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terpfan1980
terpfan1980
Join Date 08/2004
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Has the budget deficit turned the corner?

Possibly, according to article in Wash Post

May 5, 2005 7:54:18 AM from JoeUser ForumsJoeUser Forums
With a nod to Lee1776 who posted an article on this topic already, there's more to be found in the original Washington Post article noting that (Lee1776's original article title) Bush Policies Create $54 Billion Dallor Budget Surplus.

Read on for the original Washington Post article, with some commentary in-line and following. Headline is linked.



Tax Receipts Exceed Treasury Predictions

Early Surge Lowers Deficit Projections


By Jonathan Weisman
Washington Post Staff Writer
Thursday, May 5, 2005; Page E01

After three years of rising federal budget deficits, a surge of April tax receipts brought unexpected good news to fiscal policymakers -- the tide of government red ink appears to be receding.


Ok, we may as well get this one out of the way right away here and now. Yes, we've had 3 years of rising budget deficits under President Bush. So what. We've had a recession, two wars, and of course our normal "needs" that had to be covered, all meaning we couldn't just stop federal spending for our obligations, wants and desires. Historically, when the government needs to run a deficit it does. It doesn't mean the world comes to an end, it just means we're borrowing for our future -- much like the way our supposed "pay as you go" Social Security program borrows from the future earners to pay today's earners, and much like the way our normal citizens borrow (on credit cards, mortgages, etc.) to buy what they need.

Continuing....


The Treasury Department this week reported there would be a $54 billion swing from projected deficit to surplus in the April-to-June quarter, after an unanticipated gush of tax payments poured into the Treasury before the April 15 deadline. That prompted private forecasters to lower their deficit projections for the fiscal year that ends in September.


This is the good news that Lee1776 reported in his article. This is good news, and indicates that things are much better for the government than originally thought.

Hang on though, as the pooh-poohers are gonna get some ammo in the next few sections of the article.


Budget analysts inside and outside the government said the positive turn is likely to be short-lived. Indeed, after a four-year absence, the Treasury Department announced yesterday it is considering reissuing its 30-year Treasury bond to help finance long-term government debt, jolting the bond markets and pushing down the price of existing 30-year securities.


Yup, this could be just short-lived. If so, then the pooh-poohers will be back full force. I hope that doesn't happen, but again, I would be prepared for seeing them come back just as strong in the future. It's pretty much a given that some of them will never go away, as some of us just can't be so damned lucky.

Coming back to good news though:


But in the short term, many forecasters said the budget deficit appears to have crested.
"I think it has turned the corner," said David Wyss, chief economist at Standard & Poor's, the credit rating agency. "My guess is 2004 will have been the worst year."
For that fiscal year, the government recorded a $412 billion deficit, the largest ever in nominal dollar terms, although not as large as some of the deficits of the 1980s when measured against the size of the economy. The 2004 mark was up from 2003's $378 billion deficit, which topped 2002's $158 billion deficit.


Ooops, wait a second, did everyone catch that last paragraph there ... when measured against the size of the economy? Again, showing that this is part of the normal way our country's economy runs.

Either way, as the S&P economist notes, it seems that the deficit is turning the corner.

Continuing...


In January, Bush administration officials projected that the streak would continue, with a deficit of $427 billion for the fiscal year that ends Sept. 30. But that estimate was widely regarded as inflated and many forecasters believed the total would be more like $400 billion.


{ sarcasm mode on } Oh, damn. More proof that Bush lies. He must have lied when projecting the deficits at higher numbers. Damnit, the man just can't tell the truth, can he. { end sarcasm mode }

More...


April, however, turned out to be a far better month than anticipated. Taxpayers were confronted with unexpected tax bills, many from capital gains and the alternative minimum tax, a parallel income tax system designed to hit the rich but that is increasingly pinching the middle class. The Treasury announced this week that it will repay $42 billion in federal debt in the third April-to-June quarter, instead of borrowing $12 billion.


This is not necessarily good news, as eventually (hopefully) the AMT will be addressed to help keep it from impacting "average" citizens. Until then though, apparently it's helping the government take in more money than expected (which is also not good news, as some politicians, particularly the normally tax-happy left, may be less inclined to fix the AMT problem if it is helping to bring in a lot more revenue than expected).

More...


Wall Street analysts reduced their deficit forecasts this week, from around $400 billion to around $370 billion. In nominal dollar terms, that would still be the third-highest deficit on record. Even measured against the size of the economy, "it's still a high number," said Brian Bethune, director of financial economics at Global Insight Inc., a Massachusetts forecasting firm. "It needs to come down."


Damn, just can't please some people. It's still too high, it's too high, the sky is still falling, the sky is still falling...

More...


One factor should help in the short term: Seven months into the fiscal year, Congress is only now passing the $82 billion emergency war spending bill for fiscal 2005, which means that much of the money will be spent in 2006. That should reduce the 2005 deficit while bringing down war costs next year. Wyss said the deficit should continue to fall in 2006 and 2007.


Oh no!!! This means that Pres. Bush and his friends in the Congress must be employing even more budgetary tricks to hide the real deficit. Look for more rants on that particular B.S. opinion in the future. You know it'll happen, so be ready.

More...


"A month ago, I would have told you the budget numbers were on track for $400 billion. To get an adjustment this quickly would suggest a huge surprise," said Edward F. McKelvey, an economist and federal budget analyst at Goldman Sachs & Co.
Few economists say the U.S. government is out of the woods. One of the reasons for the turnaround, the alternative minimum tax, should be reduced or eliminated before it starts impinging on economic growth, Bethune said.


Damn! I must be a mind-reader or clarvoyant. I knew someone would immediately point out the problem of relying on the AMT, and I hadn't even read that far into the article. Oh well, don't say I didn't already warn you.


Anyway, as usual, there's a lot more information ... in the original linked article. I encourage folks to visit The Washington Post to read on. Even those that hate on the other Washington news paper typically trust the word of the Post, so you should feel safe reading the article there.
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terpfan1980
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Reply #1 May 5, 2005 10:03:38 AM
from JoeUser ForumsJoeUser Forums
If you read my blog's you have read that I have stated many times that we should first cut unnecessary spending such as the PORK which is at an all-time high; improve tax collections and then increase revenues to balance the budget. Several months ago the IRS estimated American taxpayers are avoiding $300 billion of taxes they owe each year. This additional $58 billion a good start in the right direction - good work Mr. Bush. We however must not lose sight of how big of a problem we have with the budget . The deficit this year without this for the 58 billion is estimated at $475 billion when you count the total supplemental request for Iraq. That is after we added about $200 billion in surplus from Social Security and Medicare which has nothing to do with the federal budget. Thus, we have about$ 58 billion toward the$ 675 billion required to balance the budget. We have solved less then 10% of the problem!
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terpfan1980
Lee1776
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Reply #2 May 5, 2005 11:45:07 AM
from PoliticalMachine ForumsPoliticalMachine Forums
Maybe the government should give us a refund this quarter. I want my extra money back!!!

Good write up Terp.
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terpfan1980
Dr Guy
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Reply #3 May 5, 2005 11:51:44 AM
from JoeUser ForumsJoeUser Forums

Maybe the government should give us a refund this quarter. I want my extra money back!!!

all 25 cents of it?

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terpfan1980
COL Gene
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Reply #4 May 5, 2005 12:42:37 PM
from JoeUser ForumsJoeUser Forums
Sounds good if they send you a bill next month when we go into the red
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