Are wreaking havoc on the timetable to get the US deficit under control;
Aided by surging tax receipts, President Bush may make good on his pledge to cut the deficit in half in 2006 — three years early.
Tax revenues are running $176 billion, or 12.9%, over last year, the Treasury Department said Monday. The Congressional Budget Office said receipts have risen faster over the first eight months of fiscal ’06 than in any other such period over the past 25 years — except for last year’s 15.5% jump.
The 2006 deficit through May was $227 billion, down from $273 billion at this time last year. Spending is up $130 billion, or 7.9%.
The CBO forecast in May that the 2006 deficit could fall as low as $300 billion. Michael Englund, chief economist of Action Economics, has long expected a deficit of about $270 billion this year. Now he thinks there’s a chance the “remarkable strength in receipts” will push the deficit even lower.
With the economy topping $13 trillion this year, a $270 billion deficit would equal less than 2.1% of GDP, easily beating the president’s 2.25% goal. Bush made his vow when the White House had a dour 2004 deficit forecast of 4.5% of GDP, or $521 billion. The actual ’04 deficit came in at $412 billion, or 3.5% of GDP, before falling to $318 billion, or 2.6% of GDP, in 2005.
Typically, the only economic news we’re receiving from the mainstream press is “market jitters … threat of inflation … interest rate hike”. Canadian political pundits are particularly misinformed – commentary on US politics nearly always assumes;
When you hear a professional opinion shaper introduce one or more of those “facts” into their commentary, it ought to tell you how seriously to consider what follows. Not only are those common media assumptions false, all are easily researchable. For example;
On to the consequences of those crippling Bush tax cuts;
A CBO analysis last week noted that withheld individual income and payroll taxes are up 7.6% from a year ago, with the gains picking up in recent months.
“Those gains suggest solid growth in wages and salaries in the national economy,” CBO said.
And lest we forget! The rich are getting richer while the poor get poorer!;
While gains are broad, those at higher-income levels are enjoying bigger salary hikes. Because they pay higher rates, federal tax revenues soar when they do well.
Those making over $200,000 now pay 46.6% of total income taxes, presidential adviser Karl Rove recently said. That’s up from 40.5% — despite Bush’s tax cuts.
h/t Instapundit
On the outsize effect the US has on the world’s economy: that’s true, but only because the US represents such a large portion of the world’s production of goods and services, roughly 28%. (By the way, the US consumes roughly 25% of the world’s refined petroleum products, which seems to indicate some efficiency in its use.) With only some 300 million people producing that much stuff, of course we’re rich. We’re productive.
The US public debt is about 64.7% of GDP. This is comparable to Germany (68.1%) and France (66.5%), worse than Great Britain (42.2%). Canada’s is exceptionally low at 38.7% of GDP, but maybe you should be more worried about the second-largest economy in the world, Japan, where the public debt is 170% of GDP. Source: CIA Factbook. Figures are for 2005.
Our current deficit is about 4.07% of GDP (2004), which is a little on the high side. We usually come in between 3.5% and 4.0%, as do most industrialized countries. Canada looks like it’s running a surplus, but the US deficit is not unreasonable.
Maybe the sky is falling in your part of Canada, steve d., but we are enjoying fine spring weather here in Boston.