The deficit, economy, and the media?

Fiscal Year 2004 for the federal government began in October. Which means that the numbers are in for 2003. Remember the "record deficit" of $455 billion? Well, it turns out that it was $374 billion instead. The reason for this is that tax revenues went up even as tax rates went down. Two questions:

1) why haven't there been mulitple news stories talking about how the record deficit turned out to be more incorrect "sky is falling" predictions?

2) since the media has taken the first steps of actually attributing economic growth to tax cuts, will they now start to acknowledge the fact that lower tax rates meansmoretax money, and that Dean's foolish ideas for repealing the tax cuts to raise money would have the opposite effect?

Okay, the media aren''t exactly economists. And second, which takes? Personal taxes? Sales Taxes? Property/Estate Taxes?

Alot of effort is put into attributing the cause for the shift in the deficit, but this can change for various reasons not related to taxes as well: shifts in balance of payments, for example (more money coming in from foreign powers means a lower overall deficit).

And are we talking the forecasted budget, or the effective (real time) budget. Two different things.

Don''t just throw garbage like that out there as Dean bait. Back it up.

Let''s see... add the 85 billion that Bush wants for more Iraq money, and... 374 plus 85... carry the one...

Hey! Lookie there! About 455 billion!

[/sarcasm]

The tax revenues for income went up, even as the tax rates for almost every bracket went down. The tax revenues for captial gains went up, even as the capital gains tax rate went down. This should not surprise anyone, because it has happened after every tax cut in memory, from Kennedy to Reagan.

The forecast for the deficit was $455 billion. After all filing, and most of the actual receipts, for 2003 was received the real number is $374 billion - and Farscry, that number includes the 2003 expenditures for the Iraq war.

The media may not be economists, but that didn''t stop me from reading dozens of stories about the record deficit. If you want to give them a pass because they aren''t economists, then your assertion is that they shouldn''t have written those stories to begin with. But since they did, their bias is pretty glaring by not reporting with equal fervor how much better things are.

Well, there are lots of reasons why tax revenues are uo, despite lower overall cap gains, sales, income, and other taxes.

For example: low interest rates spur additional spending, since borrowing funds is relatively inexpensive.

Home sales have been brisk in most locations, which is a cap gain.

The internet stock bobble, combined with all the uncertainty and allegations in the investment business has forced alot of people to reposition their retirement portfolios out of their existing brokers, and into rollovers, or some other vehicle. Those are cap gains as well.

Or, people are using their retirement funds to buy homes, which is also a taxable event.

Refis are spurring economic growth, which in turn spurs tax income.

All of these causes have nothing to do with the lower taxes, but are based on changes in individual''s long term finance decisions made possible by the continued low cost of financing.

What does that have to do with the tax cuts? Nothing. Its all well and good for Bush to take credit for the lower deficit because of his tax initiatives, but this confuses this particular effect with that cause.

Basically, attacking Dean on this is inhaling the smoke Bush is trying to blow up the ass of the American voters because, long term, this rate environment cannot be maintained, and the current level of revenue is not sustanable without it.

It''s realistic to start talking about tax hikes, unless you want to eviscerate the government to save revenue.

As far as the media is concerned, there isn''t much to gainsay, but I wonder if you cast the same critical eye over the New Republic, or National Review, for tier bias as much as you do the New York Times.

I''m going to hazard a guess, and state that I don''t think you do.

Republicans have always stated that lower tax rates will incent people to work harder and invest more. History has always proved us right, and it is doing so again. It''s wonderful that you can come up with hypothetical anecdotes as to why this basic fact of economics doesn''t happen to apply this time around, but when the results are just what the administration predicted, they get to take the credit.

Basically, attacking Dean on this is inhaling the smoke Bush is trying to blow up the ass of the American voters because, long term, this rate environment cannot be maintained, and the current level of revenue is not sustanable without it.

I''m not sure whatyou''reinhaling, but I have never mentioned Dean once in the thread. Also, Reagan slashed tax rates much deeper than Bush (they were higher to begin with), and tripled government receipts. The idea that you can look at increasing tax revenues and draw the conclusion that the current rates cannot be sustained makes absolutely no sense.

As far as the media is concerned, there isn''t much to gainsay, but I wonder if you cast the same critical eye over the New Republic, or National Review, for tier bias as much as you do the New York Times.

Funny, the publications you talk about are openly slanted. I didn''t know you believed the same thing about the NY Times or the AP...

"mateo" wrote:

The internet stock bobble, combined with all the uncertainty and allegations in the investment business has forced alot of people to reposition their retirement portfolios out of their existing brokers, and into rollovers, or some other vehicle. Those are cap gains as well.

Assuming those assets came from a retirement plan (401k,profit sharing, IRA ect) there is no taxable event in transfering them to a rollover.

Just FYI.

Its well known that lowering taxes results in more taxable revenue.

The consumer was the only thing keeping us alive the past few years. Lower interest rates, lower taxes equals a economic boon that we''re just begining to benifit from. This year in the stock market is truth to that.

We''ll have alot more gains before it sells off due to impending rate hikes and slower spending. If you have to, go ahead and raise taxes then. I mean, if you''re going to kill economic growth, might as well be good about it.

But, apart from the media that looks at the bottom line as far as investing is concerned, they suck when it comes to reporting full economic information. Which is just as well, since most folks hate reading that kind of stuff.

Hmmmm, consumers don''t want to read real economic information.....hence the media doesn''t do a great job of reporting it........naw, can''t be.

Ralcydan wrote:
After all filing, and most of the actual receipts, for 2003 was received the real number is $374 billion - and Farscry, that number includes the 2003 expenditures for the Iraq war.

Just a quick note for now -- the ~85 billion I was referring to was this request for funds in fiscal 2004.

However, I also noted in that article that the deficit was being listed as 475 billion before adding the new 87 billion in.

So, yeah... while I was right about when that new money is being added in, you''re still also right that the deficit is quite less than what was predicted.

I''m not sure what you''re inhaling, but I have never mentioned Dean once in the thread.

Talk about inhaling. Ralcydan, see #2 of your first post.

2) since the media has taken the first steps of actually attributing economic growth to tax cuts, will they now start to acknowledge the fact that lower tax rates means more tax money, and that Dean''s foolish ideas for repealing the tax cuts to raise money would have the opposite effect?

Mateo said:

this rate environment cannot be maintained

This is correct, but only because sooner or later some Democrat or weak sister Republican will get back in the White House and raise taxes again. You want reasons why lower tax rates equate to higher revenue? Reason one has already been mentioned: lower rates encourage economic activity, and economic activity creates wealth.

The second reason is that rich people aren''t stupid: they employ CPA''s and financial experts to shelter their income when tax rates are high. These tax shelters may allow the wealthy to keep more of their income, but they inhibit reinvestment of that income. When tax rates are lowered past the break-even point it becomes more profitable for the wealthy to simply pay the taxes and have their assets free to invest. So not only are they investing and making more money but they are paying the same or higher percentage of that income than they were when rates were high, since they aren''t sheltering it anymore.

Talk about inhaling. Ralcydan, see #2 of your first post.

Oops. Hey, what can I say - that was some good stuff, man.

Oops. Hey, what can I say - that was some good stuff, man.

Please, share. Hey, I thought Republicans only did coke.

Fiscal Year 2004 for the federal government began in October. Which means that the numbers are in for 2003. Remember the ""record deficit"" of $455 billion? Well, it turns out that it was $374 billion instead.

That was a July estimate from the OMB. The White House
predicted $401 billion, in September. And in October, the
WH said the deficit would be ""comfortably under $400B"".

So, it''s a surprise that the July estimate was off? Is it also
surprising that later ones are correct? Look at January,
when the 2003 deficit was to be $200B, according to the
CBO. And January 2001, when the Bush admin told us we''d
have a $300B surplus at this time. That estimate was an
amazing $700B off!

Two data points, one a guess and one final, are hardly
indicative of the true trends, especially in a time where the
events are as hard to predict as they are now.

1) why haven''t there been mulitple news stories talking about how the record deficit turned out to be more incorrect ""sky is falling"" predictions?

Because everyone understands that the CBO estimates are
just that, estimates.

2) since the media has taken the first steps of actually attributing economic growth to tax cuts, will they now start to acknowledge the fact that lower tax rates means more tax money, and that Dean''s foolish ideas for repealing the tax cuts to raise money would have the opposite effect?

Because the plan was that the tax cuts would continue the
surpluses? Unless you think that the war on terror has cost
us $800B, the tax cuts are the largest source of revenue loss
we''ve had in the last few years. The wars have cost us
what, about $200B - $250B so far? If that. So the other $550B
is attributable to economic mismanagement.

The ratio of consumer debt to GDP in this country is 360%; that
is, we are supporting our economy by taking out loans, which
are subsidized by Freddie Mac, Fannie Mae and other
government supported entities. We are in effect printing
money to support our economy. That''s, um, not good,
especially since consumer spending is about 80% of the
economy.

As Mr. Duffy, the spokesman for the White House Budget Office,
stated, no one in the WH is celebrating these deficit figures.
Perhaps we''d do well to listen to him.

Robear

Because everyone understands that the CBO estimates are
just that, estimates.

You and I maybe, but for months, people have been talking about Bush''s record $455 billion deficit - as fact, not estimate. They were wrong, but you''ll note that the media responsible for putting out this incorrect anti-Bush information doesn''t spend the same time correcting the falsehood.

Unless you think that the war on terror has cost
us $800B, the tax cuts are the largest source of revenue loss
we''ve had in the last few years. The wars have cost us
what, about $200B - $250B so far? If that. So the other $550B
is attributable to economic mismanagement.

I guess you didn''t notice that the economy has been in recession followed by slow growth - that''s where the majority of lost revenues comes from, not the tax cut.

I guess you didn''t notice that the economy has been in recession followed by slow growth - that''s where the majority of lost revenues comes from, not the tax cut.

Not according to the CBO.

The tax cuts cost us $205B in FY 2003 alone. The wars cost
about 85B to 90B in the same time period. The deficit was
around $380B, right? So $100B of that is due to other
spending, but more than half of the deficit was due to the
tax cuts last year. More than half, that is, the majority of the
deficit this past year, came from the tax cuts.

The effect the recession has had on tax revenue is to
depress it; that is, in better times, we''d have lost more
revenue.

Robear

The deficit is not caused by tax cuts. The deficit is caused by a combination of a poor economy for the past few years and an enormous increase in discretionary spending by the government.

In 2003, government spending hit $20,000 per household, for the first time since World War II (adjusted for 2003 dollars).

Military spending, including every dime spent in Iraq is proverbial drop in the bucket. For that amount of government, we paid $16,780 per household in federal taxes in 2003--huge, but still not enough. Federal revenues are still $3,520 per household less than federal spending.

The reality that all spending must eventually be paid for in taxes cannot be overemphasized. The combination that mandatory spending programs have jumped dramatically over the last few years is merely an indicator of future problems as the Medicare bill kicks in and Baby Boomers start to retire. Add to that the fact that the government is spending money like a bunch of drunken sailors on discretionary programs and you have disaster looming.

The answer to this is not to raise taxes. It is to cut spending. Lawmakers could easily save taxpayers over $150 billion per year by eliminating:

-$80 billion in corporate welfare;
-$20 billion in pork-barrel projects;
-$50 billion in waste, fraud, and abuse identified by the government''s own accountants, and
-$17 billion spent each year, for which the government''s own auditors cannot account

"Robear" wrote:
I guess you didn''t notice that the economy has been in recession followed by slow growth - that''s where the majority of lost revenues comes from, not the tax cut.

Not according to the CBO.

The tax cuts cost us $205B in FY 2003 alone. The wars cost
about 85B to 90B in the same time period. The deficit was
around $380B, right? So $100B of that is due to other
spending, but more than half of the deficit was due to the
tax cuts last year. More than half, that is, the majority of the
deficit this past year, came from the tax cuts.

The effect the recession has had on tax revenue is to
depress it; that is, in better times, we''d have lost more
revenue.

Robear

The CBO is a joke. No one should take it serious. They use current economic expectations for things years down the road.

The CBO is a joke. No one should take it serious. They use current economic expectations for things years down the road.

I''m confused. These were numbers for FY 2003 and earlier.

Robear

"Robear" wrote:
The CBO is a joke. No one should take it serious. They use current economic expectations for things years down the road.

I''m confused. These were numbers for FY 2003 and earlier.

Robear

The CBO came out with a report not too long ago saying how much the tax cuts would cost, they used current economic projections when the whole thing behind sse is that tax cuts will cause the economy to grow, thus more money for the government.

The CBO came out with a report not too long ago saying how much the tax cuts would cost, they used current economic projections when the whole thing behind sse is that tax cuts will cause the economy to grow, thus more money for the government.

Oh, well, it''s pretty confusing. Did they do that with the
FY2003 numbers as reported recently? I think - I thought -
those were the numbers I used, but hey, try figuring this
stuff out without a degree in economics.

I do agree strongly with JMJ that cutting spending is a really
good idea.

Oh, and really enjoying Horizons.

Robear

I agree with Johnny too. But, if Bush can''t do anything, and we know Dean isn''t going to do anything, what do we do?

Do we line up a few senators and congressmen, say the top pork-barrelers, and waste them?

"Robear" wrote:
The CBO came out with a report not too long ago saying how much the tax cuts would cost, they used current economic projections when the whole thing behind sse is that tax cuts will cause the economy to grow, thus more money for the government.

Oh, well, it''s pretty confusing. Did they do that with the
FY2003 numbers as reported recently? I think - I thought -
those were the numbers I used, but hey, try figuring this
stuff out without a degree in economics.

I do agree strongly with JMJ that cutting spending is a really
good idea.

Oh, and really enjoying Horizons.

Robear

Good to hear.

Oh, and really enjoying Horizons.

Robear

Brown-noser.

No, seriously, just teasing. I mean, come on, there''s got to be somebody out there enjoying the game. Glad to finally meet them.

Now, pardon me while I duck before Ulairi smacks me upside the head with a frozen halibut.

Actually, I really do like it. The crafting system is excellent,
there''s something new every level, and you can solo or team.
The economy is not dead yet, so it all works, so far. I''m just
looking forward to more story stuff, although the third episode
has already begun. Not bad at all for an mmorpg start.

Robear

Cool; I''m taking a wait-and-see with Horizons. Well, that and frankly I don''t have the time for an MMO lately anyway. I already wound up cancelling my FFXI subscription because I just didn''t have the time to set aside reasonably long gaming sessions for it.

If you take that stance, give the game a few months to rev up
the story. It''s had 3 small storylines started already, so I
feel that the team is doing very well. I was expecting one a
month, and it''s been more like one every 10 days or so.
Granted, they are small, but it takes time to get the system
down and start manipulating things in a big way.

The system is pretty much sterile, like any game without a
story. That''s what killed AC2, it was too easy to blitz the
story quests in an afternoon in most cases. But if they put
a good story in, like AC has, the world will be a rich and
interesting place with lots to do. I''m really looking forward
to seeing how they handle this.

Nothing in the game so far tells me they will fail at this, so
I''m optimistic. I''ve seen several games where it was clear
after a few days or weeks that the team had no idea how
to run a story. These guys have experience and I trust they
will use it.

Oh, and it''s good for solo-ing or group, long or short logins.
Although I do think fighting classes and Dragons are best
for solo play.
Robear