Full Version: Bush Unveils $2.4 Trillion Budget
Bush Unveils $2.4 Trillion Budget
A budgeted $521 billion deficit which in effect is 1/5th of the budget. I have to say that perhaps are president has no idea how to create a fiscally responsible budget. This is absolutely ludicrous.
Questions for debate.
Do you think Bush's fiscal nature could hurt him in the next election?
Do you think that Bush continues to go to far into deficit?
Monty
QUOTE
WASHINGTON - President Bush (news - web sites) sent Congress a $2.4 trillion election-year budget on Monday featuring big increases for defense and homeland security but also a record $521 billion deficit.
A budgeted $521 billion deficit which in effect is 1/5th of the budget. I have to say that perhaps are president has no idea how to create a fiscally responsible budget. This is absolutely ludicrous.
Questions for debate.
Do you think Bush's fiscal nature could hurt him in the next election?
Do you think that Bush continues to go to far into deficit?
Monty
QUOTE(Monty @ Feb 2 2004, 03:55 PM)
A budgeted $521 billion deficit which in effect is 1/5th of the budget. I have to say that perhaps are president has no idea how to create a fiscally responsible budget. This is absolutely ludicrous.
I could have sworn one of the longstanding hallmarks of the Republican party was fiscal responsability and a balanced budget.
Am I completely mistaken here? If Bush were a Democrat and submitted the same budget, would the Republican party not burst into flames of ire and indignation?
The smartest of the Democratic candidates have already realised that by mobilising the Democratic Party and the fiscal conservatives in the Republican party, they stand an excellent chance of forcing a continuation of the Bush 1-term tradition.
I honestly assumed that Bush, in an attempt to stop support from fleeing his candidacy, would do his best to turn in a relatively balanced budget, or at least a minimal defecit he could blame on Afganistan and Iraq and the war on terror.
Instead, I am left genuinely confused, wondering why he seems to be doing his utmost to not get re-elected...
I'd like to point out that the plan does include what Bush describes as a plan to minimize the deficit. Namely cuts in domestic programs, which should make political headway with his base. If he plays it right, he could at least partially shore up his fiscal image, one of his few political vulnerabilities.
Deficit Is $521 Billion In Bush Budget
Few voters will mind making allowances for security, so this could go over well if the administration get their message out.
I wouldn't predict disaster just yet...
QUOTE
President Bush's $2.4 trillion budget for the fiscal year that begins in October will leave the government $521 billion in the red. But by trimming domestic spending and eliminating up to 65 federal programs, the White House expects to cut the deficit to $237 billion by 2009, White House officials said yesterday.
Deficit Is $521 Billion In Bush Budget
Few voters will mind making allowances for security, so this could go over well if the administration get their message out.
I wouldn't predict disaster just yet...
QUOTE(turnea @ Feb 2 2004, 12:10 PM)
QUOTE
President Bush's $2.4 trillion budget for the fiscal year that begins in October will leave the government $521 billion in the red. But by trimming domestic spending and eliminating up to 65 federal programs, the White House expects to cut the deficit to $237 billion by 2009, White House officials said yesterday.
Deficit Is $521 Billion In Bush Budget
Few voters will mind making allowances for security, so this could go over well if the administration get their message out.
I wouldn't predict disaster just yet...
So... you think that proposing in an election year to fund everything, but then cut 65 unnamed programs sometime in the FUTURE so that at the end of four more years of Bush, we still have a deficit that's the same size that we had when Clinton took office... that's a GOOD THING??
This from the same Administration that told us at the start of its time in office that we'd have surplusses as far as the eye could see and that we needed to give that money back to the people instead of paying down our debt? This from the same Administration that said that the Medicare changes just passed would cost only $400 billion in the first 10 years and then a month later admitted it might be 30% higher? Do we even trust THAT estimate?
Perhaps voters are really that stupid to believe that Bush can really turn this around. I certainly lost hope.
QUOTE(amf @ Feb 2 2004, 11:15 AM)
So... you think that proposing in an election year to fund everything, but then cut 65 unnamed programs sometime in the FUTURE so that at the end of four more years of Bush, we still have a deficit that's the same size that we had when Clinton took office... that's a GOOD THING??
No, I said it was a politically expedient thing
To blame this on Bush is beyond silly, the economy is largely out of his control. Increased defense spending is to be expected. His failure to cut domestic spending... not exactly a big issue with voters.
The deficit won't cut politically, Bush's only economic worry is jobs.
QUOTE(turnea @ Feb 2 2004, 12:21 PM)
To blame this on Bush is beyond silly, the economy is largely out of his control. Increased defense spending is to be expected. His failure to cut domestic spending... not exactly a big issue with voters.
The deficit won't cut politically, Bush's only economic worry is jobs.
The deficit won't cut politically, Bush's only economic worry is jobs.
That's nice, but Bush DOES help control the budget. The economy didn't create the deficit; NOT REACTING properly to the economy created it.
In other words, did giving massive tax cuts to the wealthy create jobs or help the budget? Nope. Did increasing military spending and spending on Iraq help create enough jobs to help balance the budget? Nope (granted: it did create jobs in the defense industry, but we lost more elsewhere). Did cutting capital gains taxes or estate taxes balance the budget or increase jobs? Nope. Bush's entire economic package (which can be summarized by "cut taxes for the wealthy and investment classes") has stunk from day one.
Bush has control over the budget. He hasn't done his job to balance it. Neither has Congress. I blame them both for our deficit mess.
But, you're right, the job situation is the biggest worry Bush has with the political middle that he needs to capture in order to win in November.
Do you think Bush's fiscal nature could hurt him in the next election?
Republicans use to stand on a fiscally responsible nature and at one time kept democrats in spending checks. Now the opposite seems to be true. I think fiscal republicans will be turned off by his legislation and lack to keep a budget in check.
Do you think that Bush continues to go to far into deficit?
I think that Bush has not made a good fiscal judgement call since getting into office and the tax cut that was suppose to stop the surplas ended giving americans a much worse deficit than anyone anticipated.
I do not think promising to half the perpective current deficit in 4 years is going to really do anything to bolster confidence in americans that want to see a balanced budget. Bush has not tried to even come close to establish a balanced budget. It seems all his plans in the future seem to cost more money and not less.
Monty
Republicans use to stand on a fiscally responsible nature and at one time kept democrats in spending checks. Now the opposite seems to be true. I think fiscal republicans will be turned off by his legislation and lack to keep a budget in check.
Do you think that Bush continues to go to far into deficit?
I think that Bush has not made a good fiscal judgement call since getting into office and the tax cut that was suppose to stop the surplas ended giving americans a much worse deficit than anyone anticipated.
QUOTE
President Bush's $2.4 trillion budget for the fiscal year that begins in October will leave the government $521 billion in the red. But by trimming domestic spending and eliminating up to 65 federal programs, the White House expects to cut the deficit to $237 billion by 2009, White House officials said yesterday.
I do not think promising to half the perpective current deficit in 4 years is going to really do anything to bolster confidence in americans that want to see a balanced budget. Bush has not tried to even come close to establish a balanced budget. It seems all his plans in the future seem to cost more money and not less.
Monty
QUOTE
Questions for debate.
Do you think Bush's fiscal nature could hurt him in the next election?
Do you think Bush's fiscal nature could hurt him in the next election?
Absolutely. Republicans will probably stick with him, but the independents are going to be another story. Since they tend to be fiscal conservatives, running up the deficit is already calling him into question. Now he doesn't even propose a balanced budget, with yet another politicized promise to have progress in, conveniently, four more years. It seems to me that if he were serious about fixing the deficit, balancing the budget is a great place to start.
[quote] Do you think that Bush continues to go to far into deficit?[quote]
Considering that the Democrats may be able to run as the more fiscally conservative party in 2004, I'd say yes.
Do you think Bush's fiscal nature could hurt him in the next election?
Not much. It could present some limited appeal among independents to any Dem who credibly makes it an issue, but I don't see that happening. As of yet, different tax cut rollback plans are the only thing the Dems have to draw a contrast. If they come up with some specific budget cuts to push, that will defuse fears that it will all be made up in taxes. Any of the main Dems will likely cut the deficit quicker than Bush, but they have to make people 1.) care about the deficit, 2.) agree with their methods, and 3.) believe they'll do a better job when most people know political stereotypes better than budget numbers.
As for drumming up support among fiscally conservative Repubs or convincing them to stay home, I don't see it. Notice the excuses people make for Bush. Taxes, not fiscal responsibility, is the real concern of "fiscal conservatives". They rebelled against Bush's father when he did the responsible thing and broke his reckless promise to fund a war they agreed with. Bush Jr. learned his lesson and chose the popular, irresponsible route in face of a similar situation. The basic idea of paying for everything you want isn't popular with anyone.
Do you think that Bush continues to go to far into deficit?
Yep. There's nothing like a "small government conservative" who's willing to borrow money to tell people how to marry, or overpay Halliburton's no-bid contracts.
Bush has managed to take the few things that had appealed to me about Conservatism and chuck it to the abyss (hopefully to be retrieved by the Dems).
Not much. It could present some limited appeal among independents to any Dem who credibly makes it an issue, but I don't see that happening. As of yet, different tax cut rollback plans are the only thing the Dems have to draw a contrast. If they come up with some specific budget cuts to push, that will defuse fears that it will all be made up in taxes. Any of the main Dems will likely cut the deficit quicker than Bush, but they have to make people 1.) care about the deficit, 2.) agree with their methods, and 3.) believe they'll do a better job when most people know political stereotypes better than budget numbers.
As for drumming up support among fiscally conservative Repubs or convincing them to stay home, I don't see it. Notice the excuses people make for Bush. Taxes, not fiscal responsibility, is the real concern of "fiscal conservatives". They rebelled against Bush's father when he did the responsible thing and broke his reckless promise to fund a war they agreed with. Bush Jr. learned his lesson and chose the popular, irresponsible route in face of a similar situation. The basic idea of paying for everything you want isn't popular with anyone.
Do you think that Bush continues to go to far into deficit?
Yep. There's nothing like a "small government conservative" who's willing to borrow money to tell people how to marry, or overpay Halliburton's no-bid contracts.
Bush has managed to take the few things that had appealed to me about Conservatism and chuck it to the abyss (hopefully to be retrieved by the Dems).
I am concerned about the deficit because i fear high retaliatory interest rates in the future. We need to cut excess and outdated military operations, and freeze growth in entitlement programs to bring this down.
QUOTE(amf @ Feb 2 2004, 05:32 PM)
Bush has control over the budget. He hasn't done his job to balance it. Neither has Congress. I blame them both for our deficit mess.
Bush and the Republican congress are definitely to blame ... here is the proof:
GRAPH IMAGE
Source: Office of Management and Budget, Budget of the United States Government: Fiscal Year 2005: Analytical Perspectives and Historical Tables table 8.7 —OUTLAYS FOR DISCRETIONARY PROGRAMS: 1962–2009
Of course he lied about this on his Meet the Press Interview:
QUOTE
Russert: But your base conservatives -- and listen to Rush Limbaugh, the Heritage Foundation, CATO Institute, they're all saying you are the biggest spender in American history.
President Bush: Well, they're wrong.
Russert: Mr. President
President Bush: If you look at the appropriations bills that were passed under my watch, in the last year of President Clinton, discretionary spending was up 15 percent, and ours have steadily declined.
President Bush: Well, they're wrong.
Russert: Mr. President
President Bush: If you look at the appropriations bills that were passed under my watch, in the last year of President Clinton, discretionary spending was up 15 percent, and ours have steadily declined.
Edited to remove image per the Rules -Jaime
Bush 1 failed from renigging on "Read My Lips, No New Taxes!"
Bush 2 will fail from renigging on "We are the party of limited government."
Only Nixon could go to China. Only Bush could pass the Perscription Drug Benefit. I seems that putting a weak Republican in the White House is far more effective at growing government than a strong Democrat.
Bush 2 will fail from renigging on "We are the party of limited government."
Only Nixon could go to China. Only Bush could pass the Perscription Drug Benefit. I seems that putting a weak Republican in the White House is far more effective at growing government than a strong Democrat.
His budget does not even include the $100 billion dollars a year we need to spend in Iraq and/or any additional money for the war on terror. As if there really is one. But regardless of what it's called, it's costing a ton of jack not accounted for.
This issue is much more a political one than an economic one.
Federal revenues have been dropping for the last 3 years. Although some of this was expected (the tax cuts) some was not (the economic downturn).
The size of the federal deficit when compared to the GDP is not historically out of whack. It currently stands at about 4.5%. It has been higher in 6 of the last 25 years.
Here is the write up from the Whitehouse website:
OVERVIEW OF THE PRESIDENT’S 2005 BUDGET
Non-defense, non-Homeland Security discretionary spending is being held to under 0.5% growth this year. Of course, cutting some of those programs (instead of limiting their growth) might make sense, but that is certainly not the way of "compassionate" George W. Bush.
Keep in mind that the projected budget surpluses present in 2000 never really came to fruition. It came close under Clinton, but the national debt has increased every year for the past 10 years, even under Clinton. Those projections were just that--projections. The same kind of projections which George W Bush used to "project" a balanced budget in FY 2001 and 2002. Neither happened because neither of the projections were correct.
Check this article to see an explanation of why Federal receipts have been dropping for each of the past 3 years, even when the tax cuts are figured in.
FEDERAL REVENUES APPEAR TO BE DRYING UP MORE THAN EXPECTED
We should take a look at what Bush intended with the current budget (FY 2004)
From the Whitehouse Website:
Fact Sheet: President Bush's 2004 Budget
Notice the highlighted assumptions. Revenues have been lower than has been expected in each of the past 3 years. Spending can be controlled (or at least monitored), revenues are really a "best guess" scenario. We won't know until May what the actual Federal receipts will be.
It would not surprise me if Federal revenues exceeded expectations this year, just owing to the Law of Averages. Of course, they could be lower again. It is really a craps shoot, if you ask me.
I do take issue with anyone who says that the tax cuts were only for the wealthy. That is patently untrue. I am far from wealthy, and my taxes were cut at the same rate as anyone else.
Was it a "progressive" tax cut? No, it wasn't. Was it fair across the board? In my opinion, it was.
Federal revenues have been dropping for the last 3 years. Although some of this was expected (the tax cuts) some was not (the economic downturn).
The size of the federal deficit when compared to the GDP is not historically out of whack. It currently stands at about 4.5%. It has been higher in 6 of the last 25 years.
Here is the write up from the Whitehouse website:
OVERVIEW OF THE PRESIDENT’S 2005 BUDGET
Non-defense, non-Homeland Security discretionary spending is being held to under 0.5% growth this year. Of course, cutting some of those programs (instead of limiting their growth) might make sense, but that is certainly not the way of "compassionate" George W. Bush.
Keep in mind that the projected budget surpluses present in 2000 never really came to fruition. It came close under Clinton, but the national debt has increased every year for the past 10 years, even under Clinton. Those projections were just that--projections. The same kind of projections which George W Bush used to "project" a balanced budget in FY 2001 and 2002. Neither happened because neither of the projections were correct.
Check this article to see an explanation of why Federal receipts have been dropping for each of the past 3 years, even when the tax cuts are figured in.
FEDERAL REVENUES APPEAR TO BE DRYING UP MORE THAN EXPECTED
We should take a look at what Bush intended with the current budget (FY 2004)
From the Whitehouse Website:
Fact Sheet: President Bush's 2004 Budget
QUOTE
Budget Discipline: The best way to counter deficits is through stronger economic growth and spending discipline in Washington. This budget would hold spending growth to 4%, no faster than the growth of the average American families' paycheck.
The President is committed to balancing the budget as fast as possible and consistent with national priorities.
Deficits are manageable in historical terms at 2.7% of GDP. This is appropriate in light of the war on terrorism, the continuing effects of the stock market on revenues, and economic needs.
The budget would be in double digit deficit if had there never been a tax cut in 2001. The budget returned to deficit because of war, recession and emergencies associated with the terrorist attacks of September 11th.
Long-term interest rates have dropped to 40-year lows even as the budget returned to deficit, and interest on the debt is very low. Currently, the federal government pays only 8 cents on the dollar, as compared to a recent high of 15 cents in 1996.
Budget Basics for FY 2004
Total government spending in FY 2004 will be $2.2 trillion, a 4.2% increase over 2003 levels.
Discretionary government spending will increase by 4%, comparable to the growth in family budgets, and enough to allow the federal government to meet its important priorities.
The fastest growing major category of discretionary spending is homeland security at 5.5%. Defense grows at 4.2%. The total of all other discretionary spending grows at 3.8%, funding important priorities such as education, health, energy and the environment.
The President's budget increases non-defense homeland security funding by 7.6%.
Economic assumptions are in line with CBO and private sector projections. Because of uncertainty in revenue levels, the Administration made an additional downward adjustment in revenues of $25 billion in 2003 and $15 billion in 2004.
Budget Discipline: The best way to counter deficits is through stronger economic growth and spending discipline in Washington. This budget would hold spending growth to 4%, no faster than the growth of the average American families' paycheck.
The President is committed to balancing the budget as fast as possible and consistent with national priorities.
Deficits are manageable in historical terms at 2.7% of GDP. This is appropriate in light of the war on terrorism, the continuing effects of the stock market on revenues, and economic needs.
The budget would be in double digit deficit if had there never been a tax cut in 2001. The budget returned to deficit because of war, recession and emergencies associated with the terrorist attacks of September 11th.
Long-term interest rates have dropped to 40-year lows even as the budget returned to deficit, and interest on the debt is very low. Currently, the federal government pays only 8 cents on the dollar, as compared to a recent high of 15 cents in 1996.
Budget Basics for FY 2004
Total government spending in FY 2004 will be $2.2 trillion, a 4.2% increase over 2003 levels.
Discretionary government spending will increase by 4%, comparable to the growth in family budgets, and enough to allow the federal government to meet its important priorities.
The fastest growing major category of discretionary spending is homeland security at 5.5%. Defense grows at 4.2%. The total of all other discretionary spending grows at 3.8%, funding important priorities such as education, health, energy and the environment.
The President's budget increases non-defense homeland security funding by 7.6%.
Economic assumptions are in line with CBO and private sector projections. Because of uncertainty in revenue levels, the Administration made an additional downward adjustment in revenues of $25 billion in 2003 and $15 billion in 2004.
Total tax and other revenue collections will be $1.9 trillion in 2004, a 4.7% increase.
A combination of the need to fund new priorities and a cautious forecast produces a deficit that peaks in 2004 at $307 billion, and declines thereafter to $190 billion by 2008.
The FY 2004 deficit is expected to be about 2.7% of GDP, manageable and modest by historical standards. It declines to 1.4% of GDP by 2008.
Publicly-held debt is 36.9% of GDP in 2004, well below average post-World War II levels, and declines to 36.4% by 2008.
While the deficit rises in 2003, the interest cost on the federal debt declines to 8% of total spending, the lowest level as a percentage of total outlays in over 20 years. Interest expense remains below 10% over the next 5 years.
A combination of the need to fund new priorities and a cautious forecast produces a deficit that peaks in 2004 at $307 billion, and declines thereafter to $190 billion by 2008.
The FY 2004 deficit is expected to be about 2.7% of GDP, manageable and modest by historical standards. It declines to 1.4% of GDP by 2008.
Publicly-held debt is 36.9% of GDP in 2004, well below average post-World War II levels, and declines to 36.4% by 2008.
While the deficit rises in 2003, the interest cost on the federal debt declines to 8% of total spending, the lowest level as a percentage of total outlays in over 20 years. Interest expense remains below 10% over the next 5 years.
The President is committed to balancing the budget as fast as possible and consistent with national priorities.
Deficits are manageable in historical terms at 2.7% of GDP. This is appropriate in light of the war on terrorism, the continuing effects of the stock market on revenues, and economic needs.
The budget would be in double digit deficit if had there never been a tax cut in 2001. The budget returned to deficit because of war, recession and emergencies associated with the terrorist attacks of September 11th.
Long-term interest rates have dropped to 40-year lows even as the budget returned to deficit, and interest on the debt is very low. Currently, the federal government pays only 8 cents on the dollar, as compared to a recent high of 15 cents in 1996.
Budget Basics for FY 2004
Total government spending in FY 2004 will be $2.2 trillion, a 4.2% increase over 2003 levels.
Discretionary government spending will increase by 4%, comparable to the growth in family budgets, and enough to allow the federal government to meet its important priorities.
The fastest growing major category of discretionary spending is homeland security at 5.5%. Defense grows at 4.2%. The total of all other discretionary spending grows at 3.8%, funding important priorities such as education, health, energy and the environment.
The President's budget increases non-defense homeland security funding by 7.6%.
Economic assumptions are in line with CBO and private sector projections. Because of uncertainty in revenue levels, the Administration made an additional downward adjustment in revenues of $25 billion in 2003 and $15 billion in 2004.
Budget Discipline: The best way to counter deficits is through stronger economic growth and spending discipline in Washington. This budget would hold spending growth to 4%, no faster than the growth of the average American families' paycheck.
The President is committed to balancing the budget as fast as possible and consistent with national priorities.
Deficits are manageable in historical terms at 2.7% of GDP. This is appropriate in light of the war on terrorism, the continuing effects of the stock market on revenues, and economic needs.
The budget would be in double digit deficit if had there never been a tax cut in 2001. The budget returned to deficit because of war, recession and emergencies associated with the terrorist attacks of September 11th.
Long-term interest rates have dropped to 40-year lows even as the budget returned to deficit, and interest on the debt is very low. Currently, the federal government pays only 8 cents on the dollar, as compared to a recent high of 15 cents in 1996.
Budget Basics for FY 2004
Total government spending in FY 2004 will be $2.2 trillion, a 4.2% increase over 2003 levels.
Discretionary government spending will increase by 4%, comparable to the growth in family budgets, and enough to allow the federal government to meet its important priorities.
The fastest growing major category of discretionary spending is homeland security at 5.5%. Defense grows at 4.2%. The total of all other discretionary spending grows at 3.8%, funding important priorities such as education, health, energy and the environment.
The President's budget increases non-defense homeland security funding by 7.6%.
Economic assumptions are in line with CBO and private sector projections. Because of uncertainty in revenue levels, the Administration made an additional downward adjustment in revenues of $25 billion in 2003 and $15 billion in 2004.
Total tax and other revenue collections will be $1.9 trillion in 2004, a 4.7% increase.
A combination of the need to fund new priorities and a cautious forecast produces a deficit that peaks in 2004 at $307 billion, and declines thereafter to $190 billion by 2008.
The FY 2004 deficit is expected to be about 2.7% of GDP, manageable and modest by historical standards. It declines to 1.4% of GDP by 2008.
Publicly-held debt is 36.9% of GDP in 2004, well below average post-World War II levels, and declines to 36.4% by 2008.
While the deficit rises in 2003, the interest cost on the federal debt declines to 8% of total spending, the lowest level as a percentage of total outlays in over 20 years. Interest expense remains below 10% over the next 5 years.
A combination of the need to fund new priorities and a cautious forecast produces a deficit that peaks in 2004 at $307 billion, and declines thereafter to $190 billion by 2008.
The FY 2004 deficit is expected to be about 2.7% of GDP, manageable and modest by historical standards. It declines to 1.4% of GDP by 2008.
Publicly-held debt is 36.9% of GDP in 2004, well below average post-World War II levels, and declines to 36.4% by 2008.
While the deficit rises in 2003, the interest cost on the federal debt declines to 8% of total spending, the lowest level as a percentage of total outlays in over 20 years. Interest expense remains below 10% over the next 5 years.
Notice the highlighted assumptions. Revenues have been lower than has been expected in each of the past 3 years. Spending can be controlled (or at least monitored), revenues are really a "best guess" scenario. We won't know until May what the actual Federal receipts will be.
It would not surprise me if Federal revenues exceeded expectations this year, just owing to the Law of Averages. Of course, they could be lower again. It is really a craps shoot, if you ask me.
I do take issue with anyone who says that the tax cuts were only for the wealthy. That is patently untrue. I am far from wealthy, and my taxes were cut at the same rate as anyone else.
Was it a "progressive" tax cut? No, it wasn't. Was it fair across the board? In my opinion, it was.
QUOTE(Amlord @ Feb 17 2004, 11:22 AM)
This issue is much more a political one than an economic one.
The size of the federal deficit when compared to the GDP is not historically out of whack. It currently stands at about 4.5%. It has been higher in 6 of the last 25 years.
The size of the federal deficit when compared to the GDP is not historically out of whack. It currently stands at about 4.5%. It has been higher in 6 of the last 25 years.
So, Amlord, since you quote this statistic with such confidence, please explain exactly how the deficit relates to the GDP. Also, please explain how having a total government debt that is 70% (yes, 70%) of GDP -- and climbing to 75% this year or more -- is somehow "ok".
I believe you are comparing apples to automobiles and claiming that they are somehow related because they both have a price.
I'll agree that floating such a large amount of debt is a political issue. But until our creditors decide to stop loaning us money -- or until interest payments make it impossible to continue to expand the military, expand the social safety net, expand pork projects for key Congresscritters -- that the politics won't come home to roost except amongst those of us who actually understand what it will take to pay off that debt.
I don't want to sound condescending, but the federal deficit is more than simply spending more than you have in your personal checkbook.
There are actually economic benefits to running a deficit. Current fiscal control of the economy is carried out by using the deficit instruments (i.e. US Bonds).
I am not saying that running a deficit is a good thing. It is simply a reality. A balanced budget is a nice buzzword which neither political party actively strives for, but both minority parties tout as the number one issue of the day. Nothing new.
To head off the Clinton advocates, Clinton's budgets were the beneficiary of the rising bubble of an economic wave. Bush, on the other hand has been on the ebbing side of that same wave.
If a balanced budget were indeed a fiscal necessity, let's see some proposals on where we could cut $500 billion out of the current budget....
Boy, those crickets are loud today...
I think we do need to cut several programs, heck, several Cabinet Departments. (Hello, Energy Department and HUD). That doesn't mean it's going to happen.
There are actually economic benefits to running a deficit. Current fiscal control of the economy is carried out by using the deficit instruments (i.e. US Bonds).
I am not saying that running a deficit is a good thing. It is simply a reality. A balanced budget is a nice buzzword which neither political party actively strives for, but both minority parties tout as the number one issue of the day. Nothing new.
To head off the Clinton advocates, Clinton's budgets were the beneficiary of the rising bubble of an economic wave. Bush, on the other hand has been on the ebbing side of that same wave.
If a balanced budget were indeed a fiscal necessity, let's see some proposals on where we could cut $500 billion out of the current budget....
Boy, those crickets are loud today...
I think we do need to cut several programs, heck, several Cabinet Departments. (Hello, Energy Department and HUD). That doesn't mean it's going to happen.
QUOTE(Amlord @ Feb 17 2004, 12:09 PM)
I don't want to sound condescending, but the federal deficit is more than simply spending more than you have in your personal checkbook.
There are actually economic benefits to running a deficit. Current fiscal control of the economy is carried out by using the deficit instruments (i.e. US Bonds).
There are actually economic benefits to running a deficit. Current fiscal control of the economy is carried out by using the deficit instruments (i.e. US Bonds).
You're not sounding condescending as much as you just didn't answer the questions I posed based on your earlier posting. You didn't explain how the deficit is related to GDP and that somehow keeping them related is "ok" for our government (these were your claims and you sounded so confident of them, I just had to ask to see if you could explain why). You also didn't explain how our rising debt load (as related to GDP) is also good or bad.
It's because they're not related, except sort of loosely in a "well, if we flood the market with extra money by issuing debt, our GDP will go up by that same amount".
Any deficit measurement should be related to our ability to pay off the debt we've created. At this point, with tax revenues significantly below our spending, it's just a crime being perpetrated by the Bush Administration and Republican Congress to keep going in the same direction without any plan to try something different.
And we don't use those bonds to control the economy. We use the overnight lending rate between the Fed and banks as well as controlling the money supply. The bonds we float are a reflection of our need to keep funding the government, not our desire to "control" our economy.
As for eliminating whole departments of the government, I tend to agree, but would start with the Dept. of Education (which is a state-level function anyway). But that won't happen until folks vote out the current crew of politicians who use our tax money to buy votes. That includes Bush, who never met a spending bill he hasn't liked.
QUOTE(amf @ Feb 17 2004, 11:36 AM)
QUOTE(Amlord @ Feb 17 2004, 11:22 AM)
This issue is much more a political one than an economic one.
The size of the federal deficit when compared to the GDP is not historically out of whack. It currently stands at about 4.5%. It has been higher in 6 of the last 25 years.
The size of the federal deficit when compared to the GDP is not historically out of whack. It currently stands at about 4.5%. It has been higher in 6 of the last 25 years.
So, Amlord, since you quote this statistic with such confidence, please explain exactly how the deficit relates to the GDP. Also, please explain how having a total government debt that is 70% (yes, 70%) of GDP -- and climbing to 75% this year or more -- is somehow "ok".
I believe you are comparing apples to automobiles and claiming that they are somehow related because they both have a price.
I'll agree that floating such a large amount of debt is a political issue. But until our creditors decide to stop loaning us money -- or until interest payments make it impossible to continue to expand the military, expand the social safety net, expand pork projects for key Congresscritters -- that the politics won't come home to roost except amongst those of us who actually understand what it will take to pay off that debt.
I guess I should directly answer this, even if it goes off-topic.
The National debt is 62.2% of the GDP. Not 70%. I know you didn't mean to misquote the numbers. Ticky tack, I know.
News Release: Gross Domestic Product
QUOTE
Current-dollar GDP
Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 5.1
percent, or $139.3 billion, in the fourth quarter to a level of $11,246.3 billion. In the third quarter,
current-dollar GDP increased 10.0 percent, or $260.3 billion.
Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 5.1
percent, or $139.3 billion, in the fourth quarter to a level of $11,246.3 billion. In the third quarter,
current-dollar GDP increased 10.0 percent, or $260.3 billion.
U.S. NATIONAL DEBT CLOCK
Current National debt stands at just over $7 trillion.
OK, let's compare this situation to your average American. If Joe American (let's say, Amlord) makes $60,000 per year and "owns" a house with a mortgage of $120,000, what's his debt in relation to his income? Debt to income ratio of 2 to 1. This isn't out of the question, in fact, it would seem typical to me.
So the US government owes 62.2% of its yearly income. In effect, it has a $60,000 income versus a $37,000 mortgage. I'd say they are doing pretty well. It basically amounts to a car payment, where you have nothing to show at the end (as opposed to a house, where you have a durable asset).
If you look at the numbers, they are huge, and it is hard to comprehend how the government could wrack up such debts. But what is debt really?
It is getting something today that you pay for tomorrow. As long as the benefits today outweigh the payments you need to make, the exchange is a good one. Given the unwillingness of most of the voters to limit new government programs, I would say they are ok with debt financing some of the programs. Despite the deficit/debt situation, you have people clamoring for universal health care, extending unemployment benefits and countless other programs.
Now, all that being said, is the National debt a good thing? No, it isn't a good thing. But it not the horrific monstrosity that some make it out to be.
Thinking back to the good old Clinton days, when the President simply had to not "rock the boat" (or investigate corporate fraud
) to enjoy a good economy: Clinton's "surpluses" were a direct result in the growing GDP. Not from some change in tax policy. Not from fiscal responsibility. Simply happy chance and happenstance.People need to recall that the corporate financial scandals that came to light during the Bush years were actually perpetrated during the Clinton years (stock market bubble, anyone?). Those who complain that the overpriced stock market finally adjusted itself to reality must keep in mind that this correction had nothing whatsoever to do with any President.
Look at the BEA link...personal incomes are up, durable goods purchases are up, exports were WAY up last quarter while imports were down (a residual of the weaker dollar). Personal income is rising again after being stagnant for a good portion of 2002. Real dollar GDP (as opposed to current dollar GDP) is growing much faster than it did in the last two years.
QUOTE
2003 GDP
Real GDP increased 3.1 percent in 2003 (that is, from the 2002 annual level to the 2003 annual
level), compared with an increase of 2.2 percent in 2002.
The major contributors to the increase in real GDP in 2003 were personal consumption
expenditures (PCE), federal government spending, equipment and software, and residential fixed
investment. Imports, which are a subtraction in the calculation of GDP, increased in 2003.
The acceleration in real GDP in 2003 primarily reflected an upturn in equipment and software, a
smaller decrease in nonresidential structures, and an upturn in exports that were partly offset by a
downturn in private inventory investment.
The price index for gross domestic purchases increased 1.9 percent in 2003, compared with an
increase of 1.4 percent in 2002.
Current-dollar GDP increased 4.8 percent, or $503.1 billion, in 2003. Current-dollar GDP
increased 3.8 percent, or $380.0 billion, in 2002.
During 2003 (that is, measured from the fourth quarter of 2002 to the fourth quarter of 2003), real
GDP increased 4.3 percent. Real GDP increased 2.8 percent during 2002. The price index for gross
domestic purchases increased 1.6 percent during 2003, compared with an increase of 1.7 percent during
2002.
Real GDP increased 3.1 percent in 2003 (that is, from the 2002 annual level to the 2003 annual
level), compared with an increase of 2.2 percent in 2002.
The major contributors to the increase in real GDP in 2003 were personal consumption
expenditures (PCE), federal government spending, equipment and software, and residential fixed
investment. Imports, which are a subtraction in the calculation of GDP, increased in 2003.
The acceleration in real GDP in 2003 primarily reflected an upturn in equipment and software, a
smaller decrease in nonresidential structures, and an upturn in exports that were partly offset by a
downturn in private inventory investment.
The price index for gross domestic purchases increased 1.9 percent in 2003, compared with an
increase of 1.4 percent in 2002.
Current-dollar GDP increased 4.8 percent, or $503.1 billion, in 2003. Current-dollar GDP
increased 3.8 percent, or $380.0 billion, in 2002.
During 2003 (that is, measured from the fourth quarter of 2002 to the fourth quarter of 2003), real
GDP increased 4.3 percent. Real GDP increased 2.8 percent during 2002. The price index for gross
domestic purchases increased 1.6 percent during 2003, compared with an increase of 1.7 percent during
2002.
Things are not as bad as some paint them.
Now, let's tie it all back in. Bush is not promising ever increasing domestic social expenditures. He has (ostensibly) limited discretionary spending increases. He has a plan to allow economic growth to increase the size of the federal revenue pie.
That's all that can be asked in this era of "gimme gimme" entitlements. Entitlement growth is going to be the back breaker for the US government (and every other Western government), not discretionary deficit spending.
QUOTE
The National debt is 62.2% of the GDP. Not 70%. I know you didn't mean to misquote the numbers.
Actually, the number you quote is an "advance" estimate; the "real" number won't be known for a few months. That's part of the fun of figuring out what a GDP is.
QUOTE
So the US government owes 62.2% of its yearly income.
Bzzzzt! You're not in the minority, though, thinking this. The government's "income" is its tax revenue, not the GDP. The government's "income" last year was over $400 billion less than its expenditures. The government cannot increase its "income" without increasing its tax revenues.
The GDP is a measure of the size of the entire economy. It's basically a "snapshot" of how much money is changing hands.
QUOTE
Clinton's "surpluses" were a direct result in the growing GDP.
If the GDP is growing, then theoretically tax revenues should also grow. However, that's only true if the GDP growth happens in areas that the government taxes.
Clinton's "surpluses" (and I'll grant that we never got to a surplus, but we DID get closer than under ANY Republican administration in the past 30 years) were the direct result of having growing tax revenues -- not growing GDP -- and an oppositional Congress that limited spending (including military spending).
As for you taking the GDP growth rates and asserting that the economy isn't as "bad as some paint them", that's just your opinion, but it's not based on a whole lot of evidence.
And finally....
QUOTE
Bush is not promising ever increasing domestic social expenditures. He has (ostensibly) limited discretionary spending increases. He has a plan to allow economic growth to increase the size of the federal revenue pie.
He is increasing military spending dramatically, though, and that's part of the problem (do we really need to spend $400 billion on our military EXCLUDING Iraq funding, which is not even in the budget Bush requests submitted?). He's also growing our interest payments on the debt. And even if the economy grows a bit, tax revenue won't get larger if the answer to every question is "tax cut", which is what Bush claims.
Sorry, amf, I mis-spoke. I truly apologize. I don't know what I was thinking... 
My whole last post should be ignored, I guess. That should teach me not to respond so hastily.
EDIT: Actually, on second thought, the only thing to revise is that the US government has a mortgage of $228,000 on a $60,000 income (the debt is 3.9 times our National income--tax revenue), which still isn't so out of whack.
The effects of totally eliminating the National debt are not all positive...
What If the National Debt Were Eliminated?
But let me turn the table on you: How is the current picture much worse than it was in the early 1980s? How is it different from the 1970s? the 90s?
Answer: it ain't. It's better. Interest rates are lower, employment is UP (despite alot of "news" to the contrary), inflation is low.
Things are not all doom and gloom now.
My whole last post should be ignored, I guess. That should teach me not to respond so hastily.EDIT: Actually, on second thought, the only thing to revise is that the US government has a mortgage of $228,000 on a $60,000 income (the debt is 3.9 times our National income--tax revenue), which still isn't so out of whack.
The effects of totally eliminating the National debt are not all positive...
What If the National Debt Were Eliminated?
QUOTE
A concern has been raised that if the publicly held debt were eliminated entirely,
it could have ramifications for the US financial system because of the role that federal
government securities play as a benchmark asset for our financial system. First,
federal bonds play an important role in determining the interest rates of other assets
and in forecasting and evaluating financial conditions. Thus, the cost of executing
financial transactions and obtaining financial information may increase if the national
debt were eliminated. Second, since many investors have personal or institutional
reasons for choosing to hold US government securities, the elimination of the debt
could force them to hold less desirable assets. Third, at present the Federal Reserve
conducts monetary policy by buying and selling government securities. The conduct
of monetary policy could be vastly altered if the national debt were eliminated,
although these changes would arguably have greater political than economic
implications. How important these consequences are depends in part on the feasibility
of developing an effective alternative benchmark asset.
it could have ramifications for the US financial system because of the role that federal
government securities play as a benchmark asset for our financial system. First,
federal bonds play an important role in determining the interest rates of other assets
and in forecasting and evaluating financial conditions. Thus, the cost of executing
financial transactions and obtaining financial information may increase if the national
debt were eliminated. Second, since many investors have personal or institutional
reasons for choosing to hold US government securities, the elimination of the debt
could force them to hold less desirable assets. Third, at present the Federal Reserve
conducts monetary policy by buying and selling government securities. The conduct
of monetary policy could be vastly altered if the national debt were eliminated,
although these changes would arguably have greater political than economic
implications. How important these consequences are depends in part on the feasibility
of developing an effective alternative benchmark asset.
But let me turn the table on you: How is the current picture much worse than it was in the early 1980s? How is it different from the 1970s? the 90s?
Answer: it ain't. It's better. Interest rates are lower, employment is UP (despite alot of "news" to the contrary), inflation is low.
Things are not all doom and gloom now.
QUOTE(Amlord @ Feb 17 2004, 03:15 PM)
EDIT: Actually, on second thought, the only thing to revise is that the US government has a mortgage of $228,000 on a $60,000 income (the debt is 3.9 times our National income--tax revenue), which still isn't so out of whack.
If you went to the bank to get a loan and mentioned that you wanted to buy a house that was 4x your current income AND that your current income wasn't meeting your current spending habits, what do you think would happen?
I'll wait for the laughter to die down.
Now then. You keep trying to say all is not "gloom and doom", although no one is saying that it is, so that's a red herring. It's also ignoring reality by saying that everything looks wonderful today, so we just need to do MORE of that.
As for your long quote that's filled with "may" and "might", it's just conjecture, of course. We haven't NOT had a debt for decades. No one knows what will happen there. That said, no one is proposing that as well, as far as I know. Again, a red herring.
The original questions were: is running this deficit bad and will it hurt Bush?
As many of us have pointed out many times here, deficits aren't bad... until they are. And when they suddenly become bad, it'll be a HUGE mess we'll have to contend with. We're talking MASSIVE economic damage when the government can no longer borrow, when Social Security cannot meet its obligations, when the military men and women won't get paid, etc.
When will this happen? Not yet, but why wait to correct an obvious problem? Get rid of the guys and gals who can't add. Fire Bush. Fire Congress. Start over with people who understand that you can't promise tax cuts AND spending increases at the same time.
QUOTE(amf @ Feb 17 2004, 04:31 PM)
QUOTE(Amlord @ Feb 17 2004, 03:15 PM)
EDIT: Actually, on second thought, the only thing to revise is that the US government has a mortgage of $228,000 on a $60,000 income (the debt is 3.9 times our National income--tax revenue), which still isn't so out of whack.
If you went to the bank to get a loan and mentioned that you wanted to buy a house that was 4x your current income AND that your current income wasn't meeting your current spending habits, what do you think would happen?
I'll wait for the laughter to die down.
Actually, the US government is paying for the interest on the loan. They also continue to get more "home equity" type loans, which they also have the means to pay for...
Now, you haven't answered MY question :
QUOTE
But let me turn the table on you: How is the current picture much worse than it was in the early 1980s? How is it different from the 1970s? the 90s?
While we're citing all these great numbers and sources, let's be sure they relate to the original debate questions:
Do you think Bush's fiscal nature could hurt him in the next election?
Do you think that Bush continues to go too far into deficit?
Do you think Bush's fiscal nature could hurt him in the next election?
Do you think that Bush continues to go too far into deficit?
The aim of my responses has been that second question:
My answer is no.
Is it the preferred route? Also a resounding NO. But we have a war going. Homeland Security needs to be beefed up. Bush's budget obviously focuses on these two areas. He has limited spending on everything besides these (discretionary spending, which unfortunately does not take into account his huge new entitlement...) to under 1%.
Will it harm Bush in the upcoming election cycle? That answer remains to be seen. If solid conservatives (such as myself) can see the logic of his current approach, it will not affect their voting decision.
Of course, Kerry is going to use this issue like a club.
QUOTE
Do you think that Bush continues to go too far into deficit?
My answer is no.
Is it the preferred route? Also a resounding NO. But we have a war going. Homeland Security needs to be beefed up. Bush's budget obviously focuses on these two areas. He has limited spending on everything besides these (discretionary spending, which unfortunately does not take into account his huge new entitlement...) to under 1%.
Will it harm Bush in the upcoming election cycle? That answer remains to be seen. If solid conservatives (such as myself) can see the logic of his current approach, it will not affect their voting decision.
Of course, Kerry is going to use this issue like a club.
Just a Question here. Has any President ever reduced the deficit?
I can't think of one.
I can't think of one.
Amlord
OK, let's compare this situation to your average American. If Joe American (let's say, Amlord) makes $60,000 per year and "owns" a house with a mortgage of $120,000, what's his debt in relation to his income? Debt to income ratio of 2 to 1. This isn't out of the question, in fact, it would seem typical to me.
So the US government owes 62.2% of its yearly income. In effect, it has a $60,000 income versus a $37,000 mortgage. I'd say they are doing pretty well. It basically amounts to a car payment, where you have nothing to show at the end (as opposed to a house, where you have a durable asset
I believe you may be comparing ORANGES TO APPLES.
If Joe American keeps making his payments,he is reducing his principal and finally pays off his house after a set number of years.
On the other hand, the US government will pay off the bonds after a set number of years, BUT will immediate issue new bonds to cover the payment of the earlier bonds. The government rarely pays off the debt but just keeps the debt revolving.
That is a lot different than Joe American who will finally pay off his home loan in his older years and never have another loan on his home.
QUOTE
OK, let's compare this situation to your average American. If Joe American (let's say, Amlord) makes $60,000 per year and "owns" a house with a mortgage of $120,000, what's his debt in relation to his income? Debt to income ratio of 2 to 1. This isn't out of the question, in fact, it would seem typical to me.
So the US government owes 62.2% of its yearly income. In effect, it has a $60,000 income versus a $37,000 mortgage. I'd say they are doing pretty well. It basically amounts to a car payment, where you have nothing to show at the end (as opposed to a house, where you have a durable asset
I believe you may be comparing ORANGES TO APPLES.
If Joe American keeps making his payments,he is reducing his principal and finally pays off his house after a set number of years.
On the other hand, the US government will pay off the bonds after a set number of years, BUT will immediate issue new bonds to cover the payment of the earlier bonds. The government rarely pays off the debt but just keeps the debt revolving.
That is a lot different than Joe American who will finally pay off his home loan in his older years and never have another loan on his home.
QUOTE(Momof3 @ Feb 18 2004, 11:54 PM)
Just a Question here. Has any President ever reduced the deficit?
I can't think of one.
I can't think of one.
Well, Mom, the budget deficit declined to nearly 0 under Clinton and a Republican Congress. The credit should be spread around, both to the government AND to an increasing tax base.
QUOTE(Amlord)
But we have a war going. Homeland Security needs to be beefed up. Bush's budget obviously focuses on these two areas. He has limited spending on everything besides these (discretionary spending, which unfortunately does not take into account his huge new entitlement...) to under 1%.
We don't really have a war going. We have a military action going. We have some police action going. But a war requires sacrifice on the homefront, which our government is unwilling to ask from us. A "war" is also something declared by Congress, which hasn't happened.
Discretionary domestic spending has indeed been slowed in Bush's latest budget requests. But military spending -- also discretionary on the part of the President and Congress -- has been drastically increased and does NOT contain the money we'll need to continue funding Iraq. And those 60-something programs that the Prez wants to cut (remember those headlines?)... those didn't total but a few billion, a few drops in the deficit budget. Bush can't add.
As I said before, it'll hurt Bush only for those who can see past their own tax cut to realize that we exchanged that tax cut for a government debt that will eventually have to be paid off.
On the other hand, is the budget "credible"? Does running a $500+ billion (without Iraq spending) add to or detract from Bush's credibility? Can Kerry (or Edwards) make the case that Bush's inability to submit a balanced budget (or something close) makes him a terrible "CEO" at the top of the government? Remains to be seen, since Kerry has to also show that he hasn't voted for all these tax cuts and spending increases as well. Hard to do when you've been in Washington that long.
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