the budget
For those who still hypnotoze themselves that "Surplus Bill" Clinton was in some way more of an out of control spendthrift than the present gang of looters Bush revealed his fiscal 2006 budget today and, not surprisingly, it is a fraud. The NY Times has an excellent analysis: http://www.nytimes.com/2005/02/07/business/07fiscal.html?oref=login READ IT! Key points: * Yet again, Bush's budget includes NOTHING for the wars in Iraq and Afghanistan. That lets him pretend those costs don't exist for budgetary purposes. I could come up with a pretty lean budget too if I could pick and choose items to include or exclude from the budget. I thought a budget was supposed to reflect your best estimate of what you are going to spend. Guess what. We're going to spend A LOT of money in Iraq in fiscal 2006. The military know that and is planning accordingly. Heck, they have to estimate and order how much toilet paper they will need. This is downright fraudulent. * Bush is proposing big increases in the military (even apart from his wars) and entitlement spending. His proposed cuts are limited to "domestic discretionary spending. * This past year domestic discretionary spending was less than the deficit. In other words, eliminating 100% of that spending would not eliminate the deficit. * Bush's proposed cuts in domestic discretionary spending (if they are enacted - which they won't) would total around $15 billion - less than half the amount by which INTEREST on the national debt is likely to INCREASE this year. (Interest on the national debt is likely to increase from around $320 billion to $350 billion.) In other words, even draconian cuts in domestic discretionary spending can't keep up with just the INCREASE in interest payments on the national debt Bush is running up. * For Bush to cut the deficit in half by 2009, as he has pledged to do, he would have to cut domestic discretionary spending IN HALF. (Even with his proposed cuts, that spending would remain essentially flat.) And most of Bush's cuts aren't likely to happen. It's an old budget trick (as many corporate warriors know): List for cuts items you KNOW are untouchable. Then you can claim credit for a responsible budget that is total fantasy and blame the ACTUAL irresponsible budget on others. * We can't grow our way out of these deficits. As the NY Times analysis notes: "Despite strong economic growth and soaring corporate profits last year, federal tax revenues amounted to only 16.3 percent of the total economy, comparable with levels in the 1950's and far below the level of 21 percent reached during the stock market bubble in 2000." Spending is over 20% of GDP and RISING (it went down every year for 8 years under Clinton, to 18% when Bush took office). 20 minus 16 equals A BIG DEFICIT. As Robert Bixby, executive director of the bipartisan Concord Coalition notes, "What's unrealistic is that they are trying to fund a government with today's demands on a 1950's stream of revenue." This last point is crucial. The whole basis for giving a trillion dollars to the top 5% in this country was that they would invest it all in ways that generate so much economic growth that new tax revenues will quickly erase the deficit. What a joke. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: the budget
At 06:05 PM 07/02/05 -0800, David Brin wrote: snip * We can't grow our way out of these deficits. As the NY Times analysis notes: "Despite strong economic growth and soaring corporate profits last year, federal tax revenues amounted to only 16.3 percent of the total economy, comparable with levels in the 1950's and far below the level of 21 percent reached during the stock market bubble in 2000." Spending is over 20% of GDP and RISING (it went down every year for 8 years under Clinton, to 18% when Bush took office). 20 minus 16 equals A BIG DEFICIT. As Robert Bixby, executive director of the bipartisan Concord Coalition notes, "What's unrealistic is that they are trying to fund a government with today's demands on a 1950's stream of revenue." This last point is crucial. The whole basis for giving a trillion dollars to the top 5% in this country was that they would invest it all in ways that generate so much economic growth that new tax revenues will quickly erase the deficit. What a joke. Not really. These people expect the rapture, and that takes care of all the money problems. Of course, they might *get* the techno-rapture, nanotech/AI and the like. Keith Henson PS. I have changed my opinion re upload the lot of them and putting them all in a simulated heaven. It isn't unethical considering what they would do to us otherwise. So go for it. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Balancing the Budget Re: Beheading Avenges Prison Abuse
At 07:05 PM 5/14/2004 -0700 Gautam Mukunda wrote: >--- JDG <[EMAIL PROTECTED]> wrote: >> And thus our current President presided over one of >> the mildest recessions >> ever - even after the bursting of an asset bubble no >> less! > >Well, true enough, but: >1. How much of that is he responsible for? Probably a >lot. Let's be fair. The President applied a level of >fiscal stimulus to the economy that we probably >haven't seen since the Great Depression. Actually, if one uses headline budget deficits* as a percentage of GDP, the 2003 budget deficit was actually not any larger than the the deficit in 1993 - and almost certainly not as large as the deficit in 1983. The budget deficit during World War II, of course, was unlike anything we are ever likely to see again. * - I should point out, however, that neoclassical economic theory suggests that headline budget deficits are inherently arbitrary figures. For example, consider Social Security. As we all know, the government needs to make promises to today's workers and make payments to current retirees under the present system. Accordingly, the government tax today's workers in exchange for a promise of future benefits and make payments to today's retirees and thus "balance" the budget.Alternatively, the government could borrow money from today's workers, in exchange for future repayment + interest and make payments to today's retirees and thus "run an enormous deficit." Yet, the two policies described above are economically identical. Now, I should point out that I am uncomfortable with this model. Nevertheless, I think that it does provide some useful insights, and a lot of very intelligent and highly respected PhD economists totally subscribe to it totally. These economists would argue that the relative tightness or looseness of a given fiscal policy can only properly be evaluated using something called "generational accounting" - the specifics of which are still being worked on.Interestingly enough, however, among the implications of "generational accounting" is that the fiscal policy of the early 1980's was actually *not* particularly "loose", and may in fact have been fairly tight. This is because the headline budget deficits were accompanied by an increase in Social Security taxes and a decrease in Social Security benefits. Likewise, Bush's recent expansion of Medicare benefits may well make the current policy far more extraordinarily loose than the current "headline budget deficits" indicate. >2. What were the long term consequences of those >actions? That, I think, is the more important >question. I have, on occasion, written on this list >on the limitations of long term planning. True >enough. But there are things that we can see. While >I don't think that the entitlement problem is in any >sense catastrophic - given recent increases in >productivity, it may, in fact, be entirely manageable. I am glad that you mentioned this. I had the opportunity recently to speak "off the record" with a PhD economist at the Federal Reserve Bank, and he noted that (paraphrase) "if the last several year's productivity figures are at all accurate, then it is entirely possible that our entitlement problems will just evaporate." It is worth noting that productivity growth for the last several years has been - extraordinary - and if you combine it with productivity trends from the 1990's, then it seems entirely possible that these trends might even be sustainable. This has the very real possibility of substantially raising our long-term GDP. > But it still _has to be managed_. And recent >economic policy has made that immeasurably more >difficult, and it's only likely to get worse. The tax >code is far less progressive than it was - and I >happen to think that's a bad thing. The progressivity debate is one for another time, I think, so let's just stick to the deficits. >Government >spending has shot through the roof, and the war >doesn't even _begin_ to explain that. It is certainly >fair and appropriate to pay for war spending with >debt. That is what Ronald Reagan did, and I think >that was appropriate. But _some_ tax increases, or at >least holding off on tax cuts, to pay for the war was >necessary. The long term damage to America's fiscal >health may well be quite significant - and only >success in Iraq could possibly make up for that in an >evaluation of the Bush Presidency, in my opinion, at least. In terms of long-term damage to America's fiscal health, about the only thing you can fault Bush for is the prescription drug benefit. Yet, this initiative is strongly bipartisan - so much so that during the
Bush snuck his Social Security Plan into the Budget
Bush's Social Security Sleight of Hand By Allan Sloan The Washington Post Wednesday 08 February 2006 If you read enough numbers, you never know what you'll find. Take President Bush and private Social Security accounts. Last year, even though Bush talked endlessly about the supposed joys of private accounts, he never proposed a specific plan to Congress and never put privatization costs in the budget. But this year, with no fanfare whatsoever, Bush stuck a big Social Security privatization plan in the federal budget proposal, which he sent to Congress on Monday. His plan would let people set up private accounts starting in 2010 and would divert more than $700 billion of Social Security tax revenues to pay for them over the first seven years. If this comes as a surprise to you, have no fear. You're not alone. Bush didn't pitch private Social Security accounts in his State of the Union message last week. First, he drew a mocking standing ovation from Democrats by saying that "Congress did not act last year on my proposal to save Social Security," even though, as I said, he'd never submitted specific legislation. Then he seemed to be kicking the Social Security problem a few years down the road in typical Washington fashion when he asked Congress "to join me in creating a commission to examine the full impact of baby boom retirements on Social Security, Medicare and Medicaid," adding that the commission would be bipartisan "and offer bipartisan solutions." But anyone who thought that Bush would wait for bipartisanship to deal with Social Security was wrong. Instead, he stuck his own privatization proposals into his proposed budget. "The Democrats were laughing all the way to the funeral of Social Security modernization," White House spokesman Trent Duffy told me in an interview Tuesday, but "the president still cares deeply about this. " Duffy asserted that Bush would have been remiss not to include in the budget the cost of something that he feels so strongly about, and he seemed surprised at my surprise that Social Security privatization had been written into the budget without any advance fanfare. Duffy said privatization costs were included in the midyear budget update that the Office of Management and Budget released last July 30, so it was logical for them to be in the 2007 budget proposals. But I sure didn't see this coming - and I wonder how many people outside of the White House did. Nevertheless, it's here. Unlike Bush's generalized privatization talk of last year, we're now talking detailed numbers. On page 321 of the budget proposal, you see the privatization costs: $24.182 billion in fiscal 2010, $57.429 billion in fiscal 2011 and another $630.533 billion for the five years after that, for a seven-year total of $712.144 billion. In the first year of private accounts, people would be allowed to divert up to 4 percent of their wages covered by Social Security into what Bush called "voluntary private accounts." The maximum contribution to such accounts would start at $1,100 annually and rise by $100 a year through 2016. It's not clear how big a reduction in the basic benefit Social Security recipients would have to take in return for being able to set up these accounts, or precisely how the accounts would work. Bush also wants to change the way Social Security benefits are calculated for most people by adopting so-called progressive indexing. Lower-income people would continue to have their Social Security benefits tied to wages, but the benefits paid to higher-paid people would be tied to inflation. Wages have typically risen 1.1 percent a year more than inflation, so over time, that disparity would give lower-paid and higher-paid people essentially the same benefit. However, higher-paid workers would be paying substantially more into the system than lower-paid people would. This means that although progressive indexing is an attractive idea from a social-justice point of view, it would reduce Social Security's political support by making it seem more like welfare than an earned benefit. Bush is right, of course, when he says in his budget proposal that Social Security in its current form is unsustainable. But there are plenty of ways to fix it besides offering private accounts as a substitute for part of the basic benefit. Bush's 2001 Social Security commission had members of both parties, but they had to agree in advance to support private accounts. Their report, which had some interesting ideas, went essentially nowhere. What remains to be seen is whether this time around Bush follows through on forming a bipartisan commission and whether he can get credible Democrats to join it. Dropping numbers onto your opponents is a great way to stick your finger in their eye. But will
