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Bush’s Pledge to Cut the Deficit in Half by 2009 Might Happen This Year… June 13, 2006, 9:44 pm

Posted by quintapalus in Economics.
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Three years early?  Get out!  I want to party with you man!

From Investor's Business Daily:

Aided by surging tax receipts, President Bush may make good on his pledge to cut the deficit in half in 2006 — three years early. Tax revenues are running $176 billion, or 12.9%, over last year, the Treasury Department said Monday. The Congressional Budget Office said receipts have risen faster over the first eight months of fiscal '06 than in any other such period over the past 25 years — except for last year's 15.5% jump. The 2006 deficit through May was $227 billion, down from $273 billion at this time last year. Spending is up $130 billion, or 7.9%. The CBO forecast in May that the 2006 deficit could fall as low as $300 billion. Michael Englund, chief economist of Action Economics, has long expected a deficit of about $270 billion this year. Now he thinks there's a chance the "remarkable strength in receipts" will push the deficit even lower. With the economy topping $13 trillion this year, a $270 billion deficit would equal less than 2.1% of GDP, easily beating the president's 2.25% goal. Bush made his vow when the White House had a dour 2004 deficit forecast of 4.5% of GDP, or $521 billion. The actual '04 deficit came in at $412 billion, or 3.5% of GDP, before falling to $318 billion, or 2.6% of GDP, in 2005. A CBO analysis last week noted that withheld individual income and payroll taxes are up 7.6% from a year ago, with the gains picking up in recent months. "Those gains suggest solid growth in wages and salaries in the national economy," CBO said. While gains are broad, those at higher-income levels are enjoying bigger salary hikes. Because they pay higher rates, federal tax revenues soar when they do well. Those making over $200,000 now pay 46.6% of total income taxes, presidential adviser Karl Rove recently said. That's up from 40.5% — despite Bush's tax cuts. Nonwithheld income tax receipts are up about 20% vs. a year ago. That may reflect year-end bonuses and capital gains. Corporate income taxes are up about 30% from last year's pace. While economic growth is producing impressive tax revenue gains, budget experts say they won't be enough to wipe out deficits, especially as baby boomers retire. Englund thinks the deficit could hit $150 billion if the expansion lasts two or three more years. "When we go into a downturn, the numbers reverse," he said. Long-term growth in Social Security, Medicare and Medicaid "threaten to force either European-style tax increases, unprecedented spending cuts or unprecedented debt," said Heritage Foundation budget expert Brian Riedl. "There's no growing out of the long-term budget problems." Heritage sees an $800 billion deficit in 2016, assuming tax cuts are extended and spending stays on its present course. If the economy and tax receipts continue to outperform, the deficit would still be at least $600 billion, Riedl said. He noted Congress has been more disciplined about discretionary spending lately. But that saves a mere $10 billion a year, he said. Late last week, House and Senate negotiators reached a deal to hold a supplemental spending bill for Iraq, Afghanistan and hurricane relief to under $94.5 billion. The Senate had tacked on another $14 billion, but Bush vowed to veto any bill above $94.5 billion.

FINALLY!!!  It's about time that our hegemonistic foray into the middle east started paying some dividends.  Personally, I blame Haliburton.

On a serious note, can you imagine how big the surpluses would be if spending were actually held in check from where it was in 2000, allowing for only modest growth?  Good Lord. 

Oh No You Didn’t! You Didn’t Just Use the “S” Word!! January 12, 2006, 7:17 pm

Posted by quintapalus in Economics.
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“December Business Tax Payments Hit All-Time High”

From the Associated Press:

WASHINGTON — The federal government posted the first budget SURPLUS for December in three years as corporate tax payments hit an all-time high, helping offset a record level for spending, the Treasury Department reported Thursday.
The department said in its monthly budget report that government receipts surpassed spending by $10.98 billion last month. A year ago, the government ran a deficit of $2.85 billion in December.
The improvement reflected the fact that government receipts were up 12.1 percent from a year ago to $241.88 billion while government spending rose by a slower 5.6 percent to $230.9 billion. The figure for outlays still represented an all-time high for spending for any month.

That’s strange. If I recall correctly, Bush lowered the tax rates in 2003, yet we seeem to be taking in higher receipts. Golly…talk about your fuzzy math. Surely there must be some economic principle at play here, but my public school educated brain (read: liberal indoctrination) can’t seem to figure it out. After all, we just know that you collect more taxes by raising the rates, rights?

Pension Funds Continue Journey Towards Implosion November 27, 2005, 5:29 pm

Posted by quintapalus in Economics.
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Well, this New York Times article doesn’t explicity say that, but the end result of this manoever has a high probability of ending up that way. The article details how more and more pension fund managers are investing larger shares of their monies in hedge funds.

For those not in the know, hedge funds are like the original version of day traders. They play fast and loose in a low to non-existent regulated environment. Many of the positions they take are very short term in nature as their idea is to move ahead of or contrary to the market to realize higher gains. The goal is like any investment vehicle, in that it is to make their clients money, but their real unpromisable promise, is to beat market no matter what and generate very high returns. It’s your typical high risk, high reward deal. It’s so risky, in fact, that some of the only rules surrounding them is the minimum level of investment. Hedge funds are pretty much an “only millionaires need apply.” The idea being that if you have this much money, you are smart enough to know the risks involved. It supposed to keep mom and dad middle America from being wooed by a 60% return of a certain fund and putting their $10K of hard earned money into it, only to lose it all. It’s kind of a condescending bit of regulation that totally shirks individual responsibility, but in this day and age, I guess I can understand. Now that we have that bit of background information out of the way, let’s get on to the story.

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Right Wing Propaganda…by the New York Times???? November 25, 2005, 10:15 am

Posted by quintapalus in Economics.
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I’m not sure what “fuzzy math? or “Enron style accounting? these states are doing to have surpluses in the “worst economy since Herbert Hoover? where parents lament because they can’t buy their little girl a winter coat but I just know it must be Karl Rove behind it. Or the Jews…yeah, that’s it…the Jews.

Let’s see how long it will take these states to crank their spending back up through the roof and piss away every penny of it though. My prediction: as soon as Thanksgiving recess is over and they return to their respective legislatures.