[fluff]

I see that the Republicans are celebrating a deficit of only $422 billion, claiming that Bush's tax cuts are beginning to work.

Projected deficit is now a cumulative $2.3 trillion (£1.2 trillion) between 2005 and 2014.

Given the US' aging population something has got to give at some point. If Bush is re-elected it will porbably give sooner that if Kerry is (against US political tradition).

One of the things that may have to give is the US' ability to act unilaterally in regional conflicts.

So I now think a vote for Bush, whilst dumb in the short term for us all, may benefit the rest of the world in the long term, so from this point forward I will (try to) not refute any pro-bush postings, however stoopid.

 

[N8 v2.0]

I see that the Republicans are celebrating a deficit of only $422 billion, claiming that Bush's tax cuts are beginning to work.

Projected deficit is now a cumulative $2.3 trillion (£1.2 trillion) between 2005 and 2014.

Given the US' aging population something has got to give at some point. If Bush is re-elected it will porbably give sooner that if Kerry is (against US political tradition).

One of the things that may have to give is the US' ability to act unilaterally in regional conflicts.

So I now think a vote for Bush, whilst dumb in the short term for us all, may benefit the rest of the world in the long term, so from this point forward I will (try to) not refute any pro-bush postings, however stoopid.

Of course, there in no guarantee at all, that a Kerry presidency would do anything at all reduce the deficit.

 

[N8 v2.0]

Aren't 30 states or so running a surplus now?

Including Colorado, thanks to Gov Bill Owens?

 

[fluff]

Do you think it's a good thing?

 

[N8 v2.0]

It's good for states since they don't have anywhere near the income from taxation that the Fed Gov does.

The Fed Gov has income based on the GDP of the entire country so a deficit can be quickly spent down as the GDP increases, which by the way is at all time records.

 

[fluff]

I was talking aboot the deficit. I weren't clear though.

If the GDP is at all time records and the deficit is still increasing I think you should be very concerned. It's as if you were earning more than you have ever done, yet your debt was growing and your spending exceeded your income.

 

[Westy]

In the next 10 years we will have to deal with some major spending cuts, tax increases or rampant inflation. I would prefer to see some spending cuts and taxes increased today. Traditionaly the Repugnantans love tax cuts and the Dumbocrats love to give entitlements, two things that are political suicide to reverse. Now that the Repugnantans don't seem to mind giving additional entitlements we are screwed. In the past four years the government has been so fiscally irresponsible it makes me sick.

 

[LordOpie]

fluff's funny! What's bad for the US is good for the rest of the world

It's true tho. And I think, to some extent, it's inevitable. And I think some Americans, like me, are starting to adjust thier thinking about our situation, not taking it for granted, and recognizing that times are only going to get tougher for us, relatively speaking, as the global economy forces itself.

 

[Toshi]

In the past four years the government has been so fiscally irresponsible it makes me sick.

big ditto here. gwb and his neocon cronies are not conservative at all in the sense of being fiscally conservative or against foreign intervention

 

[ALEXIS_DH]

fluff's funny! What's bad for the US is good for the rest of the world

It's true tho. And I think, to some extent, it's inevitable. And I think some Americans, like me, are starting to adjust thier thinking about our situation, not taking it for granted, and recognizing that times are only going to get tougher for us, relatively speaking, as the global economy forces itself.

kerry´s election, and his protectionist policies would be a kick in the nuts to most countries that trade with the US.

fluff is right, Bush´s election is definately a good thing for the world overall, the US devaluation of currency, makes US goods cheaper, and de-centralize a lot of the world´s economy, thus the US will end up loosing a lot of its levarage power in the universe.

like for example, in the last 4 years, unbelievably, even the peruvian currency has gotten stronger than the good ol´might US buck!!!

and that is not so good for the US.

 

[Westy]

big ditto here. gwb and his neocon cronies are not conservative at all in the sense of being fiscally conservative or against foreign intervention

They seem to have this idea that deficit spending is OK so we can spend as much as we can. It is worse than a 16 year old girl with a credit card.

 

[N8 v2.0]

Investor's Business Daily
Hardly Historic
Investor's Business Daily | September 7

Budget: Hardly a month goes by without another projection of "record" deficits and, with it, the media's relentless focus on it. Is it really that bad?
As readers of this newspaper know, that's a trick question. We don't spend a lot of time worrying about the deficit because we consider it meaningless as an economic indicator.

It predicts nothing -- not interest rates, not inflation. All it tells you is where the economy's been -- and whether government is spending more than the economy is able to generate in tax revenues.

What really bugs us are the scare headlines and breathless "news" stories that go on and on about the "record" deficits.

So let's get it straight once and for all: In the two ways that matter most -- as a percentage of GDP (see chart) and in real, inflation-adjusted dollars -- the deficit is nowhere near a record.

Adjusted for inflation, the deficit was much higher in 1943, the last time the U.S. fought a world war. That year, according to the Office of Management and Budget, the deficit hit a whopping $486.2 billion in real money.

This year, the deficit will hit $390 billion in real terms. Far from a record, despite the fact that, like 55 years ago, we're again paying for a war -- the global war on terror. More important, the real gap is expected to fall, not rise, over time. Even the pessimists agree on that.

The speciousness of the scaremongers really shows up when the deficit is shown as a share of gross domestic product. By this measure, the deficit is shrinking, not growing. But don't look for that in the news stories.

If the Congressional Budget Office's estimate of $422 billion is correct, this year's deficit to GDP ratio will be 3.6%. That's only the seventh largest since 1985. Again, hardly the stuff of records.

What's more, since everyone has played up the CBO's 10-year projections for the deficit -- though no self-respecting economist would make forecasts that far out and consider them accurate -- let's look at how the deficit does.

By 2010, according to the CBO, the deficit will be less than 2% of GDP. That compares with an average 2.4% of GDP since 1970. So now we have "below average" being called a "record."

We understand why folks worry about deficits. It's never a good sign when spending is allowed to get out of control. But that's the real problem, not the deficit.

 

[Toshi]

n8, look at the conclusion of the article, about out of control spending being the real issue. well, perhaps it is, but guess what? spending IS out of control.

furthermore, "2nd worst deficit since WWII" is not very consoling

 

[ALEXIS_DH]

Investor's Business Daily
Hardly Historic
Investor's Business Daily | September 7

Budget: Hardly a month goes by without another projection of "record" deficits and, with it, the media's relentless focus on it. Is it really that bad?
As readers of this newspaper know, that's a trick question. We don't spend a lot of time worrying about the deficit because we consider it meaningless as an economic indicator.

It predicts nothing -- not interest rates, not inflation. All it tells you is where the economy's been -- and whether government is spending more than the economy is able to generate in tax revenues.

What really bugs us are the scare headlines and breathless "news" stories that go on and on about the "record" deficits.

So let's get it straight once and for all: In the two ways that matter most -- as a percentage of GDP (see chart) and in real, inflation-adjusted dollars -- the deficit is nowhere near a record.

Adjusted for inflation, the deficit was much higher in 1943, the last time the U.S. fought a world war. That year, according to the Office of Management and Budget, the deficit hit a whopping $486.2 billion in real money.

This year, the deficit will hit $390 billion in real terms. Far from a record, despite the fact that, like 55 years ago, we're again paying for a war -- the global war on terror. More important, the real gap is expected to fall, not rise, over time. Even the pessimists agree on that.

The speciousness of the scaremongers really shows up when the deficit is shown as a share of gross domestic product. By this measure, the deficit is shrinking, not growing. But don't look for that in the news stories.

If the Congressional Budget Office's estimate of $422 billion is correct, this year's deficit to GDP ratio will be 3.6%. That's only the seventh largest since 1985. Again, hardly the stuff of records.

What's more, since everyone has played up the CBO's 10-year projections for the deficit -- though no self-respecting economist would make forecasts that far out and consider them accurate -- let's look at how the deficit does.

By 2010, according to the CBO, the deficit will be less than 2% of GDP. That compares with an average 2.4% of GDP since 1970. So now we have "below average" being called a "record."

We understand why folks worry about deficits. It's never a good sign when spending is allowed to get out of control. But that's the real problem, not the deficit.

TINFOIL HAT ALERT!!!

 

[Tenchiro]

I remember when we had a budget surplus...

ink:

 

[narlus]

yeah, bush's promise on job creation has been a lot of smoke. if the incumbent is running on his record (and i don't really care about what happened 3+ decades ago, someone should take a close look at all the stuff he promised and hold him accountable for what he produced.

the ham sandwich would win in a landslide.

 

[Tenchiro]

Why does math hate America?

Creative Accounting Only Goes So Far
Unsound transactions are going to catch up with the government.

A new report from the Congressional Budget Office explains that the deficit is a virtually meaningless measure of the government’s indebtedness. The main reason for this is that the federal government uses cash accounting rather than accrual accounting. What this means is that the government can acquire massive debts far into the future with virtual impunity. The government can also, in effect, cosign for loans and provide insurance that could potentially cost taxpayers hundreds of billion of dollars without it ever showing up in the budget until a check has to be written.

By the CBO’s reckoning, the federal government’s true debt last year was $8.5 trillion — more than twice the debt held by the public, which we generally think of as the national debt. That figure came to $4 trillion, only slightly more than the $3.9 trillion in future benefits owed to government employees and veterans.

But even the $8.5 trillion figure is much too low because it excludes the really big debts that are owed for Social Security and Medicare. Since these obligations extend far into the future, the only way they can realistically be quantified is by using a statistical method called present value. This takes account of the fact that $1 fifty years from now is worth much less than $1 today. Future debts need to be discounted to put them into today’s dollars.

Even with discounting, however, the figures are massive. The CBO estimates the unfunded liability for Social Security at $7.2 trillion. But this is virtually nothing next to the $37.6 trillion cost of Medicare. In short, we would need to have about $45 trillion in the bank today earning interest in order to pay all the promises that have been made for future Social Security and Medicare benefits — over and above the future taxes and premiums that will be collected to fund these programs.

To put these numbers into a form that is comprehensible, the CBO has made a calculation of the future gross domestic product that will be produced over the same time period. These are the actual resources from which Social Security and Medicare benefits will be paid. The CBO estimates that we would have to raise taxes by 6.5 percent of GDP immediately and forever to maintain these programs in perpetuity. This year alone, that would mean a tax increase of $800 billion.

This is why I believe it was utter insanity for the White House and Congress to have enacted an expansion of Medicare for prescription drugs last year. This one unconscionable action increased the long-term liability of Medicare by 1 percent of GDP forever.

A key reason why they were able to get away with this idiotic action was that all the costs come well in the future — the program doesn’t even begin until 2006 and then phases-in for a few years before being fully effective. Thus, for a time, Republicans were able to promise something-for-nothing. It’s only a matter of time before taxes are sharply increased so that the elderly can get for free what the rest of us have to pay for ourselves.

It goes without saying that if any private corporation had behaved the way the government has, it would soon find its executives being sentenced by a federal judge. It is illegal for businesses to keep their books the way the government does, hiding their long-term liabilities from shareholders the way the government disguises its indebtedness from voters.

Writing in the Nebraska Law Review last year, George Washington University law professor Cheryl Block compared bookkeeping by the federal government to bookkeeping by businesses involved in corporate scandals. She found little difference. Congress, she wrote, “has been guilty of using accounting devices remarkably similar to those used by Enron, WorldCom and others to ‘cook the books’ and to mislead the public with regard to government finances.”

At least when a corporation misbehaves, there is an ultimate market check in the form of bankruptcy. Creative accounting can only go so far in covering up transactions that are fundamentally unsound. But national governments never go bankrupt and don’t have to worry about customers buying their goods and services for revenue. They just raise taxes or print money and keep on going. “As a result, temptations for the government to engage in creative accounting may be even greater than those in the private sector,” Block suggested.

It’s worth keeping this in mind the next time some congressional demagogue denounces corporate dishonesty.

LINK