Federal budget deficit: Bush delivers on a promise – ahead of schedule

Tom Blumer has the details on a benchmark Bush has achieved, that the MSM has conveniently ignored.

25 Responses to "Federal budget deficit: Bush delivers on a promise – ahead of schedule"

Severian says:

October 8, 2006 at 8:55 pm

The Democrats consistently fail to understand this, either that or they do understand it and refuse to acknowledge it, lowering the tax rate has always stimulated investment and grown the economy, and increased tax revenues. Did so in Kennedy’s time, did so in Reagan’s time, and is doing it now.

I think the real secret here is that the Democrats, Marxist-Socialists that they are, really don’t care about what is the most efficient way to generate tax revenue, they view taxes as a penalty that rich people deserve for being successful. That’s the real reason for taxes, funding government is just a side benefit.
Phil says:

October 9, 2006 at 12:35 am

That is because Liberals never did learn that Socialistic forms of Government do not work, they are still spouting off that we can do Socialism better than what failed in Russia.
Derrick says:

October 9, 2006 at 12:54 am

Yes, of course liberals believe in socialism now. You obviously wouldn’t know what socialism is if it punched you in the face.
brad says:

October 9, 2006 at 12:55 am

According to Greg Mankiw, tax cuts are at best 50% self financing. Of course following recessions we have recoveries.
Aghast says:

October 9, 2006 at 1:37 am

Sev,

Is having the most “efficient way to generate tax revenue” even the point? In other words, if we discovered that it would be more “efficient” to raise taxes, would you support rasing taxes based on your goal of “efficiency”? or would you revert to the principle of “it’s my money and I’ll do as I damn well please with it.” (which I tend to agree with when it isn’t a matter of “the general welfare” and falls within the governmental powers provided by the constitution.)

When it comes to tax policy, is it principle or pragmatism?

“[democrats] view taxes as a penalty that rich people deserve”
so does that make rich democrats self-hating?

I think Republicans view poverty as a penalty that stupid people deserve.

When people become wealthy in america, they don’t do it alone. If you own a business, having a bus stop nearby saves you more money than any of your workers. The more stock you own in american corporations, the more you stand to gain from war and deficit spending, and the more you stand to lose from any serious threat to american power… the wealthy’s ability to make money and hold on to it is all financed through taxes (eventually).

And sev, if you count the payroll tax (which the above linked article counts as general revenue), you don’t have to be rich to be burdened with higher taxes as a percentage of income than almost anyone else. Of course, that’s after the Bush tax cuts.

What’s funny to me is that it seems patently obvious that the supply-siders had it backwards. It’s a trickle-up economy. Pay more money to the bottom, and everyone does better. It’s a rising tide. That’s why we’ve seen local economies do better when the minimum wage is raised (I think florida and arizona are the textbook cases, too lazy too look for a link).

However you look at it, whether you think (when all is said and done) that all the poor pay all the taxes or all the rich pay all the taxes…. in the end the market equalizes it: if workers paid no taxes, employers would pay less (because they could). if employers paid no taxes, workers would get paid more (because they’d have to). There is a balance in there somewhere, and finding it has nothing to do with “punishing the rich”.
Baklava says:

October 9, 2006 at 3:14 am

Brad pretty funnily wrote, “According to Greg Mankiw, tax cuts are at best 50% self financing. Of course following recessions we have recoveries.

Yes. Of course there are business cycles. But given there was a deep recession are you or Greg saying the recession would’ve ended at the same time if there were either no tax cuts or tax hikes? That’s ridiculous. Let’s have an exercise in common sense here: Ready?

Government taxes people at the rate of 20%. The economy happens to be going normal and growing a little bit. The goverment elects idiot liberals who raises the tax rate from 20% to 25%. That means that the average person making $50,000 now pays $12,500 in taxes as oppposed to $10,000 (we are making thing simple here because it is a simple concept to understand once broken down). What Brad is the effect of everyone paying the government more in taxes? Easy !!! They have less money in their budgets for paying for goods and services so companies who provide goods and services will notice a slow down in purchases of their goods and services. What happens when companies notice a slow down of people buying thier goods and services. They reduce the amount of goods and services produced. When that occurs businesses need less people employed. No need to have as many people employed to provide less goods and services right? When less people are employed less people are earning income and therefore less people are paying taxes so there is not a static increase in government revenue based on the tax rate increase #1 and #2 the economy is affected by the tax rate increase contrary to what you or greg may believe. Additionally, the reverse is true… when a government lets people keep more of what they earned, people spend more and therefore businesses will see an increase in goods and services purchased therefore more people will need to be hired. When more people are hired there are more people paying taxes.

Let’s delve a little deeper into this. If 95% of 100 people have their taxes raised from 20% to 21% let’s explore some possibilities of what could occur. If the 95 people out of 100 have thier taxes raised so that our of their $50,000 income they are paying $10,500 instead of $10,000, would revenues rise from $950,000 to $997,500? No. Remember in the COMMON SENSE given to you above the economy was affected. With a rise in tax rates you can bet the economy will be affected. Employment may drop from 95% to 90%. If employment drops to 90% revenues would be $945,000 not $950,000. Of course, real world numbers are much different. In America (Europe sees double digit unemployment figures) we see the unemployment rate fluctuate between 4% and 7% generally during our business cycles. But you have to factor in business taxes also. If there is not PROFIT during a recession a business will pay very little in taxes. But if during good economic times businesses will pay a lot more in taxes because there is profit to be taxed. I’m not sure why during a recession liberals would ever think that raising taxes would be a good idea. Secondly, I’m not sure why liberals would blindly believe that the economy isn’t brought out of a recession quicker by lowering tax rates. It really is simple common sense.

AGHAST twisted things SEVERELY by writing, “Is having the most efficient way to generate tax revenue even the point”? In other words, if we discovered that it would be more “efficient” to raise taxes, would you support rasing taxes based on your goal of “efficiency”?”

Aghast, you twisted things because Sev never said it was “his” goal of efficiency in raising revenues. We are simply pointing out to liberals that they are in ERROR when they think that in order to solve defecits or raise revenues for government programs that the way to do it would be by raising tax rates on whomever. They are ALSO in error by claiming that George Bush’s tax cuts created the deficits. The defecits were created due to a recession. A fairly deep one. When there is a recession there is a lot less profit to be taxed, less people employed to be taxed and therefore less revenues into the government. You don’t solve a recession by raising taxes. But you do solve a recession by lowering tax rates. After tax rates were lowered we have seen revenues into the goverment increase each of the last 3 years by DOUBLE DIGITS. DOUBLE DIGIT revenue increases ! What a concept. Liberals were wrong by claiming tax rates are what created the defecits. The deficits are merely a factor of revenues going down and government expenditures never went down at the same time. In fact goverment expenditures went UP.

Aghast was in ERROR and should apologize for writing, “I think Republicans view poverty as a penalty that stupid people deservce“. Since I’ll go ahead and admit that I’m registered REpublican here in CA though I disagree with a lot they’ve done over they years as they are left of center and I’m a centrist (swallow that one if you can – I’m sure you can’t), I’ll also say that I do not view poverty as a penalty that stupid people deserve and I don’t know any Republican who believes that. Since the easiest way to dispatch somebody’s assertion about what someone else “thinks” is by telling them “NO” and “Here is what I think”, consider yourself corrected. Now on to actual discussion instead of you thinking you know what somebody else thinks. It’s pretty poor debate tactic because you set yourself up to be told no you are in error.

Supply siders do not have it backwards. Redistribution of wealth by removing it from the top and giving it to the bottom is not a useful way of growing the economy. Why? Because anyone who gains money or property without earning it soon finds it not taken care of and wasted. Section 8 housing gets run down, broken down, needing to be bulldozed within a few years for that very reason. When you have a place that isn’t paid for it’ll soon show it. We are talking degrees here of course. In American you can’t find anyone who isn’t willing to provide a safety net for those who are elderly or non-able-bodied. The question is whether or not you supply never ending welfare to people who are able-bodied. The answer is no. It gets wasted. Wasted on alchohol, poor decisions, squalor and whatnot. It is much more fruitful to teach a man to fish rather than give him fish. It is certainly acceptable to have government programs that reach out and give people a hand up or whatnot but your sentence with the phrase, “pay more money to the bottom” sounds punitive to those who are producing and rewarding those who do not want to produce. That is a recipe for people to stop caring. It’s why communism does not work. People do not want to work hard (very dispiriting) to get paid the same as some slouch.

Sure… you have a point about people benefiting and the economy benefiting if the government spends more money. That is the same as if consumers spend more money. But when the government spends money it is not a hundred percent efficient for the reasons I laid out above. It is more than 100% efficient if the money is spent on people working like NASA and the DOD. Because people are producing and there is a ripple effect of people earning and spending more.

Well. I went long.

But it obvious that the Laffer curve is TRUE and only liberals have a problem understanding it.
camojack says:

October 9, 2006 at 8:04 am

A little incentive goes a long way sometimes, huh?
brad says:

October 9, 2006 at 9:52 am

I am curious as to how long the recession lasted compared to others. Do we know? That should help tell us whether the change was cyclical or because of bush’s deficit policies.
Severian says:

October 9, 2006 at 10:09 am

Most recessions, brad, haven’t been followed almost immediately after their start by a major attack on the country, with the huge depression of the economy that wrought, and two large shooting wars. The fact that the deficit is dropping this fast is amazing. If Bush didn’t spend money like a drunken sailor, one of my main disagreements with him (in addition to immigration) we’d be in even better shape.
Severian says:

October 9, 2006 at 10:13 am

I remember living thru the recession, actually a borderline depression, during the Carter years. It didn’t abate until Reagan got in office and started his tax cuts. It lasted a lot longer than this one did, and Carter seemed to be OK with that, we weren’t supposed to pick up and get out of it, his idea of a “solution” was to get used to less and lower expectations.
brad says:

October 9, 2006 at 10:33 am

You tell me its amazing, and that this one was different than others. And really i’d like to see it compared that way. I’ve heard that our recovery was unprecedented, not in size, but in who it went to: mostly profits and not wags. But I haven’t heard much about the timing of the recovery. Was it in tune with cyclical effects, or was it because of the deficit spending?
Baklava says:

October 9, 2006 at 10:47 am

Are you saying Brad that you recognize common sense and now are just hanging on to a thought that this recession was like others?

Let me ask another way Brad. Do you Brad recognize the common sense cause and effect argument that I made above that cutting tax rates does have an effect on the economy or are you Brad denying those effects?

By the way, wages were up 4% this year. Seems you spout Democrats talking points as oppposed to doing the due diligence of seeing if the facts are true or not. When the economy expands and unemployment falls (employment rises), more people will earn and because available employees become scarce employers pay more for each employee to entice them. Leave it up to Democrats to make false arguments about wages when the economy improves as it has. What do you think happens to wages when the economy is affected negatively via tax rate hikes?
brad says:

October 9, 2006 at 11:16 am

It looks like it wasn’t like others. The recovery certainly wasn’t like others, as I said. As for wages this year, is that 4% number for real or nominal wages?
If for real, that would be welcome — real wages have failed to keep up with labor productivity for a while now. Also, showing wage growth doesn’t really answer the point that growth has been unprecedently skewed away from labor compensation and towards capital returns.

According to NBER statistics, the cycle was much longer than average — its still going. But the trough was in nov 01, so it would seem that cyclical effects effects were in full swing by the time that the 01 tax cuts — phased in over 10 years — hit.
Aghast says:

October 9, 2006 at 12:05 pm

What do you think happens to wages when the economy is affected negatively via tax rate hikes?

Like in the nineties when Clinton raised taxes?

Yeah, that was an awful 8-year period…it was only the largest period of economic expansion in our history…there were only 20 million jobs created! And let’s not pretend that it was all bubble. It wasn’t… the bubble began in Clinton’s second term between 1997â€“2001 (after deficits had been reduced significantly without the bubble).

Causation is impossible to prove when it comes to tax policy, and you have to really ignore another elephant in the room when it comes to this recovery: deficit spending.

The difference between now and then (the 90’s) is how we are maintaining a good economy. I’m not going to say the economy is bad right now… it’s been great for the wealthy and skilled workers, but not so great for others (but that’s not a tax issue so I’m not going there).

Government deficit spending pumps money into the economy that is borrowed from China and social security. That money will eventually be sucked out of the economy when the debt is repaid.

Clinton didn’t have to spend massively to get his economy going.

Aghast was in ERROR and should apologize for writing, “I think Republicans view poverty as a penalty that stupid people deservce”

It was a joke dude (I’m so sorry you didn’t get it! how’s that for an apology?)…it was meant to show how rediculous the original statement was. It’s stupid all-around to say that republicans hate the poor or stupid, or that democrats hate the rich.
Severian says:

October 9, 2006 at 12:42 pm

Causation is impossible to prove when it comes to tax policy…

You’d be amusing if it wasn’t so pathetic. Correlation must equal causality to you for CO2 in global warming, you swallow that piece of fantasy hook, line, and sinker, but a far more established and proven linkage between tax rates and economic growth you whine and say it’s impossible to prove.

A mind is a terrible thing to waste…you have a convenient way of changing your level of proof required based upon your ideological convictions.
brad says:

October 9, 2006 at 1:10 pm

Part of the problem with the tax analysis is that we’re completely ignoring monetarist effects.
Aghast says:

October 9, 2006 at 1:42 pm

I forgot to mention that the linked article falls into the hands of a classic Bush admin political trick:

Anounce that you will run a 500 billion deficit (knowing from the beginning that it won’t be that high), then announce the real (lower) numbers six months later, claiming a “reduction”.

They’ve done it every year.
Severian says:

October 9, 2006 at 5:59 pm

Aghast, I think you need mental health treatment, I honestly do. You have an overweaning sense of paranoia about Republicans and Bush, clearly a case of BDS. It infects every single thing you’ve posted about.
G Monster says:

October 9, 2006 at 6:58 pm

Aghast,

Your post on this subject really drops your credibility. You were doing so well before.
Severian says:

October 9, 2006 at 7:07 pm

Your post on this subject really drops your credibility. You were doing so well before.

It does seem like liberals can only keep up the pretense of reasonableness and emotional stability for only so long doesn’t it?
Big Bang Hunter says:

October 9, 2006 at 8:08 pm

– Laffer drove Liberals absolutely nutz, because his principle chart was so simple, as he put it “even a Liberal could understand it”.

– I don’t discuss economics with Liberals anymore, because to take the position they do, they have to think of the body economic as being some sort of self perpetuating “thing”, that they can go on taking freebee chunks out of forever. The Nannystate mentality. “I have a right to get things for free, just because”, must totally ignore that the economy is an engine, like any other, that needs priming and support to grow and prosper. They are not allowed to believe that, or the bottom falls out of their class warfare arguments. Why waste your time with children.

– Just remember the Liberal mantra:

“From each according to his gullibility….Too each according to his sloth”

– They don’t like the war because it takes away from their pet social give-aways.

– They fought against SS reform because it would start to dry up one of their favorite pork barrel funding sources.

– They fight every tax reduction for the same reason.

– They can’t wait to get back in office to raise taxes, believing falsely that will give them more revenue to dole out to their rag-tag base.

– The real enemy of the Liberal lie-machine is the advent of high speed wide spread instant communications. They just can’t pull it off anymore, but they seem to be the only ones that are unaware of that.

– Bang
Baklava says:

October 9, 2006 at 8:16 pm

I saw the debate between Arnold and Phil here in CA. ‘Twas funny as heck when Arnold said to Phil, “come on Phil just look out there at the CA people and admit you love raising taxes. .. ”

Bang wrote, “– The real enemy of the Liberal lie-machine is the advent of high speed wide spread instant communications. They just can’t pull it off anymore, but they seem to be the only ones that are unaware of that.”

That plus common sense….
geoffrey pheeney says:

October 9, 2006 at 11:09 pm

Republicans – the Party of Fiscal Irresponsibility. When is a tax cut a tax increase? When financed to the tune of the greatest fiscal fiasco in the history of world economics. The Greatest Creditor Nation is now the Greatest Debtor nation in world history. I used to buy into that “But the Democrats control Congress – they are driving the debt and spending” well now we know except for the absolutely brilliant who just can’t stand to know what is obvious, evident, and right before their very eyes.

Go Away – this White, Married, Two Children, six-figure middle-class working stiff is never voting Republican again.
brad says:

October 10, 2006 at 1:10 am

Laffer was quite interesting. So simple, yet so easy to misunderstand. It all depended on where you were onthat curve.

Tax revenues went up as soon as reagan quit cutting and started raising taxes.
Baklava says:

October 10, 2006 at 9:42 am

brad is either full of lies or ignorance. My economics book from college shows differently (from college).

Once the economy started booming from the first cuts revenues went up. Yes there were tax increases during the economic boom but those were not the reason for revenues increasing in the first place.

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