Have At It

A conservative bush-bot who haunts another board I sometimes visit posted a link to this article which seems to present an overly optimistic picture of the nation's economy in a transparent effort to vindicate monkey-boy's tax cuts. For instance...

Strong gains in tax receipts have overwhelmed increased federal spending. Congressional Budget Office (CBO) data show that federal tax receipts during the nine months ending in June were 12.8% above the same period in FY-05. Withheld income taxes increased 9% in June from last year; non-withheld income tax payments surged by 20%, while corporate tax receipts grew by

snip...

If federal receipts continue to grow in a similar fashion during the final three months of this fiscal year, they will climb to an all-time high of $2.4 trillion dollars, $275 billion above last year, $400 billion more than in 2000, and equal to 18.5% of GDP.

Federal spending is on track to increase 9% this year, and will end the year at 20.7% of GDP, up sharply from the 18.4% share in 2000. If federal spending had remained at 18.4% of GDP this year, the US would have recorded a small surplus of $21 billion.

the whole article is here:
.http://www.realclearpolitics.com/blog/2006/07/tax_cuts_budget_deficits_and_t.html

I do not claim to understand economic issues well enough to challenge this article, so if anyone feels like putting these dubious claims into perspective for me, I would appreciate it.

Some Congressman was presenting numbers about the growth of the debt. He pointed out the tiny decrease in the size of this year's apparent deficit, but showed the growth in the actual Debt. It grew by 591 Billion (I think the previous year, with the slightly larger "deficit", it grew by about 550 Billion), showing that the growth of the Debt itself is still increasing! Despite any anomalous, unexpected, slight decrease in the deficit.

I'm not up on what all goes into the growth of the Debt versus the Deficit (unless they were speaking of the "trade" deficit)... alas, I've tuned out and didn't follow along long enough. Any economics knowledgeables out there that can briefly explain the basic situation here, it would be nice to hear from you.

One good source of understandable economic information...
http://economistsview.typepad.com/economistsview/

it's an old book

The federal spending terms, a deficit is the spending shortfall for a certain period of time, like a fiscal year.

The debt is all of those deficits put together.

Some Congressman was presenting numbers about the growth of the debt. He pointed out the tiny decrease in the size of this year's apparent deficit, but showed the growth in the actual Debt. It grew by 591 Billion (I think the previous year, with the slightly larger "deficit", it grew by about 550 Billion), showing that the growth of the Debt itself is still increasing! Despite any anomalous, unexpected, slight decrease in the deficit.

I'm not up on what all goes into the growth of the Debt versus the Deficit (unless they were speaking of the "trade" deficit)... alas, I've tuned out and didn't follow along long enough. Any economics knowledgeables out there that can briefly explain the basic situation here, it would be nice to hear from you.

The reason for this apparent anomaly is that the debt that is currently at about $8.4 trillion is the "Gross Federal Debt" and includes monies that the federal government has borrowed from Social Security and other trust funds. The deficit that is nearly always reported, however, is the "Unified Deficit" and it does not include these monies. The following table shows various measures of the deficit since 1992:

            RECEIPTS, OUTLAYS, AND SURPLUSES OR DEFICITS(-): 1992-2005
                              (billions of dollars)
.
                                           Public
        Total    Total  Unified   Public  Def w/o    Gross    OASDI  Medicare
Year Receipts  Outlays  Deficit  Deficit    OASDI  Deficit  Surplus  Surplus      GDP
---- --------  -------  -------  -------  -------  -------  -------  -------  -------
1992   1091.3   1381.6   -290.3   -310.7   -361.5   -403.6     50.7     13.6   6239.9
1993   1154.5   1409.5   -255.1   -248.7   -295.4   -349.3     46.8     10.2   6575.5
1994   1258.7   1461.9   -203.2   -184.7   -241.4   -292.3     56.8      1.1   6961.3
1995   1351.9   1515.9   -164.0   -171.3   -231.8   -277.3     60.4     -7.1   7325.8
1996   1453.2   1560.6   -107.4   -129.7   -196.1   -260.9     66.4      8.9   7694.1
1997   1579.4   1601.3    -21.9    -38.3   -119.6   -187.7     81.3     -1.1   8182.4
1998   1722.0   1652.7     69.3     51.2    -48.2   -109.0     99.4      6.6   8627.9
1999   1827.6   1702.0    125.6     88.7    -36.0   -127.3    124.7     26.3   9125.3
2000   2025.5   1789.2    236.2    222.6     70.7    -23.2    151.8     29.9   9709.8
2001   1991.4   1863.2    128.2     90.2    -72.8   -141.2    163.0     25.2  10057.9
2002   1853.4   2011.2   -157.8   -220.8   -379.9   -428.5    159.1     28.6  10377.4
2003   1782.5   2160.1   -377.6   -373.0   -528.7   -561.6    155.7      8.1  10805.5
2004   1880.3   2293.0   -412.7   -382.1   -533.0   -594.7    150.9      6.1  11546.0
2005   2153.9   2472.2   -318.3   -296.7   -470.2   -550.6    173.5     14.1  12290.4

As you can see the "Gross Deficit" (change in the Gross Federal Debt) was about $550 billion in 2005 but the "Unified Deficit" was only about $318 billion. The full table and its sources can be seen at http://home.att.net/~rdavis2/def07.html . At the bottom of that page is the following table:

            DEBT HELD BY GOVERNMENT ACCOUNTS (billions of dollars)
.
                                    Investment or disinvestment  Holdings
                                   -----------------------------   end of
                                     2005   % of    2006    2007     2007   % of
Description                        actual  total    est.    est.     est.  total
---------------------------------- ------  -----  ------  ------  -------  -----
Old-age and survivors trust fund..  163.6   64.4   171.7   185.9   1973.7   50.6
Civil Service retirement & disabil   28.9   11.4    30.0    30.5    721.2   18.5
Hospital insurance trust fund.....   12.9    5.1    18.4    20.6    316.2    8.1
Disability insurance trust fund...   10.5    4.1     8.3     6.6    208.1    5.3
Military retirement trust fund....    0.0    0.0    16.9     9.1    203.3    5.2
Uniformed Services Retiree Health.   17.0    6.7    30.3    32.3    115.5    3.0
Unemployment trust fund...........    9.6    3.8    -8.7    13.6     59.7    1.5
Federal Deposit Insurance Corp....    1.2    0.5     1.3     0.0     49.5    1.3
Employees life ins & health benfts    3.1    1.2     3.0     2.7     47.7    1.2
Supplementary medical insurance...   -0.2   -0.1    11.4     9.5     38.1    1.0
Housing and Urban Development.....   -0.3   -0.1     0.8     0.3     31.7    0.8
Highway and Airport trust funds...   -1.8   -0.7     1.4    -1.3     18.4    0.5
Other government accounts.........    9.5    3.8    -5.2     1.6    120.8    3.1
--------------------------------------------------------------------------------
Total investment in Federal debt..  254.0  100.0   279.5   311.4   3904.0  100.0

This table shows the composition of the $254 billion that was borrowed from the trust funds in 2005. As can be seen, 64.4% of it came from the Old-age and survivors trust fund of Social Security. Since all of this money will have to be repaid to Social Security within the next few decades, it would make much more sense to look at the "Gross Deficit". Of course, the Bush Administration will continue to look at the "Unified Deficit" so that it can brag about halving the deficit that its tax cuts helped create.

i know this doesn't directly address your issue, but from http://www.informationclearinghouse.info/article13833.htm :
(thanks to DU'er UpInArms for finding this for us)

How the Fed Harms the Public Interest

The Federal Reserve System exists only to serve its owners and member banks and in doing so is hostile to the public interest. That's because it's a banking cartel with the power to restrict competition for greater profits gained at our expense. It goes from our pockets to theirs, and the public loses in at least four ways:

One - Through the invisible tax of inflation that results from the dilution of purchasing power caused by newly created money entering the system reducing the value of dollars already there. The Greenspan Fed was especially expansive, never was held to account for its excess and was able to pass a serious problem it created on to a future Fed chairman and society to deal with. The man we now lionize as a monetary magician began sensibly. From 1982, before he arrived in 1987, until 1992, the money supply increased on average by 8% a year. But from 1992 - 2002, the printing press worked overtime in sync with the deregulation and growth of global markets expanding the currency by more than 12% a year. It became even more extreme post 9/11 and since 2002 grew at a 15% rate. It now has more than doubled in less than a decade. It appears that the new Fed chairman has taken note and has begun reducing the rate of money expansion as he continues raising the federal funds rate to whatever level he has in mind.

Currency traders as well apparently have taken note of the rate of money supply expansion overall. Except for a respite in 2005, it's quite likely the dollar weakness since 2002 is the result of the excess amount of them created for the Bush administration's profligate spending to fund its endless wars and reckless tax cuts for the rich. The problem is further compounded as from 1964 to the present debt service has grown from 9% to 16.5% of the federal budget and rising; the current account deficit has gone from a 1% surplus to an almost 7% deficit; and federal indebtedness has grown by 40% just since 2001 and financed in large part by "the kindness of
(foreign) strangers" that may be growing restive. Furthermore, since March, 2006, the Fed stopped publishing the M-3 aggregate of the total amount of dollars in circulation. With that transparency gone, big buyers of US Treasuries now have to calculate the value of the dollar based on speculation and uncertainty rather than hard data - not a way to inspire trust in the financial markets that function best in an atmosphere of openness and clarity.

Read posts 10 and 24 of this thread,
post 13 is a concise summary of post 10 (which quotes a free slate article you should also read)

"Surprising Jump in Tax Revenues Curbs U.S. Deficit (NYT)"
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=2378082&mesg_id=2378082





There is a seperate thread with additional comments:
"NYT: Surprising Jump in Tax Revenues Is Curbing Deficit"
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=364&topic_id=1596966&mesg_id=1596966