Federal deficits are setting records

[papau]

http://www.guardian.co.uk/uslatest/story/0,1282,-3669785,00.html

Monday January 26, 2004 11:01 AM
By ALAN FRAM Associated Press Writer

WASHINGTON (AP) - Federal deficits are setting records as President Bush and Congress plunge into the election year's budget work and both parties wonder if the red ink will prove to be a campaign issue.

The Congressional Budget Office planned to release its annual winter budget and economic outlook on Monday. It was expected to be a bit better in the short term than the CBO's last update in August, when it projected shortfalls of $480 billion for this year and $341 billion for 2005.

"Even if in a small way, this could be the first good news budget report we've had in some time'' because the growing economy should make deficit projections smaller for the next two years, said Hazen Marshall, Republican staff director of the Senate Budget Committee.
The August report also envisioned deficits totaling $1.4 trillion over the decade ending in 2013, assuming lawmakers make no changes in tax law and spending grows only at the rate of inflation.

Analysts said they expected the update by Congress' nonpartisan fiscal analysts to have a similar 10-year projection.
<snip>

[mbperrin]

1. should make deficit projections smaller

How 'bout the real deficit, not just the projections!!!?

[papau]

2. CBO director on PBS says making 01 cuts permanent is 1.5T - is this

CBO director on PBS says making 01 cuts permanent is 1.5T - is this
additional?

A 1.5 T number does not show up in the 9.9 T (2.4 base plus 7.5 likely) discussion.

Another lie?

[papau]

3. Krugman says tax cuts caused deficit

Krugman thinks anew that the Bush tax cuts caused the record deficit


http://www.nytimes.com/2004/01/27/opinion/27KRUG.html

<snip> The main reason for deficits, however, is that revenues have plunged. Federal tax receipts as a share of national income are now at their lowest level since 1950.Of course, most people don't feel that their taxes have fallen sharply. And they're right: taxes that fall mainly on middle-income Americans, like the payroll tax, are still near historic highs. The decline in revenue has come almost entirely from taxes that are mostly paid by the richest 5 percent of families: the personal income tax and the corporate profits tax. These taxes combined now take a smaller share of national income than in any year since World War II.

This decline in tax collections from the wealthy is partly the result of the Bush tax cuts, which account for more than half of this year's projected deficit. But it also probably reflects an epidemic of tax avoidance and evasion. Everyone who wants to understand what's happening to the tax system should read "Perfectly Legal," the new book by David Cay Johnston, The Times's tax reporter, who shows how ideologues have made America safe for wealthy people who don't feel like paying taxes.

I was particularly struck by Mr. Johnston's description of the carefully staged Senate Finance Committee hearings in 1997-1998. Senators Trent Lott and Frank Murkowski accused the I.R.S. of "Gestapo"-like tactics, and Congress passed new rules that severely restricted the I.R.S.'s ability to investigate suspected tax evaders. Only later, when the cameras were no longer rolling, did it become clear that the whole thing was a con. Most of the charges weren't true, and there was good reason to believe that the star witness, who dramatically described how I.R.S. agents had humiliated him, really was engaged in major-league tax evasion (he eventually paid $23 million, insisting he had done no wrong).<snip>


So the right has used deceptive salesmanship to undermine tax enforcement and push through upper-income tax cuts. And now that deficits have emerged, the right insists that they are the result of runaway spending, which must be curbed. <snip>

[Bandit]

4. Everything is going according to plan

What about any of this is surprising?