Treasure This: The Deficit is Down by Almost 1/3 from Last Year

"The deficit through the first three months of the current fiscal year is almost $39 billion, or 32.7%, lower than last year's comparable figure. Receipts are up a bit over 8%, as the supply-side tax cuts continue their "magic." The real surprise is that outlays have barely budged, actually going up at a rate that is substantially lower than inflation (Psst -- Don't tell Congress that). Will the media notice?"

Don't bet on it. That is at least not until they can find a way to give full credit for it to the Democrats.


Paul Hue said...

Six: Once a democrat gets in office, these economic data will finally earn a positive luster in the media and Nadir's blog posts... unless the democrats retain control of congress and senate and undo these beneficial measures. Then the resulting economic meltdown will get blamed on those evil corporate bastards.

Nadir said...

The economy is already melting down. A small decrease in a budget that was a surplus before Bush took office isn't news to me.

And don't forget: I think the Democrats are punks, and I will stand by that until they prove otherwise.

Paul Hue said...


Yet more good news. Don't expect immigration pressures to relieve anytime soon, or any exodus to begin.


1. Please explain why the US budget had a surplus during the 1990s.

2. Please explain why the budget went red in the 2000s.

Thank you.

Paul Hue said...

Nadir: Since you believe that only business owners can understand economics, please answer these questions:

1. Should the owner of Randazo's Frut Market have a say in the wages and prices associated with your band? Should he have a say in how much you pay your drummer? Or how much club owners pay you? What if he got elected to congress and proposed mandatory minimums for drummer and band wages? Ie, paying drummers enough to raise a four-member family "above the poverty line" (about $20k/yr), and paying bands enough so that all of their members have the same wage?

2. What fraction of senate and congress members have ever owned businesses? Do you accept their decrees about "anti-price gouging" and minimum wage laws? What businesses have John Kerry, Al Gore, and Bill Clinton ever owned? You voted for these guys; do you believe that they understand ecnomics?

3. What business has Hugo Chavez, Fidel Castro, Daniel Ortega, Che Guevara, Mao, and Lennin ever owned? Do you believe that any of these guys understand business or economics?

Paul Hue said...

The above URL that I posted announces that in addition to the Bush tax cuts now reducing the federal deficit (by increasing tax revs), now even the foriegn trade deficit is coming down: "Economists are hastily upgrading their forecasts for the US economy after a series of surprisingly strong reports suggesting the so-called "soft landing" may be over and growth is accelerating. Over the past week, surprises have come in stronger-than-expected reports on US job creation, the trade balance and retail sales -- all key contributors to economic activity... Most important have been the strong consumption data and the surprising improvement in the trade balance."

Paul Hue said...

Let's just pray that Nadir's "punk" democrats don't use their new power to reverse the tax cuts.

Paul Hue said...

Nadir calls the democrats "punks", but credits them with the positive economy of the 1990s. However, the republicans controlled congress during Clinton's years. They successfully thwarted his proposed tax increases and socialized medicine, and forced on him welfare reform and budgetary restraint, which Clinton embraced as his own after failing to defeat these measures.

Tom Philpott said...

You guys, I fail to understand the triumphant tone of either Six's post of the one he links to on that weird God-and-country site. What's being compared here is 2006 and 2005. But Bush's big tax cuts came well before that that. If you want to show that tax cuts boost tax revenue, you'll have to compare pre- and post-cut data.

You'd expect tax revenues to grow as the economy grows no matter what's happening the tax code.

And anyway, didn't Bush just effectively spend those new revenues when he announced his big escalation, oops, I mean augmentation of the war?

To further complicate the notion that a liberal Democrat conspiracy is keeping us from appreciating the glories of Bush's economy, here's a piece from that notoriously liberal rag, the Wall Street Journal, on how that known Marxist, the chair of the NY Federal Reserve, has been wringing his hands over the economy -- including, yes, its mounting budget deficits.

Clearly another unreliable American. Investigate that man!!!!

Paul Hue said...

Tom wrote: ================
You'd expect tax revenues to grow as the economy grows no matter what's happening the tax code.

Yes, of course we expect tax revs to grow as the economy grows, but you fail to connect the tax code to economic performance. We supply siders claim that adjusting the tax code to lower rates and simplification boosts economic growth (provided of course that the economy already suffers from overly high and overly complicated tax rates).

Are you reckoning, Tom, that Bush's change to the tax code did not trigger this economic growth? You say that the tax rate cut happened too long ago to account for today's growth, that we must compare "pre" and "post" data. Well, have you done so? I have, and I can report with confidence that a boost in economic performance and tax rev increase correlate with Bush's tax rate cut. We remain in the "post" period, and businesses continue to operate in this new environment of lower capital gains tax rates.

Tom writes: ==========================
a liberal Democrat conspiracy is keeping us from appreciating the glories of Bush's economy====================

Go check the headlines from Clinton's years (or, just as accurately, the Gingritch years or the Low Petro Price years). For reports of lower growth and higher unemployment, the headlines swooned. Unreformed leftists in this forum still swoon over the "better economy" during that era.

Yes, some supply siders are concerned about the budget deficit. But where are the headlines celebrating the reduction of such? Or all the other positive figures?

Tom Philpott said...

Paul, it's very difficult to establish cause and effect from economic data. My point that the data Six presents does not in anyway make the case that tax cuts lead to higher tax revenues and deficit reduction. As you say, you have to establish a relationship between GDP growth and low rates and high tax reenues, which may or may not exist but certainly doesn't emerge from the numbers Six points to.

I don't glorify either low budget deficits or the Clinton years, which form a rough continuum with the Bush debacle. One difference is that Clinton's Treasury Sec. was a Wall Street man who believed that budget deficits crowded out private investment and pushed up interest rates; he convinced Clinton of this, and together with Greenspan, they behaved as "deficit hawks" and worked to push the fiscal books into surplus. Bush and his crew are supply siders -- he's always seen his Treasury sec.s as political window dressing, not serious advisors -- who figure deficits will sort themselves out over time.

But under Clinton and Bush II, corporate profit growth has far outstripped productivity growth, such that both regimes enjoy high approval among the business set (although Bush's egregious blundering in Iraq has cost him much prestige even in that circle).

Clinton has low petro prices and a stock market bubble; Bush has Asian financiers keeping interest rates artificially low, a housing bubble that has likely only begun to burst, and a surge (sorry, Madam Secretary, I said it) of military-spending stimulus unlike any seen since Reagan's heyday. And he's running up some pretty fancy bills in Iraq -- bills that someone else will have to deal with, likely under the burden of much higher interest rates.

Too bad we're not investing that money in a functioning train system, real alternative energy (and not that con game, ethanol), local food infrastructure, school lunches, and other things that would actually make this joint stronger and more secure. Instead, we're on a leaky ship steered by an addled captain, not toward a welcoming beach, but rather right into the the well-littered jagged rocks of wrecked empire.

Nadir said...

"Nadir calls the democrats "punks", but credits them with the positive economy of the 1990s."

I don't credit the Dems with the positive economy. I credit the emergence of the Internet, the resulting stock market bubble and lower energy costs. The market actually moved the economy and new jobs were created.

I blame the Dems for NAFTA and the whole "free trade" fiasco and for the shoddy politics that allowed the Republicans to gain Congress in 1994 and Bush to steal the White House in 2000 and 2004.

Nadir said...

The budget went red in 2000 because the artificially inflated stock market bubble burst, 911 fears cost companies and consumers a lot of money, Bush's wars siphoned the surplus and Bush's economic policies exacerbated all of these problems.

Paul Hue said...

I agree with all of Nadir's claims about the 2000 budget reddening, except I absolutely reject his claim that Bush's tax rate cuts contributed. Quite to the contrary, those cuts made for less red than there would otherwise have been, and has resulted in continuing tax revenue increases that are drawing the budget back to black.