View Full Forums : White House Projects Highest Deficit Ever


Rahjeir
07-31-2004, 03:55 AM
White House Projects Highest Deficit Ever
By ALAN FRAM
Associated Press Writer

WASHINGTON - This year's federal deficit will soar to a record $445 billion, the White House projected Friday in a report provoking immediate election-season tussling over how well President Bush has handled the economy.
The administration's annual summertime budget update forecast shortfalls falling to $331 billion next year, then fading to $229 billion by 2009. For each year, the red ink was smaller than the White House envisioned six months ago.

The analysis was released the same day the Commerce Department said economic growth slowed this spring to an annual rate of 3 percent, well below the 3.8 percent spurt that many economists expected. The slowdown was caused by a spending cutback by consumers in the face of high gasoline costs, the department said.

Administration officials hailed the budget figures as a solid improvement over the deficits analysts forecast early this year, and said they were on their way to their goal of halving this year's shortfall in five years. The White House estimated a $521 billion budget gap for 2004 in February, while the nonpartisan Congressional Budget Office predicted a $477 billion deficit.

"This improved budget outlook is the direct result of the strong economic growth the president's tax relief has fueled," said White House budget director Joshua Bolten.

He conceded that the red ink remained at "unwelcome" levels, but said the report was still "good news" because of the reduction from earlier estimates.

Democrats contrasted the $445 billion projection with the $262 billion surplus for this year that Bush projected in 2001, when he was persuading Congress to approve the first of his tax cuts.

The shortfall will be the third consecutive - and ever-growing - deficit under Bush, following four consecutive annual surpluses under President Clinton. Democrats said the turnabout underscored the damage done by Bush's tax cuts and his poor stewardship of the economy, and criticized the White House praise for the report.

"What we've got now is a president of the United States who is actively misleading the American people on the financial condition of the country," said Sen. Kent Conrad of North Dakota, top Democrat on the Senate Budget Committee. "Shame on him."

The White House attributed this year's improvement to the collection of $82 billion more in revenue than anticipated, reflecting stronger economic activity. That was partly offset by $6 billion more in spending than expected, largely for Medicaid and Medicare.

The projection, if accurate, would mean the government will have to borrow 19 percent of the $2.32 trillion it expects to spend this year.

Last year's $375 billion deficit was the largest ever. When adjusted for the loss of purchasing power caused by inflation, only the shortfalls during World War II have exceeded the projected $445 billion shortfall.

The Concord Coalition and the Committee for a Responsible Federal Budget, bipartisan groups that advocate balanced budgets, said the report showed deficits must be controlled.

"We cannot continue to allow this burden to multiply for our children and our children's children," said Maya MacGuineas, the committee's executive director.

The White House said this year's actual deficit could well be smaller because federal agencies often overestimate expected spending. The government's budget year runs through Sept. 30, so the final figures will be in shortly before the Nov. 2 elections.

Administration officials say a $445 billion deficit would be manageable because it would be 3.8 percent the size of the economy - well under the 6 percent ratio during the worst of the red ink under President Reagan.

"I am pleased with the direction we are moving in," said House Budget Committee Chairman Jim Nussle, R-Iowa. Continuing a Republican theme, he and others said the numbers showed spending must be constrained.

Democrats said by only extending five years, the projections ignored the longer-term budget crisis looming as the baby boom generation starts retiring later this decade.

The report included the $25 billion Congress recently approved for U.S. action in Iraq and Afghanistan. But Democrats noted it ignored the next request for those wars the White House will make early next year, and the costs of easing the alternative minimum tax's effect on middle-income families.

"There's no shock, there's no shame and there's no solution" from the White House, said Rep. John Spratt of South Carolina, lead House Budget Committee Democrat.

The report also boosted the estimate of Medicare spending by $67 billion over the next five years. It said $26 billion was to correct costs left out of Bush's budget last February, with the rest reflecting new estimates for the program's spending.

Medicare, the government's health insurance program for the elderly and disabled, spends about $300 billion a year. It already faces questions about its solvency because of the burden the baby boomers will place on it, and growing medical costs.

The report was released a day after the Democratic National Convention and the same day Congress began hearings on the Sept. 11 commission's final report. The deficit projection was due July 15, a date often ignored by administrations of both parties.

Bolten said the report was not ready earlier, but Democrats said the timing was aimed at hiding it.

Rahjeir
07-31-2004, 03:56 AM
Someone get him out of office please. Sheesh, when will the madness end.

Talyena Trueheart
07-31-2004, 10:33 AM
The madness will end when people realize that the deficit is caused not only by government spending, but by government income, and that government income is determined by the economy. The government hasn't cut spending the past six months, yet the deficit projections have dropped by nearly $80 billion. The economy is booming, and yet people want to replace Bush with someone who will raise taxes, slow the growth, and has so many proposed programs that he will blow Bush's overspending out of the water? I agree, it is madness.

vestix
07-31-2004, 01:59 PM
The president always get more credit than he deserves when things go well, and more blame than he deserves when things go poorly. Fact is, in the United States the president has little power over the budget, since that is constitutionally relegated to the congress.

Tiane
07-31-2004, 05:30 PM
Line item veto!

Anyway... amazing how stuff like this goes by and yet the Republicans are somehow able to perpeptuate the myth that it's the Dems that are the irresponsible spenders and bad for economy people, especially when the direct evidence for the past 8+ years shows completely the opposite.

And yes, its true that the President doesnt have direct control of the economy. But you *can* blame his administration when your country is the one somehow bucking the G8 trend of budget balances and surpluses.

Tudamorf
07-31-2004, 06:55 PM
Not only does the President have very little control over the budget, but no one in the government has full control over the economy, which determines how much money will come in.

Blaming Bush for the economic downturn and reduction in government income is like blaming SoE because it's raining outside.

Jinjre
07-31-2004, 07:19 PM
is like blaming SoE because it's raining outside.

so THAT'S whose fault it is!

jtoast
07-31-2004, 08:12 PM
Its a record in DOLLAR terms but if you look at it as a percentage of the GDP its actually lower than the deficits of the mid 80's and early 90's.

Kinda like Bill Gates having a Half Million dollar Amex bill for one month. It sounds like a lot until you realize his income.

also

The CBO released a report Monday projecting the all-time deficit high, further predicting that the deficit will decrease to $362 billion in 2005 and continue to decline until 2014 when the federal budget will be in balance

Quote is from http://www.insightmag.com/news/2004/02/03/National/Cbo-Chief.Says.Deficit.Shouldnt.Be.Ignored-590093.shtml




It's just depends on whose "spin" you think is more credible.

Gunny Burlfoot
07-31-2004, 11:19 PM
Um, we could wipe out deficits instantly, if ALL the politicians weren't cowardly gits, and instead would touch "the 3rd rail" of politics. Social Security, Medicare, and Medicaid. It HAS to be done eventually, but no one has the guts, Republician or Democrat.

The people who are working now are going to be bled dry over the coming years, as more and more baby boomers retire. If you look at past federal budgets, the percentage that is going to SS payments is constantly going up. Eventually, it will collapse under its massive sodden weight, and only those who have seen that a system like this cannot continue indefinitely, and have taken steps for private insurances will enjoy continued health care.

Here is a very simplistic pie chart of the 2002 budget I copied from the budget archives (http://www.gpoaccess.gov/usbudget/fy02/pdf/guide.pdf).

http://www.boomspeed.com/pariah/2002budget.jpg

Notice how more than half the money taken in goes to the behemoth that is Social Security/MediWelfare?

To survive long term without deficits, we have to cut the entitlements. All of them. Welfare, social security, farm aid, etc. America has always been the land of freedom. Freedom to succeed, or freedom to fail. As it stands, we are not free to fail, Papa Sam will take care of us. The founding fathers would writhe in agony at the intrusiveness of the government today, mostly done in the name of "good" causes.

Sorry, all you senior citizens. If all you are depending on to take care of you is Social Security, you will have a rude awakening one day in the (hopefully) distant future. :(

weoden
08-01-2004, 01:34 AM
Deficts go up for a couple reasons... First, congress is allowed to vote for bills that have pork and create over expenditures. Second, the president allows the spending by signing the bills... Third, borrowing seems to have little to no effect on the economy... Forth, the process that congress creates these budgets allows to adding line items that rack up over the legislative process... Fifth, by spending now legislators prevent future representatives from taking advantage of borrowing....

There are some issues with this borrowing. Currently, the Japaneese lend the US massive amounts of money and with the aging Japaneese populace... this source of money will dry up. Other sources may become available such as Chineese.

I am unsure of the solution. Just say no? Insist on the fed gov't to pass balanced or close to balanced budgets? Possibly writting a series of proceedures that require passing constutionally required programs first but that is open for add-on legislation that raises the cost of that bill. In any case, if voters call their representatives to fight these type of pork barrel spending... that can address these issues. I do not think that the media does enough to confront these issues.

Also, between the late Clinton admin stock market crash and 9/11 litterally taking out ALL of the computers that keep wall street up and running... The economy is about where it should have been around 9/11. 9/11 was not a trivial event. This caused a severe disruption in the US economy. Along the same lines, blowing up random oil pipelines coupled with increased Chineese/Indian demand has sucked extra spending income out of the economy. Franky, I do not think the economy is that bad.... It is what they call Goldie Locks economy.... Not too hot or too cold.

That said, I do not see any brilliant ideas to deal with this overspending. I question if representatives can control themselves if one party controls both houses and the president spots. Look at California. Dems controlled all three parts and look at their spending... Arnold got in and he could confront the Dems. This is good, imo. Probably, losing one of the three parts of the leg/exec would put this spending under control. Which is not to say that overspending for operations in Iraq are bad. In my opinion, if congress is going to over spend then let it be for those type of expenditures only....

As a final note, Kerry would propose massive spending initiatives but they would get struck down if reps controlled one part of congress... which is probably good politics.

Talyena Trueheart
08-01-2004, 01:45 AM
You don't have to cut anything to balance the budget. A simple spending freeze for a few years (with the exception of a few things like military pay which should be set at the rate of inflation) would do the trick. I just can't believe the people haven't demanded a flat tax yet. I think many of them are stuck on the name flat and don't realize that it is a perfectly curved tax that would cut their tax calculations down to about ten minutes a year.

Jinjre
08-01-2004, 11:19 AM
The problem with flat tax systems is the same problem that exists now: how do you define income. Is it just income made off of a paycheck for a job? If that's the case, Bill Gates will be paid entirely in stock options, which would not be taxed. CEOs of fortune 500 companies will be making "minimum wage" but still be able to afford their 5 McMansions in various vacation destinations. Do we track stock options and trades and income from annuities as income as well? Well, that just added another line to that 5 minute tax preparation. How about capital gains, do we tax those? Add another line to that 5 minute flat tax system. Gifts? Are those counted? If daddy Bush gives daughter Bush 300K to pay her lawyer for her next drunk driving accident, would she have to declare that as income? Add another line to the 'simple' flat tax.

A flat tax system would either tax the lower ends at a much higher percentage of their gross worth than the upper ends, or it would eventually end up just as headachy as the current system, and would require much more than 5 minutes to complete unless you were making only salary income and owned no investments.

Seriena
08-01-2004, 12:59 PM
Do you really believe that SS and medicare only help the old people and those who choose not to work? Give me a break. If you cut that out, you cut out the only benefits some people have who are permanetly disabled due to terminal illnesses, injuries, etc.

Paldor
08-01-2004, 03:45 PM
Seriena wrote:
Do you really believe that SS and medicare only help the old people and those who choose not to work?

Boy I am really sorry to see someone "who chooses not to work" be hurt by that decision... let me help this person right away!

Seriena
08-01-2004, 04:28 PM
sorry that should have been in quotes as in I was being sarcastic and summarizing how ignorant that post above is.

It's funny how you ignore the issues with terminal illness and people with disabilities though and jump right into the ignorance too.

Tiane
08-01-2004, 05:38 PM
Besides, it's an irrelevant point. You dont need to cut out social programs to have a balanced budget, there's a few countries around the world who have both 8)

Paldor
08-01-2004, 08:31 PM
The difference Seriena is not what you as a person wants to do. You can help anyone you want. The difference is what you want to make other people do by using the police-power of the government that concerns me.

When the government comes to my house on Tax day with a gun in one hand asking me for my taxes it is no longer a choice.

As far as "helping people".. Giving money to the government in the hopes they will distribute to "needy people" is about as stupid as giving that same money to the most unrelaible person you can think of hoping they will spend it well.
---

Oh and Jinjre a better system then a "Flat-Tax" is a "National Sales Tax" where everything (except maybe food and basic living amenities) would be taxed to pay for the government. The rich would still pay more taxes then the poor since they spend more money, but no longer would people be punished for making money.

weoden
08-01-2004, 08:35 PM
You don't have to cut anything to balance the budget. A simple spending freeze for a few years ...

The spending items that I am thinking of are not necessarily recurring line items. Things such as putting in roads or building some miscellaneous monument are the types of spending. Spending that could get delayed a year or two. Which brings up another point. Kenysian spending which injects money into the economy during economic downturns is good "pork barrel" spending. This gets money floating around the economy. I have an issue with continued deficit spending when the economy is running fine.

weoden
08-01-2004, 09:26 PM
The problem with flat tax systems is the same problem that exists now: how do you define income.

This is an interesting conversation topic that is extraneous to the original post. You are right that "tax fairness" is a real issue. Sales tax hits the poorest people the hardest while land tax on a nice house may hit the richest the most.... or middle class. I think the end issue is what income strat pays what final % of income. Issues like buying federal bonds allow complete avoidance of taxation down to the minimum tax... Or fortune 500 companies paying fat stock options to its management which can sell those options while workers are unable to do similiar? Lots and lots of discussion which does not have easy answers...

I, however, favor a large standard deduction(20~40k) and a 30~35% proportional tax. I think the average income is around 40k so the average person would not pay income tax... and 401k would relieve those above 40k.

I see simplfying the tax system as a method for the average person to understand who is paying what. A simplified tax system would encourage the average person to file their own taxes and offer the possiblity that they would become interested in who pays what. Scams like H&R' block's "fast tax return" amounted to loan sharking which is waaaay off topic...

Talyena Trueheart
08-01-2004, 09:29 PM
Seems the GOP could be going for the one big way to simplify the tax code and get rid of the IRS which is even better than a flat tax. (http://www.drudgereport.com/rnc.htm)

weoden
08-01-2004, 09:42 PM
.. which is even better than a flat tax.[/URL]
If a politician told me that, I would vote againts them on the basis that the statement "EVEN BETTER" really scares me!

Talyena Trueheart
08-01-2004, 10:00 PM
If a politician told me that, I would vote againts them on the basis that the statement "EVEN BETTER" really scares me!

Haha, well, it is even better in my opinion. There is nothing good about the IRS. And there is even less good in our insane tax code. A flat tax gets rid of our insane tax code and minimizes the IRS. A national sales tax gets rid of both. Another thing nice about a national sales tax is that imports are taxed equally to goods made here, while exports are free from taxation on our side. This lowers the price of American made goods being sold overseas, while raising the cost of imported goods over here.

Rahjeir
08-03-2004, 12:29 AM
If you want to try and balance the budget here's a site for you.

http://www.kowaldesign.com/budget/

Talyena Trueheart
08-03-2004, 01:35 AM
If you want to try and balance the budget here's a site for you.

http://www.kowaldesign.com/budget/

Interestingly enough, that site says this year's deficit will be over $500 billion. Amazingly enough, the Bush administration has cut the deficit by about $80 billion in only six months. Okay, maybe they didn't, but I think I found a site that explains those projected numbers much better than I can.

http://www.cato.org/dailys/07-28-04-2.html

Jinjre
08-03-2004, 09:47 AM
Oh and Jinjre a better system then a "Flat-Tax" is a "National Sales Tax" where everything (except maybe food and basic living amenities) would be taxed to pay for the government.

I have been a huge supporter of this for some time now. Many state sales taxes have "basic neccessities" clauses (food, clothing, housing, medical and dental services are not taxed, all other goods and services are). This does seem to spread the burden out more reasonably. Those who can afford 5 McMansions and a Hummer can afford to pay the tax on it. People like me who could afford the hummer but think it's an ungodly waste of money can keep my money by buying honda civics instead. And those at the very bottom scraping to get by don't get gakked by taxes unless they're doing well enough to purchase items which aren't neccessities.

Not only does it put the burden back on those who can afford it (where it used to be coincidentally, early on when income taxes were first started in this country, those who paid it would frame their statements and show them off as only the very wealthy paid taxes, so it was a status symbol), it also means each individual, based on their buying decisions, can control how much in taxes they pay. No looking for tax dodges, just buy stuff that isn't an ostentatious display of wealth.

edited to add: I don't think you can eliminate the IRS with a national sales tax though. Someone needs to watch businesses collecting the tax receipts and make sure they're sending off the money to the gov't like they're supposed to. As long as there are taxes to be paid, there will be people trying to not pay them, and a need for some organization to oversee the payment.

Panamah
08-03-2004, 11:39 AM
The IRS isn't evil, the tax code is evil. The IRS is just supposed to make sure that people pay their taxes. You'll never be able to eliminate the fact that some government agency has to collect the revenues, no matter what you call them.

weoden
08-03-2004, 12:14 PM
There are two notions that seem to have terminology which is not very distinct in their use... The term is deficit. When you hear these politicians talk about deficit reduction, you need to assume the congress reduced the deficit spending and not the actual deficit. That is, our debt might be a trillion but the deficit spending will be 500 million. So next years deficit will be 1trillion and 500 million.... Pinning these politicians down on what they mean is a task the media does not do well...

In any case, congress has two separate issues to deal with and confusing either seems to allow politicians to avoid making long term changes... First issue is income. This is based on taxes and the Federal gov't needs money to function and this is limited to tax rates and economic activity. Changing how taxes are collected will do little to the ecomony but shift the burdern and distract to what, I think, voters see as the real problem.

The real problem is the deficit expenditures. Congress members seem to not mind over spending and adding programs that add to the existing deficit. This seems to "buy votes" by way of added social programs. I noticed that non-constutionally mandated programs seem to be a larger part of the federal budget than constutionally mandated programs are...


Oddly enough, dems need to take the deficit reduction stance. Unfortunately, that party seems to not speak loud enough about this issue, imo, or the general populace does not believe them...

Panamah
08-03-2004, 12:27 PM
No one ever got elected by promising to spend less on their constituents. The difference between Reps and Dems is *what* the money gets spent on. But if I were to take away federal spending on roads, or subsidies and tax breaks for businesses, then Republicans would complain about it. If I take away welfare, SSI or social programs, Democrats would complain.

And if you take away Medicare, everyone over 65 complains, and their adult children, regardless of which party they belong to.

weoden
08-06-2004, 10:04 AM
No one ever got elected by promising to spend less on their constituents. The difference between Reps and Dems is *what* the money gets spent on...

There in is the problem. When you have a Rep signing legislation from a Rep congress that increases gov't spending on social programs... such as the perscription drug bill.

Yakk
08-06-2004, 04:08 PM
Do you include stocks in sales taxes? Ie, do you pay 5% of the value of a stock market purchase?

Do you put sales tax on corperate acts: if a corperation buys another corperation, does it pay 5%?

Are sales taxes charged on assets that never 'enter' the USA?

Are sales taxes charged on assets that leave the USA?

Are sales taxes charged on assets bought by non-Americans?

Are sales taxes charged on pure labour: when you sell your labour to your employer, do you have to charge sales tax?

Are sales taxes charged on assets used solely for economic benefit, or only end-consumer assets?

Do stores have to pay sales taxes on goods they buy from their producers?

Can someone set up a shell corperation, be it's sole owner, work for it for pennies, and have it conrol all their assets, and thus avoid sales taxes?

When paid for something in a non-liquid asset, how is it valued? As the last sale, estimated current value, or other?

If I buy a chocolate bar for a friend, and then sell it to the friend, do I charge my friend sales taxes?

Do you charge truckers sales taxes on gas?

Alternative ideas:
Asset tax. Annual tax on a % of your total asset's value.

National Dividend. Replace means-based expendatures (welfare, social security, medicare) with a flat dividend cheque to the entire nation. You are advised to buy some health care with it, but feel free not to. Removes what is effectively a high marginal tax rate on recipiants of means-based social assistance.

Panamah
08-06-2004, 04:28 PM
Here's an example of the problem I heard this morning. The Homeland security gives each state X number of dollars to help defray the costs that being on high security alert causes for each state. Should Wyoming and New York get the same amount of money? Well, the population isn't very dense in Wyoming and there aren't really any targets of interest. Not a lot of terror to be generated from terrorizing cows. At least, not amongst humans.

Meanwhile, NY is getting hit with millions and millions of dollars of extra expenses, most of it in the form of overtime pay for cops because of this latest terror alert. They're spending a ton more than Wyoming is.

Ok, so it'd make sense to probably give Wyoming a lot less money and shuffle it to the places more likely to be hit. However, this will never get past the Senate because Wyoming and the other little states without a lot of reason to fear they're targets like their money! They can put some people to work checking cow's udders for dirty bombs.

This is just typical of how money gets allocated and wasted. The transportation bill is another one. It's just a horrible boondoggle with people putting all sorts of special allocations in on projects they want for their district. And Republicans are as guilty as Democrats when it comes to this.

Rahjeir
08-06-2004, 04:50 PM
My area is now code Orange. Honestly it's nuts around here. Police armed with M16's randomly stoping cars on city streets doing searches.

Jersey City (My City) is spending $16,000 per day just on these new terror threats. Money, My city doesn't honestly have at this point. The city is close to a really huge problem budget wise. Police force here hasn't been this low since 1973. No money to pay for normal beat cops, nevermind added police.

The thing that is Ironic, is since 9/11 skyscrapers have popped up here on the waterfront all over(We are right across the water from ground zero. 2 miles from it). It's starting to look like NYC here.

Interesting thing is, where does all this money go? NYC area, Tunnels, Bridge ect ect, are all owned by a private company. Which don't get funds from any State and get litttle funding from the government.

Holland Tunnel
Lincoln Tunnel
Outterbridge Crossing
GWB Bridge
(They owned WTC)
They own ALL Airports in the New York Metro Area.

And afew more I can't think of right now. These was all targets, and of course sadly one doesn't stand anymore.