Goldman `Skeptical' of Bush Budget (Bloomberg News)

[swag]

July 14 (Bloomberg) -- Economists at Goldman, Sachs & Co.
``remain skeptical'' about a long-term improvement in the U.S.
federal budget deficit, even as tax receipts surge. They disagree
with yesterday's Bush administration forecast for continued
declines in the deficit.
``At least part of the surge in tax receipts has been due to
less sustainable factors, for example the very strong performance
of the equity market over the past two years,'' wrote Andrew
Tilton, an economist at New York-based Goldman Sachs, in a note
to clients yesterday.

(no link - this is from a Bloomberg terminal. Will post a link when one becomes available).

[swag]

1. Supporting story

http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economicnews&pv_noticia=1121294636-e04f0f08-44941

. . .

"t least part of the surge in receipts has been due to less sustainable factors, for example the very strong performance of the equity market over the past two years," wrote Goldman Sachs economist Andrew Tilton, in a research note. "With the S&P 500 up only slightly so far this year, non-withheld income tax gains are likely to be somewhat weaker in 2006." Tilton said he agreed with OMB's 2005 forecast, but was skeptical of the OMB's long-range forecast, partly due to the White House's expectation that two-thirds of the recent revenue rise will be sustained in coming years

The White House's long-term outlook may also prove overly optimistic since it assumes only another $50 billion in spending through 2010 to fund ongoing military operations in Iraq and Afghanistan, he said. The projections also offer no estimate of the cost of reforming the alternative minimum tax, or AMT

Budget hawks warned the recent improvement in the outlook could induce lawmakers to pursue new spending or tax cuts that could reverse any recent gains on the fiscal front, despite the looming retirement of the Baby Boom generation

"If lawmakers get the idea that our fiscal challenges are behind us and view these numbers as a green light for new tax cuts or spending initiatives, they will make a bad situation worse," said Robert L. Bixby, executive director of The Concord Coalition, a group that advocates balanced budgets

. . . more

[wryter2000]

2. Thanks

Used this to undermine a freeper post somewhere else.

[swag]

3. You're welcome - since the batshit-crazy WSJ editorial

calling increased revenues a "vindication of the Laffer curve," the knuckledraggers have been singing hosanna, but the smart money is extremely skeptical, especially given the fiscal incontinence of the borrow-and-spend Republicans in the House, Senate, and White House.

[wryter2000]

6. Four plus years of fiscal disaster

And they call one quarter that isn't as bad as expected a vindication of the model. The freeper I was debating likes to present himself as an expert in economics because he has a bachelor's degree in it. And yet, he won't believe anything Paul Krugman says. We need a term for freeper logic. FreeLogic?

[swag]

7. That's catchy. You can add the tagline: Logic-free!

[AlCzervik]

4. Oh dear, he's losing the wall street ho's

[swag]

5. He lost some of them long ago with his very shitty policies,

Paul McCulley and Steve Roach, to name two very prominent ones.