CBO: Budget deficit shrinks (Tax receipts higher than expected)

[sabra]

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http://www.cnn.com/2005/POLITICS/07/08/budget.deficit.ap/

CBO: Budget deficit shrinks
Tax receipts higher than expected

WASHINGTON (AP) -- Higher-than-expected tax receipts and the steadily growing economy have combined to produce an improved picture for the federal budget deficit, congressional analysts say.

The deficit for the current budget year, which runs through September 30, should be "significantly less than $350 billion, perhaps below $325 billion," according to the Congressional Budget Office. The agency produces nonpartisan estimates for Congress and will put out a full update August 15.

Thursday's new figures come as the White House is to release its midyear budget review July 13. Administration figures are also expected to show significant improvement from the $427 billion current-year deficit it predicted in January.

Last year's $412 billion deficit was a record in dollar terms, but economists say the more significant measure is against the size of the economy. In those terms, the current deficit picture -- a $350 billion deficit for this year would equal 2.9 percent of gross domestic product -- is significantly better than deficits witnessed in the mid-1980s and early 1990s. Then, deficits of 4 percent to 6 percent of GDP were common.

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[tecelote]

1. Phew!

Nothing to worry about then.

Let's keep spending!

[catabryna]

2. So, where did all that money come from?

I thought we were all supposed to get tax cuts? :sarcasm:

[mbperrin]

3. Comparing anything to GDP is stupid.

GDP is a measure (extremely approximate) of the "market" value of all "finished" goods "produced" in the US in one year. Whether they were sold or not, whether they will ever be sold, no matter what else is going on, this "value" is the GDP.

Here's an example: Nuclear waste is very valuable, yes? So we dump 1000 pounds of nuclear waste in your front yard, and now you're a millionaire! Never mind death and illness from the waste. Never mind that you can't actually improve your living with it, in fact, you'll have to move.

I get really weary of the GDP arguments. These are the largest deficits in history by any measure, and it is killing the value of the dollar. As we continue to give away our industrial base, we will pay more and more for the products of others with the weak dollar.

[Toots]

4. And money spent on Terrorism (Iraq/Afghanistan) is still not on budget

Deceptive figures. Add another two hundred billion for Iraq.

[yellowcanine]

5. So how much was the SURPLUS in FY2000? Just asking.

[BillZBubb]

6. There are some really, REALLY stupid comments in that piece!

but economists say the more significant measure is against the size of the economy. In those terms, the current deficit picture -- a $350 billion deficit for this year would equal 2.9 percent of gross domestic product -- is significantly better than deficits witnessed in the mid-1980s and early 1990s. Then, deficits of 4 percent to 6 percent of GDP were common.

1) In the early 1990's we were in a recession, so large deficits are to be expected or at least understood. We are supposedly in an expansion now, so deficits should be low or non-existent.

2) We were in surplus only 4 years ago. The current deficits might not be real dollar records, but the change in deficits is a record. Going from surplus to huge deficits, that difference is a record.

3) We can't go on borrowing forever, whether it's 4% of GDP or 2.9% of GDP. To excuse these horrific deficits based on some percentage is idiotic. Eventually the piper must be paid. It won't be pretty.

4) They continue to leave out the cost of Bush's occupation of Iraq and Afghanistan from the budget numbers. I wonder why the "economists" didn't point this out. It would make the deficits as bad as any in history.