Good news for America = bad news for Dems

[MonsterMark]

Humm, maybe Bushonomics does work after all.
+++++++++++++++++++++++++++++++++++++++++++++++++

Bush's Budget Update May Show Deficit Goal Being Reached Early

July 11 (Bloomberg) -- President George W. Bush's administration will report this week that surging tax revenue is shrinking this year's budget deficit from the record 2004 level, possibly by as much as $90 billion, giving him a shot at fulfilling his deficit reduction promise three years early.
With tax revenue running $1 billion a day ahead of the 2004 pace in late April and May, the deficit will likely decline to about $325 billion from $412 billion last year, according to the Congressional Budget Office and private forecasters such as Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut.

``An expanding economy, creating more receipts, is putting us on a very good path to deal with our deficit,'' Treasury Secretary John Snow said at a press conference in Calgary on July 8. ``It's pretty clear now the path we are on will take us below the president's initial target.''

Bush promised during his election campaign last year that he would pare the annual deficit to about 2.25 percent of the nation's gross domestic product by 2009.

 

[97silverlsc]

Un-Spin the Budget
By Paul Krugman
The New York Times

Monday 11 July 2005

Later this week the White House budget director plans to put on an aviator costume, march up to a microphone and declare Mission Accomplished in the war on deficits. O.K., I'm not sure about the costume bit.

Seriously, the administration is poised to do the same thing on the budget that it has done again and again in Iraq: claim that a modest, probably temporary lull in the flow of bad news shows that victory is around the corner and that its policies have been vindicated.

So let me do some pre-emptive de-spinning and debunking.

To understand where the budget deficit came from, you can't do better than the Jan. 18, 2001, issue of the satirical newspaper The Onion, which predicted the future with eerie precision. "We must squander our nation's hard-won budget surplus on tax breaks for the wealthiest 15 percent," the magazine's spoof had the president-elect declare. "And, on the foreign front, we must find an enemy and defeat it."

And so it has turned out. President Bush has presided over the transformation of a budget surplus into a large deficit, which threatens the government's long-run solvency. The principal cause of that reversal was Mr. Bush's unprecedented decision to cut taxes, especially on the wealthiest Americans, while taking the nation into an expensive war.

Where's the good news? Well, for the past four years actual tax receipts have consistently come in below expectations, so that the deficit is even bigger than one might have predicted given the administration's don't-tax-but-spend-anyway policies. Recent tax numbers, however, finally offer a positive surprise. The Congressional Budget Office suggests in its latest monthly budget review that the deficit in fiscal 2005 will be "significantly less than $350 billion, perhaps below $325 billion." Last year the deficit was $412 billion.

The usual suspects on the right are already declaring victory over the deficit, and proclaiming vindication for the Laffer Curve - the claim that tax cuts pay for themselves, because they have such a miraculous effect on the economy that revenue actually goes up.

But the fact is that revenue remains far lower than anyone would have predicted before the tax cuts began. In January 2001 the budget office forecast revenues of $2.57 trillion in fiscal 2005. Even with the recent increase in receipts, the actual number will be at least $400 billion less.

And nonpartisan budget experts, such as Ed McKelvey of Goldman Sachs, believe that even the limited good news on the budget is a temporary blip, not a turning point. Douglas Holtz-Eakin, the director of the Congressional Budget Office, warns us to take the new revenue figures with a "grain of salt," and declares that "if you take yourself to 2008, 2009 or 2010, that vision is the same today as it was two months ago."

A close look at the tax data explains why these experts believe that we're seeing a temporary uptick in revenues, not a sustained change in the trend. Taxes that are closely tied to the number of jobs and the average wage, such as payroll taxes and income taxes automatically withheld from paychecks, aren't showing any big pickup. This confirms other data showing that the economy as a whole is, if anything, doing worse than one would expect at this stage of an economic recovery.

It turns out that all of the upside surprise in tax receipts is coming from two sources. One is tax payments from corporations, up both because last year corporate profits grew much more rapidly than the rest of the economy and because the effective tax rate on corporations went up when a temporary tax break, introduced in 2002, expired. Both are one-time events

The other source of increased revenue is nonwithheld income taxes - taxes that aren't deducted from paychecks but are instead paid by people receiving additional, nonsalary income. The bounce in nonwithheld taxes probably reflects mainly capital gains on stocks and real estate, together with bonuses paid in the finance and real estate industries. Again, this revenue boost looks like a temporary blip driven by rising stocks and the housing bubble.

In other words, we're still deep in the fiscal quagmire, with federal revenues far below what's needed to pay for federal programs. And we won't get out of that quagmire until a future president admits that the Bush tax cuts were a mistake, and must be reversed.

 

[MonsterMark]

fiscal quagmire

There's that quagmire word again. Can't wait until somebody in the DNC looks up another word in the dictionary.

Once again, take positive news and spin it negative. The left is sad and angry. I feel sorry for them. What a way to go through life.

 

[97silverlsc]

There's that quagmire word again. Can't wait until somebody in the DNC looks up another word in the dictionary.

Once again, take positive news and spin it negative. The left is sad and angry. I feel sorry for them. What a way to go through life.

Don't like quagmire? How about disaster?
Once again, take negative news and try to spin it positive. The right are lying through their teeth. Feel sorry for yourself, I didn't vote for the bonehead that created this fiscal mess!!!

 

[97silverlsc]

U.S. jobless rate understated, study says
Labor force participation rates have not rebounded
By Rex Nutting, MarketWatch
Last Update: 2:56 PM ET July 15, 2005
E-mail it | Print | Alert | Reprint |

WASHINGTON (MarketWatch) - The current low U.S. unemployment rate probably understates the true level of joblessness by 1 to 3 percentage points, the senior economist at the Boston Federal Reserve says.

Millions of potential workers who dropped out of the labor force during the recession four years ago have not returned as expected and are thus not counted in the official unemployment statistics, said Katharine Bradbury in a paper published by the Boston Fed. Read the study.

The jobless rate fell to 5% in June the lowest level since the terror attacks of September 2001.

Labor force participation rates "have not recovered as much as usual and the discrepancies are large," she wrote.

"Current low rates of labor market participation thus potentially represent considerable slack in the U.S. labor market," she wrote.

The amount of slack in the economy is a key variable for Federal Reserve policymakers, who have been raising interest rates for more than a year to return rates to "neutral' levels.

All things equal, the more slack in the economy, the lower rates ought to be.

Some policymakers have argued that the economy is close to full employment with the jobless rate at 5%, thus justifying higher rates to pre-empt inflationary pressures from building in a tight labor market.

While the official unemployment rate has fallen from a peak of 6.3% in June 2003 to 5% in June 2005, the labor force participation rate remains close to 15-year lows of 66%.

Typically, labor force participation rates rebound sharply following recessions, Bradbury found.

The official jobless rate understated the severity of the slowdown in 2001 and has overstated the strength of the recovery since then, she said.

Government unemployment statistics are calculated by asking adults who aren't working if they'd like to work and if they've actively looked for work. Only those who are working or looking are considered in the unemployment rate calculations.

Crunching the numbers

The unemployment rate is derived by dividing the number of people who are unemployed (and looking) by the number of people in the labor force.

The labor force participation rate is calculated by taking all those working or looking for work and dividing by the total adult population.

The labor force participation rate has changed dramatically over the past 40 years as more women entered the workforce and more teenagers and young adults continue their education. At the same time, participation rates for adult men declined, as more took early retirement and disability benefits improved.

In 1965, only about 59% of all adults were in the labor force. By 1996, the figure had risen to 67%. When the recession began in March 2001, the participation rate was 67.2%.

All of the improvement in participation rates during this recovery has come from people over 55, as more relatively healthy Baby Boomers enter this cohort. At the same time, participation rates for teenagers have fallen to 44% after averaging more than 50% during the 1990s boom.

If labor force participation rates had improved as much during this recovery as typical, between 1.6 million and 5.1 million more people would be in the labor force, Bradbury concluded.

If those people were counted in the labor force but not working, the jobless rate would have been somewhere between 6.5% and 8.7%, rather than the 5.4% reported by the Labor Department in the three months from November 2004 to February 2005.

"An 8.7% unemployment rate would represent considerable slack in the labor market," Bradbury said.

 

[fossten]

Don't like quagmire? How about disaster?
Once again, take negative news and try to spin it positive. The right are lying through their teeth. Feel sorry for yourself, I didn't vote for the bonehead that created this fiscal mess!!!

I see. But you voted for and/or support the libs in Congress who say that Social Security isn't in trouble and doesn't need to be fixed, which, by the way, contradicts everything Bill Clinton said about SS and also contradicts everything they themselves said about SS. Total hypocrisy. That only supports that libs/Dems are in favor of whatever fiscal policy leaves them with the most power and keeps the most number of people dependent on them.

 

[97silverlsc]

I see. But you voted for and/or support the libs in Congress who say that Social Security isn't in trouble and doesn't need to be fixed, which, by the way, contradicts everything Bill Clinton said about SS and also contradicts everything they themselves said about SS. Total hypocrisy. That only supports that libs/Dems are in favor of whatever fiscal policy leaves them with the most power and keeps the most number of people dependent on them.

There you go again, putting words in my mouth. You don't know who I voted for, don't know who I support, and from what I've read, I don't see the libs saying SS isn't in trouble and doesn't need fixing, they just don't agree with Shrubs fix of giving money to wall street and creating more national debt on top of the record debt Shrub has already run up.
You love that "hypocrisy" word, but I think that word applies more aptly to the Repugs. They support the law of the land except when it applies to them. They're "christian" when they can score points making headlines about Terry Schiavo, but not when considering whether we were lied to about the Iraq war or whether it is a just war, etc., etc.

:N

 

[fossten]

There you go again, putting words in my mouth. You don't know who I voted for, don't know who I support...
:N

Well, you leave me no choice. Everybody else who knows how to type on a keyboard puts words in your mouth, since you don't show any ability to do much more than cut-and-paste their articles. Why should it make any difference if I do it as well?

I don't know what you stand for since I don't see you put your own thoughts or ideas in this forum. All I ever see you do is bash Republicans. I never see any real, new, positive ideas come from you.

Whatsamatter? Are you afraid to tell people what you believe in? Or are you afraid people will find out that you don't believe in anything?

Come on, I challenge you: Start a new thread, and only state what you think and believe in, and don't quote anybody else. Just for that thread. I would gladly read it.

 

[JohnnyBz00LS]

Well, you leave me no choice. Everybody else who knows how to type on a keyboard puts words in your mouth, since you don't show any ability to do much more than cut-and-paste their articles. Why should it make any difference if I do it as well?

I don't know what you stand for since I don't see you put your own thoughts or ideas in this forum. All I ever see you do is bash Republicans. I never see any real, new, positive ideas come from you.

Whatsamatter? Are you afraid to tell people what you believe in? Or are you afraid people will find out that you don't believe in anything?

Come on, I challenge you: Start a new thread, and only state what you think and believe in, and don't quote anybody else. Just for that thread. I would gladly read it.

Fossten, try engaging the issue for a change instead of nit-picking one's preferred method of responding to a post, you might regain a trace of your lost credibility. This thread was started w/ a quoted article, WTF is wrong w/ responding to it w/ another quoted article? Phil posts articles that expresses HIS thoughts and opinions. If he posts one that DIFFERS from his thoughs / opinion, he'll follow it up w/ his own commentary about how / where he disagrees with it. It's pretty obvious to me that you'd prefer to launch a personal attack against someone's "credibility" based on something trivial / irrelevant and then shove your own ideas down someone else's throat. Typical RWW tactics.