Bush May Meet Vow To Halve The Deficit Three Years Early

[w¡n9Nµ7 §£@¥€r 123]

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.

http://www.investors.com/editorial/IBDArti...20060612&view=1

[almaty 19]

another pack of lies

[mawilson 2,133]

When they say "cut the deficit in half" they are only talking about this year's deficit,

not the total cumulative deficit which runs into trillions. To cut the latter in half, they

would actually have to run a surplus over the next 10 years.

[w¡n9Nµ7 §£@¥€r 123]

When they say "cut the deficit in half" they are only talking about this year's deficit,

not the total cumulative deficit which runs into trillions.

The cumulative figure is actually called the debt, not the deficit. You are correct though, the deficit refers to the shortfall in any given year. Every deficit becomes part of the cumulative debt.

[I'm Gone 60]

When they say "cut the deficit in half" they are only talking about this year's deficit,

not the total cumulative deficit which runs into trillions. To cut the latter in half, they

would actually have to run a surplus over the next 10 years.

That's the debt, not the deficit and even in the years Clinton claimed to have balanced the budget the debt was still going up.

[Mr. Big Dog 10,747]

When they say "cut the deficit in half" they are only talking about this year's deficit, not the total cumulative deficit which runs into trillions. To cut the latter in half, they

would actually have to run a surplus over the next 10 years.

That's the debt, not the deficit and even in the years Clinton claimed to have balanced the budget the debt was still going up.

Not if you look at the numbers adjusted for inflation:

[I'm Gone 60]

When they say "cut the deficit in half" they are only talking about this year's deficit, not the total cumulative deficit which runs into trillions. To cut the latter in half, they

would actually have to run a surplus over the next 10 years.

That's the debt, not the deficit and even in the years Clinton claimed to have balanced the budget the debt was still going up.

Not if you look at the numbers adjusted for inflation:

Yeah, but the amount of the debt still was more each year than it was the previous year. That's like the BS they pull when a program's budget is increased and people scream it's been cut and say when you figure in inflation it's less money. If the freakin dollar amount goes up it's an increase not matter how you try to spin it.

[*Robert* 2]

Isn't it great how economists can spin the numbers to make something so bad "appear" to look good?!

[babybunny 2]

Coz, G. Dubya said so!

[Mr. Big Dog 10,747]

When they say "cut the deficit in half" they are only talking about this year's deficit, not the total cumulative deficit which runs into trillions. To cut the latter in half, they

would actually have to run a surplus over the next 10 years.

That's the debt, not the deficit and even in the years Clinton claimed to have balanced the budget the debt was still going up.

Not if you look at the numbers adjusted for inflation:

Yeah, but the amount of the debt still was more each year than it was the previous year.

True. But a dollar five years ago is just not the same as a dollar today. Inflation is a fact of life and one ought to account for it.

Otherwise one could be saying that the minimum wage in 2005, for example, was more than it was 50 years earlier in 1955. Only, that argument wouldn't hold any water since the $0.75 back in 1955 would translate into $4.36 (in 1996 dollars) while the $5.15 of 2005 were only $4.15 (in 1996 dollars). So, while the absolute amount of the minimum wage is almost 7 times that of 1955, the real value of the minimum wage is less today than it was 50 years ago.

You may call that spin, I call it keeping it real.

[cmartyn 0]

Dont you know you guys have to call a financial advisor before you talk ###### about economic matters? They are specialy trained in all this stuff.

Hey, Currency is DESIGNED to lose value. You HAVE to adjust for inflation. If you dont, then you cant measure in dollars plain and simple.

I have issues with these ridiculous inflation figures. Sure, the Fed says they cant control Asset inflation but man, those asset values reflect ####### like RENT!

[w¡n9Nµ7 §£@¥€r 123]

ET,

The following graph, which shows our national debt as a percentage of GDP, is more meaningful than simply adjusting it for inflation. JMHO.

http://en.wikipedia.org/wiki/Image:Nationa..._%25_of_gdp.jpg

[cmartyn 0]

Meaningfull yes, but the fact we are still recovering from paying back the war debt of the 40's is more telling. Those figures get more popular all the time as the Govt feels that the indicator looks a lot better.

Edited June 14, 2006 by cmartyn

[w¡n9Nµ7 §£@¥€r 123]

I don't see how you can pin it all on WW2 era debt. The graph shows a clear upturn in the early 80s, during the Cold War arms race.

[cmartyn 0]

I wasnt really. I was just pointing out we never saw the pre-war lows again.

Yes, arms race, coupled with hyper inflation in raw material and labour. Notice how we went through VN era without these problems. That was plastics baby. Hopefully we will get the next plastic at some point rather than the next Google or Yahoo.