Jan 12 2007
Deficits Still Falling
The old adage “if it ain’t broke, don’t fix it” should be a warning to Democrats intent on their socialistic tax and spend policies. The US economy is doing just great (thanks George Bush!), the job market is looking as good as the stock market, and the Federal deficit is dropping. In fact, the Feds ran a bit of a surplus in December:
he federal deficit has improved significantly in the first three months of the new budget year, helped by a continued surge in tax revenues.
In its monthly budget report, the Treasury Department said Friday that the deficit from October through December totaled $80.4 billion, the smallest imbalance for the first three months of a budget year since The budget year ends Sept. 30.
Tax collections are running 8.2 percent higher than a year ago while government spending is up by just 0.7 percent from a year ago. Last year’s spending totals were boosted by significant payments to help the victims of the Gulf Coast hurricanes.
The Treasury said for December, the government actually ran a surplus of $44.5 billion, the largest surplus ever recorded in December and a gain that reflected a big jump in quarterly corporate tax payments.
The $80.4 billion deficit for the first three months of the current budget year was down 32.6 percent from the imbalance for the same period a year ago of $119.4 billion.
For the year, analysts are still forecasting that the deficit will worsen from last year’s total of $248.2 billion, which had been the lowest in four years.
The Congressional Budget Office is forecasting that the deficit for the 2007 budget year will rise to $286 billion, an increase of 15.2 percent from last year, but that figure could be lowered when the CBO releases its revised estimate later this month.
People may wonder why the CBO continues to forecast increasing deficits – as they have for the last 4 years running. That’s because (a) their forecasting models don’t work and (2) they are always misforecasting the true budget picture. For all the money we spend on government you would think the CBO could get some real models in there that actually reflect the return on investment from tax cuts and the ensuing economic power lower taxes create. But the CBO is a political institution (don’t kid yourselves otherwise) and they are firm believers in their religion of liberal tax and spend policies.
All eatablished government agencies are highly socialistic because of the type of employees who shun the dynamics of the private market for the safety net of government careers. It really is that simple, and why the agencies refuse to think in terms of the private sector (which works and employs the nation as well as the bureacrats). The Deficits will be lower this year too.
Why is it that the MSM only harps on the deficit when a Republican is President is in office? All we heard when Reagan was President was “his” deficit figures. Yet the national debt was $1 trillion when he took office and $3 trillion when George Bush I left office. Of that, $1 trillion went to bail out the savings and loans after the Democrats in Congress deliberately passed tax changes which they knew would collapse the real estate industry. The Dems were willing to destroy the economy to make Reagan look bad. The National debt was $3 trillion when Clinton took office, yet, after touting his surpluses it was $6 trillion when he left office. That means Clinton added more to the National debt, while running surpluses, than Reagan did. I have never heard anyone in the MSM even mention Clinton’s additions to the national debt much less question his bookkeeping practices.
Another failure to report was the inflation rate during Clinton’s term in office. While claiming the inflation rate was low, the cost of everything we use tripled or quadrupled during his term in office. When Clinton took office you could buy 5 lbs. of sugar or flour for $ .39 and a box of cereal for $.79 to $1.29. When he left office 5 lbs of sugar cost over $2 and flour was almost as high. And don’t even ask what a box of cereal cost. It was $3 and $4 per box. The cost of everything else that were necessities went up at the same rate. The only things that got cheaper where manufactured goods after he opened our markets to China and allowed them to dump so much cheap stuff here it caused the collapse and ultimate exodus to China of our manufacturing base. Yet Clinton is still touted and praised for his handling of the economy.
But not nearly as far and fast as China’s would. It would be complete suicide for them.
Because if the money’s not there to pay them, we would have the goods, they would have worthless paper.
it wouldn’t be suicide for them. they would lose a lot of money, but unlike us, they don’t have a huge trade deficit.
it would hurt them though, so i don’t think they will do it lightly. but they could do it, and that’s why the growing debt is such a problem. we are giving the keys to collapse our economy to a foreign and often not-so-friendly government. right now they have a large economic incentive not to cash in the bonds all at once. but say we ever got in a war with them over taiwan? the u.s. has pledged to protect taiwan in the event of a chinese invasion and taiwan is doomed without our help. all china would have to do is cash in the bonds, just before attacking taiwan and we would be unable to stop them
oh and japan was never in the same position. the japanese bought american real estate, not u.s. bonds. also, even if they did, unlike china japan depends on the u.s. military for it’s national defense. so even if they had bought bonds in the 1980s it would not be as dangerous
Why is it that the MSM only harps on the deficit when a Republican is President is in office?
apparently momdear1 has forgotten the entire 1996 candidacy of ross perot
as for ivehadit,
i’m a little confused. what “DNC talking points” are you referring to? i wasn’t quoting anyone else, i was just explaining what SSI is and pointing out that it wasn’t part of bush’s social security reform plan.
you say “I was referring to MY payments into the “system— but that’s not what you said. you asked about SSI, which is not based on your payments into the system. as i pointed out above, maybe you were confused with SSDI (which would be covered by the bush plan). a lot of people on SSDI or who get both SSI and SSDI mistakenly call it “SSI”, but i don’t know what your situation is. you said you were on SSI and i simply took you at your word.
And where do you get your information regarding the amount of bonds China holds? Americans hold a huge bulk of bonds, tbills and notes…just depends on interest rates as to which is the biggest investment at any given time.
there’s a ton of stuff all over the place about how china has been acquiring u.s. debt. a simple google search will turn up a ton of articles about it. but if you want a simple cite, this is from the wikipedia entry on the u.s. public debt:
UPyer
“it wouldn’t be suicide for them. they would lose a lot of money, but unlike us, they don’t have a huge trade deficit.”
Interesting observation. If you own a factory producing goods, after all, that’s all China is right now, and you had a note where Joe Blow owed you a million dollars and Joe Blow was your main consumer (say 90%) of your manufactured goods and suddenly Joe Blow decided to quit buying from you because he went broke. You think you would still be in good shape. You shut your factory down because you don’t have enough customers and so you attempt to call your note, but remember, Joe Blow went broke, he’s not gonna pay you anything. Are you in good shape or pretty much bankrupt?
“it would hurt them though, so i don’t think they will do it lightly. but they could do it, and that’s why the growing debt is such a problem.”
Depends on your definition of “hurt them”
“we are giving the keys to collapse our economy to a foreign and often not-so-friendly government. right now they have a large economic incentive not to cash in the bonds all at once. but say we ever got in a war with them over taiwan?”
Useless hypothetical. Mao was the one with the chapped butt about Taiwan, no indication that the present leader is obsessed. He doesn’t want to aim his own shotgun at his head.
” the u.s. has pledged to protect taiwan in the event of a chinese invasion and taiwan is doomed without our help.”
According to you, our military help would be useless because China asked us to redeem their bonds. interesting.
” all china would have to do is cash in the bonds, just before attacking taiwan and we would be unable to stop them”
According to you, we are bankrupt and wouldn’t redeem the bonds anyhow.
“oh and japan was never in the same position. the japanese bought american real estate, not u.s. bonds. also, even if they did, unlike china japan depends on the u.s. military for it’s national defense. so even if they had bought bonds in the 1980s it would not be as dangerous”
Need to apply a little logic here. If you had some money to invest. Do you think it would be worth more to invest in real estate where a major highway intersection was going to be built(ala Harry Reid) or in U S. Treasury bonds. So you’re saying Japan was WORSE off for buying real estate than they would have been had they bought bonds? How much of Donand Trump’s or Bill Gates money do you think they have invested in US Bonds?
Think about why China is investing in US Bonds. Where is the money coming from to buy the bonds? Every factory in China is partially owned by the government and all raw materials are owned by the government. So to get the millions of Chinese working so they can live, they manufacture goods and sell them at a cheap price(possible because of government subsidized raw materials,etc) but they sell mostly to the US because that is the only country that seems to have unlimited wealth (compared to the rest of the world). Now they could take their profits and build more factories, but the market is limited, so they just elect to keep the money for future use when the market improves. So what do they do with that money? Let’s see, invest it in Chinese Bonds(to sell to public or other countries) whoops no market. Let’s look as alternatives, buy Russian bonds? whoops, would you? Whose bonds to buy? Maybe the US? well using a little reasoning and thinking, well that’s certainly the safest place. So they do. Now let’s think, what do they do next. Well hell, let’s declare war lose both our money and markets. Well that’s reasonable. Bang bang. Jeez, give me a break.
UpYerNoz,
You answered basic questions regarding your argument with ‘I dunt no, check google’. For example:
Tell me, the deficit is what percentage of GDP?
And that is historically?
i don’t know off the top of my head. and i’m guessing you could google it up just as easily as i could. so be my guest…
What percent of the debt is paid to Americans through Treasury bonds,bills and notes? You know, mom and pops who rely on these for income?
again, google away.
but i do know this: t-bonds are not just held by mom and pops. the reason china holds so much of the u.s. debt is because they have become the biggest holder of american bonds. all they have to do is cash them all in and the u.s. economy falls.
Why make your ‘America is going broke because people are investing in it!!!’ argument if you cannot answer those basic questions.
Nations and individuals are investing in America because it is the best and safest investment out there. Simple enough, eh. The Euro and Yen based economies are our only competition for this – and they are not much competition.
Also, your point that the supplemental defense are ‘hidden’ from the budget process:
Do war expenses increase the deficit?
in theory it should. except that the bush administration has not included war spending in the normal budgetary process. instead of having it be part of the DoD budget for the year, the iraq and afghan wars are being funding by ad hoc “emergency†spending bills.
which is why some figures touting a falling deficit can be misleading. they sometimes only look at the usual budget and do not count the large and growing heap of money that is being spent on iraq and afghanistan.
Buddy, if you bothered to read my first post in this chain it points you directly to the Federal Monthly Treasury Statement. Do your own Google search for when the Dems start wailing and rending their clothes about the Defense
Supplemental and watch as the DOD expenditures increase by that amout+ either that month or the next’.
Why do you Libs not back up your opinions with direct sources?
And, please don’t source some Truther’s, TruthOut, or biased NYT document as a primary source.
I will say again…
Without any interference from big spending Libs in Congress we will run a microscopic deficit this year – about $65 Billion. And, for all I care let the oil ticks and Chicoms buy it all!!! Or, let the Baby Boomers who actually invested in their retirements rebalance their accounts to safety – your really don’t want to deny them that since you are apparently so scared of the stock market. By the way, on the topic of investing for your own retirement – watch out for us GetXers. We are kindof a nasty lot that is not really very forgiving. If you don’t set yourself up, we will not vote to bail you out…
Useless hypothetical. Mao was the one with the chapped butt about Taiwan, no indication that the present leader is obsessed
every leader since mao has reaffirmed the policy of reunited with it’s renegate provence taiwan. the current leadership of china has told taiwan that if they officially declared independance than that will trigger a military response. they last said that in 2006. so yes, the current leadership also has a chapped butt about the issue.
According to you, our military help would be useless because China asked us to redeem their bonds. interesting.
you’re missing the intermediate step. if china cashes in all its bonds (and other forms of debt) then the u.s. can either honor its obligations and go bankrupt–thus unable to pay soldiers’ salaries–or default and let our economy go down the toilet as all of the rest of our creditors stop loaning the u.s. money.
So you’re saying Japan was WORSE off for buying real estate than they would have been had they bought bonds?
no, that’s not what i’m saying at all. economically real estate was a better investment. but strategically holding american real estate did not give the japanese government a sword to hold over the u.s.’ head. they’re different things.
So to get the millions of Chinese working so they can live, they manufacture goods and sell them at a cheap price(possible because of government subsidized raw materials,etc) but they sell mostly to the US because that is the only country that seems to have unlimited wealth (compared to the rest of the world).
the u.s. is china’s biggest customer, but it is not it’s only customer. the EU is a close second and will probably surpass the u.s. in the next few years (largely because of their increased buying power as the euro increasingly gains value against the dollar). also chinese goods are literally everywhere now. i have seen them in the middle east, in africa and across asia.
For your information, I was a registered rep for 10 years with a world class firm. I know exactly what I am talking about. You, however, do not.
You might want to get some information that is legitimate before you start typing on this site.
By the way UpYerNoz,
The Baby Boomers that retire now are those that can retire now. They will not be the folks counting on stupid Social Security. They will be the folks who have rather large retirement account – and they will continue paying taxes for their entire retirement.
That is, personal income tax revenues will continue to escalate even as the Baby Boomers retire.
Those that did not invest in retirement accounts will have to continue to work and invest for retirement. They will work at least an additional growth cycle (~8 years) and will have to put their retirement investments more at risk. They will be paying income taxes well into the Social Security crash you are expecting. And, if we keep our tax and regulation structure growth oriented they will be fine.
Finally, when we start running Federal Surpluses do you think it is really wise to pay down long term debt with intrest rates of less than 5%. For example, I am not paying down my mortgage. We are not talking about debt at 15% interest anymore – those rates haven’t been seen since the ever brilliant President Carter moved on… We should, perhaps, use that money to seed the individually owned and managed Social Security accounts promoted by President Bush…
Upyer, so much of your argument is so useless. Taiwan is gonna be Taiwan. Who gives a damn. They are independent, why “declare” independence just to go to war? Stupid argument.
So the US is only 50-60 percent of their business. Let’s see now, the Chinese discussion would go:
America is wealthiest country in world, let’s invest in their bonds so our money will be safe then demand the money to crash their economy, shooting ourselves in the foot.
Duh, yea that sounds reasonable, let’s go get them. What the hell, we can just put all our people in all our factories out of work, they can just eat rats.
Because if the US econ tanks, EU will be right there with them and so would the rest of the world, but hell, let’s do it anyway.
I’ll have to admit Upyer, you make a great argument for why China should crash the US econ. (Better countries have tried, Russia)
you’re missing the intermediate step. if china cashes in all its bonds (and other forms of debt) then the u.s. can either honor its obligations and go bankrupt–thus unable to pay soldiers’ salaries–or default and let our economy go down the toilet as all of the rest of our creditors stop loaning the u.s. money
What in the world gives you the idea that there are not buyers lined up to buy the t-bills, bonds, etc if China should be dumb enough to cash theirs in. The whole world wants to buy them to say nothing of the investors in this country. If China should be dumb enough all the government has to do in worst case scenario is increase the interest rates and they will all be gone within a week.
You are the perfect example of “a little knowledge is a dangerous thing”. But then you are not dangerous because you don’t know what you are talking about and nobody listens to you anyway.
Exactly, Barbara.
Although I will say that raising the interest rates probably would upset the balance of the economy it would not be as bad as the US going bankrupt. Besides higher interest rates would be very short term.
What in the world gives you the idea that there are not buyers lined up to buy the t-bills, bonds, etc
there probably aren’t enough buyers. if china cashes in all $1 trillion of its bonds, that will flood the market, rendering other bonds less valuable and giving them an incentive to dump them as well.
and china doesn’t just have t-bonds. it also holds a lot of u.s. currency reserves. dumping that would flood the market on dollars causing a collapse of its value. it isn’t in china’s interest to do that. it wants a valuable dollar so that chinese products cost less. but if we end up in a more adversarial and less commercial relationship with them in the future, that might change
upyer, I actually think I agree with you here. Only on this point.
there is no distinct advantage in China investing in US securities except for one reason. They are the safest investments they can make.
It is not now, and for the forseeable future, in their interest for that to change.
Overall, the US econ is the best it’s ever been, ever. It is much better than China’s China is a 3rd world country and will be for a long, long time. Their cities don’t have sewer systems, they have medical care similar to Cuba, except they each pay for their own. government supplies nothing. Instead of buying all these US securities, they should be investing in infrastructure.
Couldn’t help but notice that you failed to respond to this:
“You said above:â€isn’t having any deficit being broke? i mean, a deficit is when our country is spending more money that it receives, and borrows the difference.â€
Do you still believe that any deficit is being broke?