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Surprising Jump in Tax Revenues Curbs U.S. Deficit [Democrats sadden.......]
New York Times ^

Posted on 07/08/2006 10:20:32 AM PDT by Sub-Driver

Surprising Jump in Tax Revenues Curbs U.S. Deficit By EDMUND L. ANDREWS

WASHINGTON, July 8 — An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.

On Tuesday, White House officials are expected to announce that the tax receipts will be about $250 billion above last year's levels and that the deficit will be about $100 billion less than what they projected six months ago. The rising tide in tax payments has been building for months, but the increased scale is surprising even seasoned budget analysts and making it easier for both the administration and Congress to finesse the big run-up in spending over the past year.

Tax revenues are climbing twice as fast as the administration predicted in February, so fast that the budget deficit could actually decline this year.

The main reason is a big spike in corporate tax receipts, which have nearly tripled since 2003, as well as what appears to be a big rise in individual taxes on stock market profits and executive bonuses.

On Friday, the Congressional Budget Office reported that corporate tax receipts for the nine months ending in June hit $250 billion — nearly 26 percent higher than the same time last year — and that overall revenues were $206 billion higher than at this point in 2005.

Congressional analysts say that the surprise windfall could shrink the deficit this year to $300 billion, from $318 billion in 2005 and an all-time high of $412 billion in 2004.

Republicans are already arguing that the revenue jump proves their argument that tax cuts, especially the 2003 tax cut on stock dividends,

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Government; News/Current Events; Politics/Elections
KEYWORDS: economics101; economy; govwatch; laffercurve; noduh; onlynytissurprised; taxes
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To: Sub-Driver

"An unexpectedly steep rise in tax revenues from corporations and the wealthy" unexpected only by people moronic enough to get their information from the NY Times.
NY Times readers also deal with the paradox of lower crime rates and higher incarceration rates.


51 posted on 07/08/2006 12:04:56 PM PDT by don'tbedenied
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To: Jameison
What did Klinton do about Bin Laden, Al Quaeda and the Taliban again, despite repeated attacks against America during the Klinton administration?

If I remember correctly, he spent most of the time playing "hide the cigar" with a fat intern.

Apart from firing cruse missiles into empty huts in Afghanistan that is.

And the Sudanese aspirin factory, and the Chinese embassy...

Throughout history, counrries have run deficits when fighting big foreign wars. Much rather have deficits then get planes driven into my office one morning.

I'd rather that the government cut spending to fund the war, rather than raise unnecessary domestic spending to unprecedented levels during a war. It's not that it can't be done, it's just that they don't have the stones to do it. There are more than enough spending cuts that could be done to fund the war. We had enough of a surplus before the war to fund it, had they not increased spending like they did. We don't need a deficit to fund the WOT.

There was a $236B surplus before the war: Last year there was a $318B deficit. The war doesn't cost $554B annually. There is absolutely NO justification for a Republican President, and the Republicans holding majorities in both houses of Congress, to be spending at levels higher than the dems who preceeded them.

52 posted on 07/08/2006 12:05:33 PM PDT by wyattearp (Study! Study! Study! Or BONK, BONK, on the head!)
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To: CT
Surprising. Not to Ronald Reagan and millions of conservative Americans.

Exactly what I was thinking. VIVA LA Reagan Revolution!! I think that means Republican girls rock!!


53 posted on 07/08/2006 12:07:01 PM PDT by do the dhue (I hope y'all will help bail me out of jail after I dot Chris Mathew's eyes.)
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To: Zman516
If Albore had been successful in stealing the 2000 election, we'd be in an economic sinkhole right now.

I think that it would be more likely that we would be under Sharia law, actually.

54 posted on 07/08/2006 12:08:01 PM PDT by wyattearp (Study! Study! Study! Or BONK, BONK, on the head!)
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To: wyattearp


Ahhh...no, not quite Wyatt.

I think your missing the point, what you cite are budgeted costs as causes. The GAO takes Medicare and all those other goodies you mention into consideration. There may be slippage, there always is, but appropriations are made for those expenditures.

But when you are talking about increases in borrowing in excess of planned receipts, and unappropriated expenses, which triggers increases in Nat Debt...then one must look to "unbudgeted, unappropriated, expenditures" and how "governmental" accounting funds them, and thus Congress must borrow.

Nat. Gov. spending over the last three years has indeed increased in regard expense that lacked appropriation, which incidentally was for the WOT in 03 (not appropriated in '02 budget), and only partially appropriated in 03' for 04, due to how the budgetary process works for the Nat. Gov (the lag effect)...Expenses for the WOT have averaged about 350-400 billion a (YEAR)...what's 3X that Wyatt? (A drop in the bucket huh?) Well..it's money well spent.

Well, I agree, a trillion dollars over three years in regards to the size of our Economy (and Nat. Gov. Budget) is a drop in the Bucket.

As a side note, and in regard to what you cite as a cause, Congress has often robbed the Social Securtiy fund for appropriations...since as of now, it is fully funded....but projections have this going south in a couple of decades, thus congress will (unless benefits are cut or something else is changed)...will have to borrow for this with public debt at some point in the future.

Thanks, chief.


55 posted on 07/08/2006 12:10:00 PM PDT by in hoc signo vinces ("Houston, TX...a waiting quagmire for jihadis. American gals are worth fighting for!")
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To: wyattearp


Check the OMB stats...pretty interesting.


56 posted on 07/08/2006 12:19:03 PM PDT by in hoc signo vinces ("Houston, TX...a waiting quagmire for jihadis. American gals are worth fighting for!")
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To: expat_panama; Dog Gone
"If liberals really want to raise money to spend, they should cut taxes." (Dog Gone)

"Personally, I wouldn't mind paying an extra $thousand in taxes as long as it meant an extra after-tax $3thousand in my income." (expat-panama)

Which is it?

According to the guy that invented the Laffer Curve, there's a limit to how much you can cut the tax rate, and still have more total tax revenue.

Laffer didn't say that taxes shouldn't go lower than that point -- even though there would be less total tax revenue.

The argument in favor of even lower taxes is easy -- when governments have too much money, they waste some of it. When they have to tighten up, that forces them to be more efficient. Also, the economy would likely continue to grow even more -- so everyone would have even more money to spend.

Dog Gone's argument against even lower taxes seems to be based on a sort of Keynesian theory -- i.e. that more government spending stimulates the economy. Sometimes, (e.g. during a depression) that's true. Otherwise, it's not.

If the left were honest, they'd be admitting that they want higher taxes to decrease the gap between rich and poor -- even if that makes everyone worse off. This could be defended on the basis of social stability -- it's much better to have a lot of people in the "middle class" than it is to have too many very rich and very poor. Actually achieving this ideal, without destroying the economy, is the tricky part.
57 posted on 07/08/2006 12:21:51 PM PDT by USFRIENDINVICTORIA
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To: expat_panama; Dog Gone
"Dog Gone's argument against even lower taxes ..."

My apologies for the misattribution. I should have said: "expat_panama's argument against even lower taxes...."
58 posted on 07/08/2006 12:26:42 PM PDT by USFRIENDINVICTORIA
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To: in hoc signo vinces
Expenses for the WOT have averaged about 350-400 billion a (YEAR)...

Yep. And they started out with a $236B surplus. Is it your position that $114B-$164B absolutely could not be cut from the budget to fund the WOT? With Republicans in control of the Congress and White House? No way?

The budget went from +$236B to -$318B, for a difference of $554B in total increased spending. Basically, when Bush, et al, took office, they increased spending to swallow up the surplus. That was irresponsible.

They had an opportunity to reduce the national debt, and instead they increased spending on socialist programs, and increased gov't bureaucracy. When the WOT began, they did not decrease spending to make up the difference and get back to at least a balanced budget. This is not a fiscally conservative administration.

59 posted on 07/08/2006 12:27:45 PM PDT by wyattearp (Study! Study! Study! Or BONK, BONK, on the head!)
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To: C210N
Can't the 'Rats spend some more money to fix this problem?!

Not to worry, our own Republican leadership has no trouble spending more money.
60 posted on 07/08/2006 12:34:09 PM PDT by javachip
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To: in hoc signo vinces
Check the OMB stats...pretty interesting.

This is an excerpt. Check out the On-Budget vs Off-Budget for 2002-2005. You're right. It is interesting. (and I REALLY hope that this formatting takes).

\

Table 1.1—SUMMARY OF RECEIPTS, OUTLAYS, AND SURPLUSES OR DEFICITS (−): 1789–2011

(in millions of dollars)

Year

Total

On-Budget

Off-Budget

Receipts

Outlays

Surplus or Deficit(−)

Receipts

Outlays

Surplus or Deficit(−)

Receipts

Outlays

Surplus or Deficit(−)

2000

2,025,457

1,789,216

236,241

1,544,873

1,458,451

86,422

480,584

330,765

149,819

2001

1,991,426

1,863,190

128,236

1,483,907

1,516,352

-32,445

507,519

346,838

160,681

2002

1,853,395

2,011,153

-157,758

1,338,074

1,655,491

-317,417

515,321

355,662

159,659

2003

1,782,532

2,160,117

-377,585

1,258,690

1,797,108

-538,418

523,842

363,009

160,833

2004

1,880,279

2,293,006

-412,727

1,345,534

1,913,495

-567,961

534,745

379,511

155,234

2005

2,153,859

2,472,205

-318,346

1,576,383

2,069,994

-493,611

577,476

402,211

175,265

2006 estimate

2,285,491

2,708,677

-423,186

1,675,526

2,277,667

-602,141

609,965

431,010

178,955

2007 estimate

2,415,852

2,770,097

-354,245

1,773,533

2,316,952

-543,419

642,319

453,145

189,174

2008 estimate

2,590,258

2,813,592

-223,334

1,911,129

2,347,125

-435,996

679,129

466,467

212,662

2009 estimate

2,714,207

2,921,760

-207,553

1,997,985

2,435,200

-437,215

716,222

486,560

229,662

2010 estimate

2,878,167

3,060,875

-182,708

2,119,705

2,527,217

-407,512

758,462

533,658

224,804

2011 estimate

3,034,861

3,239,769

-204,908

2,233,286

2,648,669

-415,383

801,575

591,100

210,475

 


61 posted on 07/08/2006 12:45:32 PM PDT by wyattearp (Study! Study! Study! Or BONK, BONK, on the head!)
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To: USFRIENDINVICTORIA

Oh good. I was trying to figure out where you could have misconstrued what I was saying... ;-)


62 posted on 07/08/2006 12:49:40 PM PDT by Dog Gone
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To: Sub-Driver

I am pleasantly surprised that the NYT printed this information prominently at their website.

Yesterday I was listening to Rush, then ABC News broke in. Bad News: job growth less than expected. Only 120,000 new jobs added last month - less than the 160,000 estimated by some. They can spin anything.


63 posted on 07/08/2006 12:59:04 PM PDT by ChessExpert (MSM: America's one party press)
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To: Hamilcar_Barca
I have been watching the federal government revenue growth since the tax cuts and it's amazing. It is also having a ripple effect on state government revenues. They have also increased dramatically in the past couple of years.

My state has much improved tax revenues and fiscal health. It about one third back in tax relief, and two thirds go to the teachers.
64 posted on 07/08/2006 1:16:04 PM PDT by ChessExpert (MSM: America's one party press)
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To: ChessExpert

My state also. They have spent it all and are still in a budget crisis.


65 posted on 07/08/2006 1:21:34 PM PDT by Hamilcar_Barca (Hamilcar_Barca)
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To: Sub-Driver
Excellent article by Kudlow.

"Well, the marquis employment report for June may have showed "only" 121,000 new nonfarm payroll jobs, below Wall Street expectations. ...This months's household survey shows 387,000 new jobs in June


The employment report differs from household survey report. That distinction should be filed away for future reference. As I understand it, the “household survey” includes the self-employed and new startups, while the “employment” report only includes previously established employers.

The MSM has wriggle-room in their choice of reports.

66 posted on 07/08/2006 1:30:46 PM PDT by ChessExpert (MSM: America's one party press)
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To: Sub-Driver

"Did you know that just over the past 11 quarters, dating back to the June 2003 Bush tax cuts, America has increased the size of its entire economy by 20 percent? In less than three years, the U.S. economic pie has expanded by $2.2 trillion, an output add-on that is roughly the same size as the total Chinese economy, and much larger than the total economic size of nations like India, Mexico, Ireland, and Belgium."

Amazing.


67 posted on 07/08/2006 1:33:02 PM PDT by ChessExpert (MSM: America's one party press)
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To: Sub-Driver

Expect more spending increses.


68 posted on 07/08/2006 1:54:33 PM PDT by SmoothTalker
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To: wyattearp
Very good post. I have been tremendously disappointed on that front. Our guys have talked like fiscal conservatives, and spent like liberals.
69 posted on 07/08/2006 1:55:32 PM PDT by SmoothTalker
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To: Dog Gone
Tax cuts always work.

I think the history of tax cuts has been favorable: roaring 20s, Kennedy, Reagan, Bush. Tax increases include the Smoot-Hawley tariff (Great Depression), Bush I ("no new taxes"). Some people point to Clinton's tax increases as a success for taxes. I gather that tax rates went up somewhat and revenues a lot, while Newt Gingrich "slashed spending." We could use some Gingrich style slashing today, excepting Defense.
70 posted on 07/08/2006 2:26:14 PM PDT by ChessExpert (MSM: America's one party press)
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To: Jameison; Marius3188
"Clinton spent close to what President Bush has spent on Defense per GDP." "There is simply no way..."

Technically, what TeMarius3188 said was true, but it's misleading. 

The point is that Clinton's budgets slashed defense spending in favor of domestic programs, and GW Bush's priorities were to restore defense spending.

71 posted on 07/08/2006 2:29:12 PM PDT by expat_panama
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To: expat_panama
"pay less taxes"

Agreed. I have heard normally sane people argue that they would rather not get raises, because then they'd have to pay more taxes. Nobody likes to pay more taxes, but if your total net income is higher even with increased taxes, then it's quite stupid to not want a pay raise. I suspect that most of the anti-raise people were joking or not thinking coherently at the time. I also suspect that they would actually jump for joy at a pay raise.

72 posted on 07/08/2006 2:31:36 PM PDT by driftless ( For life-long happiness, learn how to play the accordion.)
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To: Jameison
"Klinton do"

Quite right. Everybody is quick to calculate the costs of doing something, but it is a lot harder to tote up the costs of not doing the right thing. Pay me now, or pay me a lot more later. Clinton preferred that the dirty work of guaranteeing the country's safety be done after he left office.

73 posted on 07/08/2006 2:34:28 PM PDT by driftless ( For life-long happiness, learn how to play the accordion.)
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To: Dog Gone
As far as I know, cutting taxes results in increased government revenue after a few years at the outside. Every time.

If liberals really want to raise money to spend, they should cut taxes.


What you say makes sense, but they will never see it.

They don’t understand the production of wealth. All they can understand is stealing. David Horowitz said "socialism is an ideology of theft." To modern liberals (socialists) anyone who has money does not deserve it; basically they stole it. To liberals, taxes are a way to steal back. Thomas Sowell says that many economic mistakes are based on the assumption that every thing is zero sum. In other words, the economic pie is a fixed size; the only question is how to divvy it up. Many people don’t realize that we can make ten pies or none.

Ayn Rand was right in Atlas Shrugged, productive people can stay home, and do, in many ways. Invest in pharmaceuticals? - nah. Become a doctor? - no. Start a business? I don’t think so. Retire later? Why? To shift gears a little, how motivated was an American slave? Could Soviets motivate the worker in collectivized agriculture? The whip and the bayonet do not motivate, nor do high taxes. This is all on the personal level. On top of that, there are all the interactions (or lack of interactions) in the market place.

74 posted on 07/08/2006 2:50:05 PM PDT by ChessExpert (MSM: America's one party press)
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