Deficit Down by 30%

[nbcrusader]

Tax cuts spur economic growth. Critics dumbfounded.

Bush heralds improved deficit figures

WASHINGTON (AP) -- President Bush touted new deficit figures Tuesday showing considerable improvement upon earlier administration predictions, saying it shows the wisdom of his tax cuts.

Bush himself announced the figures -- a task that for the most part has been left to lower-ranking administration officials in the past. The new figures show the deficit for the budget year ending September 30 will be $296 billion -- much better than the $423 billion that Bush predicted in February and a slight improvement over 2005.

 

[Zoomerang96]

oh so you're still happy that you have a TWO HUNDRED AND NINETY SIX BILLION DOLLAR DEFICIT FOR ONE YEAR?

it's practically criminal in canada not to have a SURPLUS.

well, have fun with that.

 

[melon]

I'd be interested to see how much "growth" has reached the working/lower classes. It has been noted that much of our "economic growth" has been concentrated in the upper classes, which has generated this extra tax revenue.

Melon

 

[AEON]

I'd be interested to see how much "growth" has reached the working/lower classes. It has been noted that much of our "economic growth" has been concentrated in the upper classes, which has generated this extra tax revenue.

Melon

Is this cynicism, nihilism, or skepticism?

 

[melon]

Is this cynicism, nihilism, or skepticism?

It comes with the understanding that politics is rarely one-dimensional.

Melon

 

[AEON]

It comes with the understanding that politics is rarely one-dimensional.

Melon

I was only kidding with ya.

 

[nbcrusader]

The skeptic asks the question and then goes and looks for the answer.

The cynic asks the question to poo poo the good news.

We may never know the difference.

 

[melon]

The skeptic asks the question and then goes and looks for the answer.

I think you've read enough of my writings to know that I have a distaste for unanswered questions.

Melon

 

[Irvine511]

and it's still the 4th largest deficit in the nation's history, and our long term outlook is still very bleak as social security will start to run a deficit rather than a surplus, and the debt has increased by well over $3 trillion since Bush took office.

i suppose when you set the bar so low, it's not hard to leap over it and demand your trophy.

but Jr. has been doing this his whole life.

 

[STING2]

and it's still the 4th largest deficit in the nation's history, and our long term outlook is still very bleak as social security will start to run a deficit rather than a surplus, and the debt has increased by well over $3 trillion since Bush took office.

i suppose when you set the bar so low, it's not hard to leap over it and demand your trophy.

but Jr. has been doing this his whole life.

Its far from being the 4th largest deficit in the nations history once you adjust for inflation. If you want record deficits and record national debt, go back to World War II when the national debt reached 150% of anual GDP in 1946. The national debt as a percentage of GDP has only increased slightly since Bush has been in office.

Jr. is doing just fine despite the democrats best efforts over the past 6 years to unseat him and his party from power. So far Bush and the Republicans are undefeated in the category and the democrats chances in November, their lost shot at Bush, appear to be getting dimmer now.

 

[melon]

Jr. is doing just fine despite the democrats best efforts over the past 6 years to unseat him and his party from power. So far Bush and the Republicans are undefeated in the category and the democrats chances in November, their lost shot at Bush, appear to be getting dimmer now.

Yet there's still the issue of the working/lower classes. If they aren't happy, no amount of macro-level numbers are going to please them.

Of course, this is where the diversion issues like gay marriage, flag burning, and school prayer come in to save the day for the GOP.

Anyway, my point here isn't to bash Bush, as much as to question whether these rosy numbers genuinely affect anyone besides those with six-figure incomes and higher. It's a running question of mine, considering the kind of weak job environment I see around where I live.

Melon

 

[Irvine511]

Its far from being the 4th largest deficit in the nations history once you adjust for inflation. If you want record deficits and record national debt, go back to World War II when the national debt reached 150% of anual GDP in 1946. The national debt as a percentage of GDP has only increased slightly since Bush has been in office.

but it is helpful to view the debt in context. the $271 billion - the level of debt by the end of World War II - had more purchasing power than it does today.

in fact, the national debt as a percentage of GDP has grown every year since Bush has been in office. in 2004, the $7.4 trillion national debt constituted 62.9 percent of GDP; in 2001 when Bush took office, the debt was 57.3 percent of GDP. in 1981, it was 32.9 percent of GDP; in 1929, it was just 16.3 percent. The 2004 figure of 62.9 percent is close to double that of 1981 and nearly four times that of 1929.

ultimately, the current debt load isn't the problem, yet. the problem, as i pointed out, is what happens after 2010, when retiring Baby Boomers begin placing demands on Social Security and Medicare. so it's less about where we are -- and the ability to make chest-thumping, nyah-nyah statements -- but it's the trajectory we're on.

with a so called “booming” economy, per the mantra of tax cutting logic, the debt ratio should be going down, but it continues to grow. US debt will double under Bush in both real dollars and as a percent of GDP.

 

[STING2]

Yet there's still the issue of the working/lower classes. If they aren't happy, no amount of macro-level numbers are going to please them.

Of course, this is where the diversion issues like gay marriage, flag burning, and school prayer come in to save the day for the GOP.

Anyway, my point here isn't to bash Bush, as much as to question whether these rosy numbers genuinely affect anyone besides those with six-figure incomes and higher. It's a running question of mine, considering the kind of weak job environment I see around where I live.

Melon

Well, the latest labor statistics available on the poverty rate are from 2004. I think once we see the 2005 figures and especially the 2006 figures, that the poverty rate is dropping to the lows it was at in the late 1990s.

 

[STING2]

but it is helpful to view the debt in context. the $271 billion - the level of debt by the end of World War II - had more purchasing power than it does today.

in fact, the national debt as a percentage of GDP has grown every year since Bush has been in office. in 2004, the $7.4 trillion national debt constituted 62.9 percent of GDP; in 2001 when Bush took office, the debt was 57.3 percent of GDP. in 1981, it was 32.9 percent of GDP; in 1929, it was just 16.3 percent. The 2004 figure of 62.9 percent is close to double that of 1981 and nearly four times that of 1929.

ultimately, the current debt load isn't the problem, yet. the problem, as i pointed out, is what happens after 2010, when retiring Baby Boomers begin placing demands on Social Security and Medicare. so it's less about where we are -- and the ability to make chest-thumping, nyah-nyah statements -- but it's the trajectory we're on.

with a so called “booming” economy, per the mantra of tax cutting logic, the debt ratio should be going down, but it continues to grow. US debt will double under Bush in both real dollars and as a percent of GDP.

Regardless, the national debt was 150% of GDP in 1946, it was by far the heaviest burden in terms of debt this country has ever had and it is a far greater burden than the country is currently under. Several European countries currently have national debts that exceed their annual GDP, like Italy. You will see problems in Europe with national debts, a far greater ratio of the retired to the working, most workers relying on the government for their pensions, much earlier than you will in the United States.

As long as the United States continues to grow economically and the labor base continues to expand, the Baby Boom and Social Security difficulties will not be a major problem. In Europe, there is definitely cause for concern because economic growth is very low, the labor base is not expanding, and the number of older Europeans to younger Europeans is expanding at a much faster rate than it is here in the United States.

Also the national debt moving from 57% of GDP to 63% of GDP is nothing to lose sleep over. The United States has had a national debt total that has averaged around 60% of the countries GDP since the 1980s. It has not stopped the United States from having one of the highest standards of living on the planet, year after year, according to the UN Human Development Index. In Europe, we have Italy and Greece sporting national debts of 107% and 108% of GDP respectively.

 

[Irvine511]

don't worry, be happy!

(and i love how we use 1946 -- an outlier year if ever there was one -- as our basis of comparison)

 

[MrBrau1]

ultimately, the current debt load isn't the problem, yet. the problem, as i pointed out, is what happens after 2010, when retiring Baby Boomers begin placing demands on Social Security and Medicare. so it's less about where we are -- and the ability to make chest-thumping, nyah-nyah statements -- but it's the trajectory we're on.

This is the frightning part. It scares the crap outa me. 77 million of them. Most with less than $50K saved for retirement.

 

[verte76]

This is the frightning part. It scares the crap outa me. 77 million of them. Most with less than $50K saved for retirement.

Damn.

 

[nbcrusader]

It would seem that a government can pay attention to cultural issues when the economic issues are in fairly good order. Perhaps we overlook the enormous wealth of this country and the ability to absorb and bounce back from large deficits. The cynics had their day during the Reagan administration, and yet we bounced back from the “insurmountable” deficits. Our bounce back today is even stronger – considering a 30% reduction in a relatively short time span is considered.

Similar doomsday arguments have been made regarding Social Security. The scare tactics of potentially losing this entitlement has often been used as a political distraction to current economic realities. We continually project the bankruptcy of the Social Security system, which of course has always been a fraud as the government has never segregated SS funds from the general fund.

 

[MrBrau1]

Then throw in negative savings rates,

and record household debt service:

http://www.federalreserve.gov/releases/housedebt/default.htm

Good times.

Good times.

 

[financeguy]

Is this cynicism, nihilism, or skepticism?

It's called realism.

 

[melon]

It would seem that a government can pay attention to cultural issues when the economic issues are in fairly good order. Perhaps we overlook the enormous wealth of this country and the ability to absorb and bounce back from large deficits. The cynics had their day during the Reagan administration, and yet we bounced back from the “insurmountable” deficits. Our bounce back today is even stronger – considering a 30% reduction in a relatively short time span is considered.

Similar doomsday arguments have been made regarding Social Security. The scare tactics of potentially losing this entitlement has often been used as a political distraction to current economic realities. We continually project the bankruptcy of the Social Security system, which of course has always been a fraud as the government has never segregated SS funds from the general fund.

Actually, we never bounced back from Reagan's debt. We've just accumulated on top of it since his era. Clinton made a small dent, but it's obviously easier to spend on the credit card than it is to come up with the money to pay it back.

However, I would agree that doomsday arguments are premature, and we should be looking for better arguments and solutions--as I try to do--rather than cry that it's the end of the world.

Melon

 

[shart1780]

The deficit goes down and all so many people have to say "well the deficit is sttill huge!!"

I guess Bush hate is very dominant here.

 

[melon]

So....about that deficit...

Melon

 

[Irvine511]

However, I would agree that doomsday arguments are premature, and we should be looking for better arguments and solutions--as I try to do--rather than cry that it's the end of the world.

oh, i agree. i don't think its the end of the world, but i think we are on a bad path and i can't think that there's some sort of master plan here -- like, we'll have to cut HUD or the Department of Education or some other program once "the beast" is effectively "starved."

my objections were more to the fact that critics were somehow "dumbfounded" or the assertion that lower taxes is the key to all economic problems, as well as to Bush's taunting, sneering press conference where he effectively said that he thought he was going to get a D+ but instead pulled a solid gentleman's C.

 

[najeena]

OK, all you wordsmiths... what is the correct phonetic spelling for a derisive snort? Bush has done this bofore, forcast horrible numbers so that when they turn up being just bad it doesn't seem as awful. What would the numbers be like if he factored in the war?

 

[AliEnvy]

Tax cuts spur economic growth. Critics dumbfounded.

While consumer spending due to tax cuts may have held strong and contributed to reducing the deficit, I'm guessing personal debt levels have been spiking even higher...while interest rates and gas prices are going up...and wages are stagnant...

This is not a pretty picture...it's a ticking time bomb.

 

[AliEnvy]

However, I would agree that doomsday arguments are premature, and we should be looking for better arguments and solutions--as I try to do--

The only thing fueling the economy right now is rising consumer debt. The only way out it seems is a recession that hopefully doesn't burst any bubbles.

 

[deep]

US 'could be going bankrupt'

By Edmund Conway, Economics Editor
(Filed: 14/07/2006)

The United States is heading for bankruptcy, according to an extraordinary paper published by one of the key members of the country's central bank.

A ballooning budget deficit and a pensions and welfare timebomb could send the economic superpower into insolvency, according to research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a leading constituent of the US Federal Reserve.

Prof Kotlikoff said that, by some measures, the US is already bankrupt. "To paraphrase the Oxford English Dictionary, is the United States at the end of its resources, exhausted, stripped bare, destitute, bereft, wanting in property, or wrecked in consequence of failure to pay its creditors," he asked.

According to his central analysis, "the US government is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who, in this context, are current and future generations to whom it has explicitly or implicitly promised future net payments of various kinds''.



Prof Kotlikoff, who teaches at Boston University, says: "The proper way to consider a country's solvency is to examine the lifetime fiscal burdens facing current and future generations. If these burdens exceed the resources of those generations, get close to doing so, or simply get so high as to preclude their full collection, the country's policy will be unsustainable and can constitute or lead to national bankruptcy.

"Does the United States fit this bill? No one knows for sure, but there are strong reasons to believe the United States may be going broke."

Experts have calculated that the country's long-term "fiscal gap" between all future government spending and all future receipts will widen immensely as the Baby Boomer generation retires, and as the amount the state will have to spend on healthcare and pensions soars. The total fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study by Professors Gokhale and Smetters.


The figure is massive because President George W Bush has made major tax cuts in recent years, and because the bill for Medicare, which provides health insurance for the elderly, and Medicaid, which does likewise for the poor, will increase greatly due to demographics.


Prof Kotlikoff said: "This figure is more than five times US GDP and almost twice the size of national wealth. One way to wrap one's head around $65.9trillion is to ask what fiscal adjustments are needed to eliminate this red hole. The answers are terrifying. One solution is an immediate and permanent doubling of personal and corporate income taxes. Another is an immediate and permanent two-thirds cut in Social Security and Medicare benefits. A third alternative, were it feasible, would be to immediately and permanently cut all federal discretionary spending by 143pc."

The scenario has serious implications for the dollar. If investors lose confidence in the US's future, and suspect the country may at some point allow inflation to erode away its debts, they may reduce their holdings of US Treasury bonds.

Prof Kotlikoff said: "The United States has experienced high rates of inflation in the past and appears to be running the same type of fiscal policies that engendered hyperinflations in 20 countries over the past century."

Paul Ashworth, of Capital Economics, was more sanguine about the coming retirement of the Baby Boomer generation. "For a start, the expected deterioration in the Federal budget owes more to rising per capita spending on health care than to changing demographics," he said.

"This can be contained if the political will is there. Similarly, the expected increase in social security spending can be controlled by reducing the growth rate of benefits. Expecting a fix now is probably asking too much of short-sighted politicians who have no incentives to do so. But a fix, or at least a succession of patches, will come when the problem becomes more pressing."
pyright

 

[hiphop]

Am I mistaken, or does the actual debt of something like 290 billions directly reflect the cost of the Iraq war?

Does that mean the country could be debt-free, if it wasn´t for that dirty ass Saddam? It´s his fault. Just because you wanted to get rid of some WMDs.

Boo-fucking-hoo.

 

[verte76]

my objections were more to the fact that critics were somehow "dumbfounded" or the assertion that lower taxes is the key to all economic problems, as well as to Bush's taunting, sneering press conference where he effectively said that he thought he was going to get a D+ but instead pulled a solid gentleman's C.

I agree with this. Bush thinks cutting taxes will solve all of our economic problems and I don't.