Surprising Jump in Tax Revenues Curbs U.S. Deficit [Democrats sadden.......]

New York Times ^

[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,

[wyattearp]

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

 

[Dog Gone]

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

[ChessExpert]

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.

[ChessExpert]

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.

[Hamilcar_Barca]

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

[ChessExpert]

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.

[ChessExpert]

"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.

[SmoothTalker]

Expect more spending increses.

[SmoothTalker]

Very good post. I have been tremendously disappointed on that front. Our guys have talked like fiscal conservatives, and spent like liberals.

[ChessExpert]

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.

[expat_panama]

"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.

[driftless]

"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.

[driftless]

"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.

[ChessExpert]

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.