Tax Cut For The Rich (Political)

[R. Richard]

Budget deficit drops $296B under estimate

WASHINGTON - The White House Tuesday touted new deficit figures showing considerable improvement upon earlier administration predictions, trumpeting the news as a validation of President Bush's pro-growth tax cuts.

The deficit will for budget year ending Sept. 30 will register $296 billion under a new White House estimate released Tuesday. That's much better than the $423 billion that Bush predicted in February and a slight improvement over 2005.

A surge in taxes paid by corporations and the wealthy is largely responsible for the deficit drop.

Bush himself was to trumpet the good news, attributing the improvement to tax cuts he pushed in 2001 and 2003 and his clampdown on domestic agencies funded by Congress.

However, the results are less impressive when compared to the $318 billion deficit posted last fall for fiscal 2005. Despite strong revenues, the high costs of the Iraq war and Gulf Coast hurricane relief have weighed on the deficit — as have higher interest payments paid on the national debt.

Revenues are running $115 billion greater than expected earlier this year, the White House said, reflecting particularly strong growth in taxes paid on corporate profits and income taxes paid by wealthier people and small businessmen who pay taxes quarterly instead of having them withheld by employers.

"With the help of the president's successful pro-growth policies, the 2006 deficit is 30 percent lower than originally expected," said the White House report.

Taxes paid by individuals are growing at an 11 percent rate, the White House says, while corporate taxes are rising at a 19 percent rate.

The economy is estimated to grow at a 3.5 percent rate in real terms, a slight slowdown from the 5.6 percent rate of the first quarter of the year.

"We've had extraordinarily good profit growth, and when you have better profit growth than wage growth you tend to have windfall tax revenues because taxes on profits are higher than taxes on wages," said Diane Swonk, chief economist for Mesirow Financial, a Chicago-based financial services firm.

Swonk predicted that the unexpected revenue surge would ease around the end of the year as profits peak.

Bush has had few opportunities to boast about the deficit over the course of his time in office. He inherited in 2001 a surplus estimated by both White House and congressional forecasters at $5.6 trillion over the subsequent decade, and it quickly dwindled.

Those faulty estimates assumed the late-1990s revenue boom — fueled by the stock market and dot.com booms — would continue. But that bubble burst, and a recession and the Sept. 11, 2001, terrorist attacks started a flow of red ink. Several rounds of tax cuts, including Bush's signature $1.35 trillion tax cut in 2001, also contributed to the return to deficits four years ago after four years of budget surpluses.

Even before the release of the figures, critics poked at the White House figures, citing, for example, how they are at odds from Bush's original budget released in 2001, which predicted a $305 billion surplus for the current year, even after accounting for tax cuts.

"The deficit's probably going to be in the range of $300 billion and that still represents a swing of about $600 billion from what was projected in 2001," said Rep. John Spratt (news, bio, voting record) Jr. of South Carolina, top Democrat on the Budget Committee. "You've still got triple-digit deficits for as far as the eye can see."

Some budget experts say the steep rise in tax receipts looks more impressive than it really is since revenues are bouncing back from a three-year decline during Bush's first term, drops not seen since the Great Depression.

"The current so-called revenue surge is merely restoring revenues to where they were half a decade ago," said Robert Greenstein, executive director of the liberal-leaning Center on Budget and Policy Priorities think tank. That's after accounting for inflation and population growth.

Still, the new figures should allow Bush to claim credibly that he will meet his promise, made in early 2004, that he will cut the deficit in half by the end of his second term. Then, the White House forecast the deficit to be $521 billion for the 2004 budget year, setting the goal of $260 billion by 2009.

 

[Joe Wordsworth]

So it doesn't work that way? So you give your product/services away for free? Such an philanthrapist you must be.

For every dollar you charge a customer whats the breakdown on where the money goes?

No... it really doesn't just "work that way". I mean, damn, that's like saying "So, an airplane has wings and that's how it flies". It's part of the story, but there are so many more complex parts to the process. I'm not going to say "no, that's not how it flies", but I'm going to have to say "no, that's not ALL there is to flying".

Taxes for my company, like ALL costs, are a part of the budget. They're controllable, some are uncontrollable, some are uncertain, some (like taxes) are part of the only certainty in business. If I /don't/ price myself for my costs, I /will/ go bankrupt. That's the first part you have to realize.

Lemme say that again... if I /don't/ price myself (and all aspects of my business) for my costs, I /will/ go bankrupt.

That's a truth every enterprise, at the very basic heart of it, needs to understand.

Past that, if my costs go up (taxes, labor, the cost of having to renovate, the cost of rent for land value, paying for damages to properties I own by customers or accidents, new requirements by brands I franchise from, etc.) then I threaten my bottom line with violating the basic rule of finance: Don't spend more than you make.

Two ways, basically, to fix that problem if you're heading into it: (1) cut costs (maybe cut hourly wages, lay people off, use cheaper vendors, etc.) or (2) raise prices.

Now, does that mean that the consumer pays my employees' paychecks?

No.

No, they don't.

I pay the paychecks. I do. My company does. The whole corporate hooha pays them. If that check bounces because there's not enough money in the corporate accounts, the customers aren't the ones liable.

The company is.

Arguments to the effect of "but the consumers GIVE you the money you have" are as practical and accurate as saying that the guy who invented pointy sticks is responsible for my dinner knife. Sure, there's a causal chain, but liability and legality and my banker don't care.

The government isn't going to hunt down my individual customers across the country and demand tax payments for what I do as a business. They're coming to me. For my money. For what I earned. Whether its profit or not, whether I collected more than I spent in a quarter, whether I "passed along" all of my costs and ended up in the black or "passed along" only 80% of my costs and ended up 20% in the red.... they're coming to ME and the company for money.

As such.... yes.... yes, indeed, my corporation does pay taxes. We (1) collect money for our products and services; and (2) pay our debts and costs.

In between those two things is business, people, and the company.

If my taxes get raised for one reason or another (a new tourism tax where I run a hotel, etc.), I will raise my prices or cut my expenses as much as the market will allow. But, and here's the important part, I'm doing that regardless.

If my expenses stay the same from one quarter to the next? I'm still going to charge whatever people will pay. My corporation will try to make as much money as people are willing to give us (welcome to the heart of free enterprise, for goods and services that are not required for anyone to spend money on). There may be quarters where I can go up a few percentage points, and nothing in my expenses has changed.... and there will be quarters where I have to cut my profit margin to stay competative even though my costs (possibly taxes in there, mind you) go up.

If you're going to lambast the business world (corporate or not, your argument doesn't make any fundamental distinction) for making as much money as it can, then fine.

Go join a commune or something. Eat tofu. Do what you gotta do.

Me? I'm not buying into it, I'm afraid. But, I'm open minded... about the time we can start holding consumers legally responsible for my costs is about the time I'll agree that I'll share the conceptual burden of having them AND the conceptual appreciation for the managing of them. Until then? No. I'm afraid my company pays its taxes, using our money, which we have because of bank loans, revenue, and investment.

Do consumers pay my taxes? No moreso than my bank does or my investers do... which is to say, they don't. Neither the bank nor my investors co-signed my enterprise.

 

[JamesSD]

Bush: Good news! The budget deficit for this year is only $296 billion -- $100 billion less than projected.* (*I made the projection) (Headline borrowed from Fark.com)


And, as Kos put it:
"Bush wants high-fives all around for yet another massive budget deficit.

Today, the Office of Management Budget projected a $296 billion federal deficit for fiscal year 2006. Bush held a press conference arguing that this is a vindication of his economic policies.

Actually, it would be the fourth largest deficit of all time. Here's the top five:

1. 2004 (George W. Bush) $413 billion
2. 2003 (George W. Bush) $378 billion
3. 2005 (George W. Bush) $318 billion
4. 2006 (George W. Bush) $296 billion (projected)
5. 1992 (George H. W. Bush) $290 billion

When President Bush came into office, he inherited a surplus of $284 Billion. At that time, the Bush administration predicted a $516 billion surplus for 2006.

I remember when Republicans thought deficits were bad. Now they are celebrating them. "

Balanced Budget Amendment? (Crickets chirping... chirping...)