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spittle8
17 Aug 06,, 16:32
Hello. I don't know exactly what the deal is with our (U.S.) deficit, but I know it's bad. What exactly is the deal? Can we come out of it? :confused: :)

highsea
17 Aug 06,, 17:50
The deficit is declining due to a good economy, down about $110 Billion from the predictions made this last March.

The CBO by nature makes pessimistic outlooks. The projections for the next decade assume that Iraq spending will stay at $100 Billion/year, for example.

Whether the economy slows as they predict, and consumer spending declines and inflation increases is yet to be seen.
WASHINGTON (Marke****ch) -- The Congressional Budget Office on Thursday estimated that the federal deficit will narrow to $260 billion in the current fiscal year, down from $318 billion in fiscal 2005, amid surging tax revenues.

The new figure, contained in CBO's annual summer budget update, is $112 billion lower than the nonpartisan agency's March projection. The $260 billion figure matches an estimate contained in a monthly CBO report released a few weeks ago.

"Higher-than-anticipated revenues, mostly from individual and corporate income taxes, account for the bulk of that improvement," the CBO report said.
CBO said it now expects 2006 revenues to exceed its March forecast by $99 billion.

The 2006 deficit would be equal to 2% of gross domestic product, down from around 2.6% in 2005.

The White House Office of Management and Budget, in its midyear budget review last month, said the federal deficit would likely to fall to $296 billion, or 2.3% of gross domestic product, in fiscal 2006, which ends on Sept. 30.

The White House and Republican lawmakers have hailed recent budget news, arguing that economic growth and stronger-than-expected tax receipts have vindicated President Bush's first-term tax cuts.

The OMB and CBO budget projections "tell the same story," OMB Director Rob Portman told Bloomberg Television. "As the economy has improved, budget deficits have gone down."

For their part, Democrats charge that a $296 billion deficit this late in an economic recovery is nothing for the White House to brag about.

"This year alone, the debt is expected to increase by $557 billion. And under realistic assumptions, the country's total debt is projected to soar to more than $11 trillion by 2011," said Sen. Kent Conrad of North Dakota, senior Democrat on the Senate Budget Committee. "That is occurring at the worst possible time, just as the baby-boom generation begins to retire."

Economists have said this year's surge in tax receipts indeed reflects a strong economy, but they cautioned that the boost isn't fully sustainable.
The CBO sees the deficit rising to $286 billion in fiscal 2007, and projects cumulative deficits of $1.418 trillion from 2007 to 2011. Over the next decade, the agency sees deficits totaling $1.761 trillion.

CBO assumptions

Official CBO projections, under law, can only assume spending and tax policies that are already on the books. That means the long-term projections assumes that war spending will continue at its current pace and that many of Bush's first-term tax cuts will expire.

The CBO projections assume that the U.S. economic growth will slow to a "moderate, sustainable pace" over the next year and a half, expanding at an inflation-adjusted rate of 3% in the second half of 2006 and remaining at that pace through 2007.

The agency also expects consumer spending growth to slow amid a rise in interest rates, higher energy prices and declining growth of house prices. The outlook for business investment, meanwhile, remains "bright," CBO said, citing solid demand for goods and services from domestic and foreign customers.
The CBO noted that businesses are seeking to add capacity and continue to enjoy high profits amid "relatively low" levels of corporate debt.

HistoricalDavid
17 Aug 06,, 17:51
Iraq spending will stay at $100 billion a year?

Pessimistic in the extreme.

gilgamesh
17 Aug 06,, 17:53
You are riding in a metered taxi and running out of cash to pay for the ride. Your total debt(accumulated deficits) is monstorous.

highsea
17 Aug 06,, 18:08
...Pessimistic in the extreme.Agreed, but those are the rules they operate under. If Iraq spending went up to $150 Billion this year, the projections would be adjusted accordingly out ten years.

They are not permitted to make assumptions that decrease the numbers.

Bill
17 Aug 06,, 18:10
You are riding in a metered taxi and running out of cash to pay for the ride. Your total debt(accumulated deficits) is monstorous.

So what. (note the lack of a question mark)

gilgamesh
17 Aug 06,, 18:14
So what. (note the lack of a question mark)

Wait for another five years, then see what happens(if you are young and paying taxes).

Bill
17 Aug 06,, 18:46
Wait for another five years, then see what happens(if you are young and paying taxes).

Dude, i've heard all this naysaying before precisely because i'm not so young.

You should've heard the sky is falling hysteria from the left when reagan was running up those massive deficits in the 80s.

Yet, here we are 25+ years later....still kings of the hill.

Like we will be in 25 more.

gunnut
17 Aug 06,, 19:13
Dude, i've heard all this naysaying before precisely because i'm not so young.

You should've heard the sky is falling hysteria from the left when reagan was running up those massive deficits in the 80s.

Yet, here we are 25+ years later....still kings of the hill.

Like we will be in 25 more.

But you can't deny that a persistant deficit, and debt, is harmful to any economy. If only we can outlaw government employee unions, cut welfare, reduce bureaucracy...

dalem
17 Aug 06,, 21:38
But you can't deny that a persistant deficit, and debt, is harmful to any economy. If only we can outlaw government employee unions, cut welfare, reduce bureaucracy...

You're hired.

-dale

ArmchairGeneral
18 Aug 06,, 00:53
Elect gunnut dictator for life! All in favor say aye!

gunnut
18 Aug 06,, 06:31
Wow, people like, agree with me and stuff. That has never happened to me before... :eek:

Bill
18 Aug 06,, 07:11
But you can't deny that a persistant deficit, and debt, is harmful to any economy. If only we can outlaw government employee unions, cut welfare, reduce bureaucracy...

Sure it's not helpful, but it's also not at all likely to be fatal either.

Bill
18 Aug 06,, 07:12
Elect gunnut dictator for life! All in favor say aye!

Um, nay.

LOL....sorry dude, i don't dig the dictatorial stuff.(even though im almost certain i could get a high level position in your security apparatus, lolol).

You can still be the Pork Czar or something.

gunnut
18 Aug 06,, 18:08
Um, nay.

LOL....sorry dude, i don't dig the dictatorial stuff.(even though im almost certain i could get a high level position in your security apparatus, lolol).

You can still be the Pork Czar or something.

You can be my vice-dictator for a certain amount of time. :biggrin:

spittle8
19 Aug 06,, 02:37
"Yet, here we are 25+ years later....still kings of the hill.

Like we will be in 25 more."

I enjoy your posts for their caustic humor, and awesomeness.

I'm also glad to see Highsea post. I found this site a couple months ago, and read through about 20 pages (took a long time..) of the Super Hornet versus Fulcrum thread. I thoroughly enjoyed reading both of your posts in particular. I've learned an awful lot reading your posts, and I appreciate that you guys take the time to share your knowledge.

Shek
30 Aug 06,, 02:27
Hello. I don't know exactly what the deal is with our (U.S.) deficit, but I know it's bad. What exactly is the deal? Can we come out of it? :confused: :)

Deficits reflect whether you are in the black or red in a particular year. The debt is what matters and while it is large in absolute terms, you must look at it in comparison to GDP, which is rarely done. An anology is this - while a doctor's debt may be big, he also has a large salary, and so he can afford to carry more debt.

Now, you can't run deficits forever, but a good gauge of how solid the fundamentals of the US economy are is the fact that there is still such a large demand for the US dollar. This is one of the reason why interest rates in the US have remained low despite the large deficit.

So, there should be concern, but the issue is overhyped way too much.

Ray
30 Aug 06,, 11:02
So what. (note the lack of a question mark)

The sky may fall on the head!

Have you wondered why has the gusto and go seem to have gone away from the speeches of Bush?

GVChamp
31 Aug 06,, 23:35
I'm not concerned. Deficits DO carry some big negatives with them (mostly that they crowd out private investment by raising interest rates, meaning that, because the government spends so much on welfare programs, the nation as a whole has a lower capital stock and thus lower production in the future), but our deficits are very small compared to total GDP. In fact, I believe they are actually smaller than a number of European nations, including France.
What's more concerning is that the budget of all American governance combined continues to rise. There are actually very few branches that produce innovations (the military and, to a lesser extent, the NHS come to mind) and government is heavily bureaucratized and slow to change. We might as well be signing our economic death certificate when we continue to let government make more and more decisions with our resources.