been set using an inflated figure for the 2004 deficit of $521bn, not the lower forecast from the Congressional Budget Office of $477bn to make it "easier to meet the goal".

Administration officials denied they manipulated forecasts for political purposes. Ed Lazear, chairman of the Council of Economic Advisers, last week said the forecasts had nothing to do "with strategic behaviour by anybody".

Citing figures from the CBO, Mr Horney warned that if tax cuts were made permanent, and relief from the alternative minimum tax extended, deficits could reach "nearly $3.5 trillion over the next 10 years".

 

[Laz]

US economic indicators from: http://www.bea.gov/bea/dn/home/gdp.htm

-Real GDP increased at an annual rate of 2.6 percent in Q2 2006, according to final estimates

-In August 2006, personal income increased 0.3 percent.

From the US Department of Labor: http://www.bls.gov/eag/eag.us.htm

United States Economy at a Glance
Apr May June July Aug Sept
2006 2006 2006 2006 2006 2006
Unemployment Rate (,1,) 4.7 4.6 4.6 4.8 4.7 4.6
Change in Payroll Employment (,2,) 112 100 134 123 188(,P,) 51(,P,)
Average Hourly Earnings (,3,) 16.61 16.62 16.69 16.76 16.80(,P,) 16.84(,P,)
Consumer Price Index (,4,) 0.6 0.4 0.2 0.4 0.2
Producer Price Index (,5,) 0.9 0.1(,P,) 0.5(,P,) 0.1(,P,) 0.1(,P,)
U.S. Import Price Index (,6,) 2.1 1.8 0.1 1.0 0.8
Employment Cost Index (,7,9,10,) 0.9
Productivity (,8,) 1.6



You decide

 

[Cannot_Wait_4Disney]

It happens every time. Lower taxes and leave people more of their own money, it stimulates the economy and produces more revenue for the federal government.

Revenue from the income tax was 944 billion in FY 1991, before the first wave of tax cuts. Receipts in 2005 were 1.044 trillion. You'll find that is an increase of 1% before adjusting for inflation. In an economy growing at an average historical rate, that figure should be going up by more than 2.5% per year after adjusting for inflation if tax cuts are to completely pay for themselves. Thus, they haven't.
I find it ironic Bush is bragging about cutting the deficit (as measured by the unified budget) to 248 billion when by that same measure we were running surplusses prior to Bush's balooning deficits.

 

[Cannot_Wait_4Disney]

Trully a lot of double speak from the left.

Translated. You have absolutely nothing to offer.

There is simply no proof whatsoever for Dawnie's claim.

Since when has Dawn ever required proof to regurgitate Rush?

 

[Charade]

Didn't even make it past page1 before it started

 

[NewJersey]

Didn't even make it past page1 before it started

I was wondering where you were...

 

[JoeEpcotRocks]

Unemployment at 4.6%. So much for the "jobless" recovery.

I'm certainly glad my taxes are lower. If those on the left want them higher, they are free to donate.

I think the stunning economic recovery we've had since 9/11 deserves a big thumbs up. and dance and cheer

 

[JoeEpcotRocks]

It happens every time. Lower taxes and leave people more of their own money, it stimulates the economy and produces more revenue for the federal government.

Amen

Of course, the "left leaning" will disagree. They have a "better" use for your money and my money.

 

[TheDoctor]

Amen

Of course, the "left leaning" will disagree. They have a "better" use for your money and my money.

When Joe agrees with Dawnie, you know for a certainity that they are wrong and this is no exception. Again, no one who knows anything about economics believes that tax cuts pay for themselves. http://www.washingtonpost.com/wp-dyn/content/article/2006/05/14/AR2006051400806.html

Nobody serious believes that tax cuts pay for themselves, as I noted last week. But most senior Republicans flunk this test of seriousness......

Okay, so let's review this issue with the help of some experts. I'd like to cite Richard Kogan of the Center on Budget and Policy Priorities, because his work inspired this column. But to win over reasonable conservatives, I'm going to choose N. Gregory Mankiw of Harvard, a proponent of tax cuts who chaired the Council of Economic Advisers in the Bush White House. Mankiw is a top-notch economist hired by Bush and Cheney to advise them. And last year he published a paper on how far tax cuts pay for themselves, reporting enthusiastically that this self-financing effect is "surprisingly large."

How large, exactly? Mankiw reckons that over the long run (the long run being generous to his argument), cuts on capital taxes generate enough extra growth to pay for half of the lost revenue. Hello, Mr. President, that means that the other half of the lost revenue translates into bigger deficits. Mankiw also calculates that the comparable figure for cuts in taxes on wages is 17 percent. Yes, Mr. President, that means every $1 trillion in tax cuts is going to add $830 billion to the national debt.

Let's engage in what Bush might call the soft bigotry of low expectations and cut Republicans some slack. Hey, maybe they just overlooked that Mankiw paper? Or maybe, despite hiring Mankiw to head the Council of Economic Advisers, they later acquired reasons to doubt his judgment? In that case they should at least have listened to Douglas Holtz-Eakin, another conservative economist who worked in the Bush White House and who went on to run the Congressional Budget Office.

In a study published under Holtz-Eakin's direction last December, the CBO estimated the extent to which a 10 percent reduction in personal taxes might pay for itself. The conclusions confirm that the free-lunch mantra is just plain wrong. On the most optimistic assumptions it could muster, the CBO found that tax cuts would stimulate enough economic growth to replace 22 percent of lost revenue in the first five years and 32 percent in the second five. On pessimistic assumptions, the growth effects of tax cuts did nothing to offset revenue loss.

So Mankiw isn't with them. Holtz-Eakin isn't with them. Which raises a question: When top Republicans go around claiming that tax cuts pay for themselves, which economic authorities are they relying on? None, is the answer. These people's approach to government is to make economics up.

Again, only someone who does NOT understand economics believes that tax cuts pay for themselves. Even the main economists of the bush administration are all clear that tax cuts do not pay for themselves. Joe and dawnie may believe this myth but they are wrong.

 

[nightowlky]

Unemployment at 4.6%. So much for the "jobless" recovery.

I'm certainly glad my taxes are lower. If those on the left want them higher, they are free to donate.

I think the stunning economic recovery we've had since 9/11 deserves a big thumbs up. and dance and cheer

Yeah...look at those new jobs just bursting out all over the place!!

The unemployment numbers have been worthless for years, at least a decade. It's a household survey and doesn't reflect the true employment picture.

More info on the unemployment numbers, inflation, deficit, and GDP:

Employment and Unemployment Reporting
Federal Deficit Reality
Consumer Price Index (UPDATE)
Gross Domestic Product

 

[Mugg Mann]

This shows you how much standards have fallen, We have an enormous deficit while the previous administration achieved budget surpluses and some of you actually believe Bush is doing a good job economically.

Read the following. The author is a columnist for the very conservative Boston Herald (which for a point of reference is the home of one of Dawn's favorite rant-and-ravers, Howie Carr).

Those who would read it and want to blame 9/11 for poor economic performance must also be willing to factor in the explosive growth that every war economy has produced throughout American History. I've challenged Joe in the past to show which number was higher; the economic loss on 9/11 or the overall cost of the Iraq war, and he has remained silent every time in the face of facts.

Bush economy nothing to broadcast
By Brett Arends
Boston Herald Business Columnist

Wednesday, October 11, 2006

The neocon talk-show hosts were so angry last week they could barely speak.

The “mainstream media” and “the drive-by media” and “the liberal media,” they said, were deliberately ignoring the president’s great record on the stock market, on gasoline prices and on jobs.

Why don’t the media talk about the Dow, they demanded.

OK. Let’s.

The Dow Jones Industrials Average closed last week at 11,867. That’s a gain of 1,279 points since George Bush took office on Jan. 20, 2001.

That’s an annualized gain of 2 percent.


Under Bill Clinton, it was 15.9 percent.

Bush’s dad: 9.8 percent.

Ronald Reagan: 11.3 percent.
These figures are public record.

The index also did better under Presidents Ford, Johnson, Kennedy, Eisenhower, Truman, Franklin D. Roosevelt and Calvin Coolidge. Much better.

Since World War I, the only presidents with a worse Dow Jones Industrials record than the incumbent were Herbert Hoover, Richard Nixon and Jimmy Carter.
Hoover, Nixon, Carter, Bush? Hmmmm.

I’m saying nothing.

Let’s talk about gasoline prices.

Yes, they’re down 73 cents a gallon from the peak in August. Average today: $2.26. But in January 2001, they were $1.46. So they’re still up 55 percent.
Jobs?

Since January 2001, the jobless rate has risen from 4.2 percent to 4.6 percent.

Over that period, non-farm payrolls have added an average of 46,200 jobs a month. That’s good, right?

Clinton: 237,000 a month.

Reagan: 168,000.

Carter: 215,000. Carter!

Bush’s dad presided over a recession so bad it cost him his job. His record must be worse, right?

His average: 54,000 a month. That’s 17 percent higher than junior’s. Hey, don’t blame me. They asked.

 

[Bob Slydell]

This shows you how much standards have fallen, We have an enormous deficit while the previous administration achieved budget surpluses and some of you actually believe Bush is doing a good job economically.

I never said Bush was doing a good job, I simply said that it was a positive trend -- that it was good news that the deficit has been getting smaller. Crazy me, thinking it was a good thing that the deficit got smaller.

 

[yeartolate]

So we have essentially paid for the war in advance and we are not leaving the debt to our kids? That is very good news.