Quote: March 24th 2009
His proposed budget would "cut our deficit in half by the end of my first term."
Barack Obama on Tuesday, March 24th, 2009 in in a news conference.
Obama promises to cut the deficit in half in four years
Defending his budget at a news conference on March 24, President Barack Obama repeated his claim that his plan would cut the deficit in half in five years.
...
Obama was quick to point out that he inherited much of this year's goliath deficit. And he's mostly right. The deficit began skyrocketing before Obama ever took office. In January, the CBO projected the 2009 deficit would balloon to $1.2 trillion. A worsening economy, the burden of the economic stimulus package, and projected spending in Obama's budget led the CBO in late March to revise its 2009 deficit projection to $1.8 trillion. So Obama can't claim that he inherited the entire deficit. But suffice to say the huge jump in the 2009 deficit is not a result of Obama's proposed budget.
The only thing that you can say is that Obama faithfully predicted the big deficits, and released those notices twice a year. So while he clearly didn't live up to those promises 3 years ago, we were clearly notified every few months.
By contrast, almost every Bush budget ended up being worse than predicted because of massive overspending.
In contrast, Clinton continually under-predicted the unprecedented GDP growth, which resulted in higher revenue and lower deficit. While the times certainly were as good as it's gotten in the last 4 decades, it almost seems as if you can't take credit for everything, if you couldn't predict it.
Budget Year | President | Deficit estimate | Deficit actual |
---|---|---|---|
2013 | Obama | ($901) | future |
2012 | Obama | ($1,101) | ($1,327) with year half over |
2011 | Obama | ($1,267) | ($1,300) |
2010 | Obama | ($1,258) | ($1,293) |
2009 | Bush | ($407) | ($1,413) |
2008 | Bush | ($239) | ($459) |
2007 | Bush | ($354) | ($161) |
2006 | Bush | ($390) | ($248) |
2005 | Bush | ($364) | ($318) |
2004 | Bush | ($307) | ($413) |
2003 | Bush | ($80) | ($378) |
2002 | Bush | $231 | ($158) |
2001 | Clinton | $184 | $128 |
2000 | Clinton | $117 | $236 |
1999 | Clinton | $10 | $126 |
1998 | Clinton | ($121) | $69 |
1997 | Clinton | ($140) | ($22) |
1996 | Clinton | ($197) | ($107) |
Quote: matildaIt is my understanding that Bush's wars were off the books and Obama's budget includes them.
so what, you still feel the effects of the money having been squandered.
Or as Diane Feinstein said long ago: There was no deficit, there was an Income Shortfall.
Quote: FleaStiffThere was no deficit, there was an Income Shortfall.
My confidence in Obama's desire for transperency is a little shaken for the 2013 budget. If you are not familiar with government bookkeeping, fiscal year 2013 begins 1 October 2012 before the election. So 30% of the fiscal year is guaranteed to have Obama as president, and the remainder will be his only if he wins.
In order to get the deficit under a trillion dollars, he is predicting almost no increase in federal spending, and an 18% increase in income. Neither of those extremes have happened since 1996 (except 2010 expenditures were lower than 2009).
I can't find a good source right now, so please don't quote me!!!
Quote: whatmeI remember hearing that the 2013 budget includes 1 trillion in additional revenue from new taxes. I remember the Pres. saying it not that long ago I think it was around the state of the union address.
$1 TRILLION IN NEW TAXES?!
Well, GW Bush raised revenue by $687 billion in only three years (from 2004 to 2007) before it all came crashing down.
As a reality check Federal Revenue is about the same as it was 5 to 6 years ago. The entire GDP is up about $2 trillion.
Federal Revenue
2006 $2.407 trillion
2007 $2.568
...
2012 $2.469
GDP for the USA
2006 $13.207 trillion
2007 $13.861 trillion
...
2012 $15.602 trillion
In some ways I share that sense of amazement that the government will increase revenue from the present $2.5 billion to almost $4 billion by 2017. My larger point is that the budget predictions are always way off for the year in question. The budget predictions for 5 years into the future are almost total fantasy .
I can't accuse Obama of doing anything different than what GW Bush did in previous years.
I am reminded of an anonymously credited thought, "The public votes for the President: the reverse is not always true."
Now that the Fed Reserve has printed a huge sum of currency as QE, and QE2, whom or perhaps better what entities have benefitted?
AFAIK, none of that newly-minted money went towards actually pay-down the defecit, thus the defecit has not "eased". Banking and financial entities have gained some very cheap money, at the cost of investing in say Treasuries. 2-year notes at a fraction of 1%. 30-years below 4%. You want 6%???, you think "real" inflation hasn't kicked in yet??,buy AT&T stock, not bonds.
Lets have a chart of gasoline, gold, A medium-sized Quarter-Pounder meal, bottled water, a sixx-pack of Bud, health-care costs, and the defecit growth for the past 15 years.
Quote: 98Clubs
Now that the Fed Reserve has printed a huge sum of currency as QE, and QE2, whom or perhaps better what entities have benefitted?
AFAIK, none of that newly-minted money went towards actually pay-down the defecit, thus the defecit has not "eased". Banking and financial entities have gained some very cheap money, at the cost of investing in say Treasuries. 2-year notes at a fraction of 1%. 30-years below 4%. You want 6%???, you think "real" inflation hasn't kicked in yet??,buy AT&T stock, not bonds.
QE/QE2 do not "ease the deficit." In fact, they have nothing to do with the deficit. It is just pumping money into the system. The money can buy Treasuries or it can buy other securities or it can be offered (or forced) to the private banking system. The Fed can call Jamie Dimon of Chase and say, "Hey, Jamie, can you take $10B of capital at a rate of 0.5%?"
At this point Mr Dimon can buy Treasuries for a near-risk-free return of say 1% or "put it on the street" to consumers, institutions, or commercial customers for a higher but riskier return. The "easing" comes when there is that extra billion chasing the same borrowers, which is supposed to lower rates. As rates are very low you can say it works if you like.
Problem is people need to want to borrow. If Mr Dimon calls US Steel and offers to loan $500MM and the CFO of USS says, "What are you, crazy? The economy is sluggish, we don't need more capital. Heck, we are sitting on a record amount now!"
Quote: Chris ChristieLast week, Christie said he was "tired of hearing about" Buffett in the national debt debate, adding that if the investor wants to make a difference, then he should donate his own money towards solving the problem.
"He should just write a check and shut up. Really, and just contribute," Christie said on CNN's "Piers Morgan Tonight." "If he wants to give the government more money, he's got the ability to write a check – go ahead and write it."
Quote: Warren BuffettIt's sort of a touching response to a $1.2 trillion deficit, isn't it, that somehow the American people will just all send in checks and take care of it," Buffett said on CNBC.
In 2010, the combined wealth of the Forbes 400 was $1.37 trillion. Maybe if they all give their entire fortune the government will break even for one year. I got to credit Christie with being really stupid on this one.
Quote: pacomartinIn 2010, the combined wealth of the Forbes 400 was $1.37 trillion. Maybe if they all give their entire fortune the government will break even for one year. I got to credit Christie with being really stupid on this one.
As stupid as those demanding higher taxes on "the rich"?
Quote: pacomartin
In 2010, the combined wealth of the Forbes 400 was $1.37 trillion. Maybe if they all give their entire fortune the government will break even for one year. I got to credit Christie with being really stupid on this one.
And how much of YOUR money are YOU willing to give to help the cause?
"The Rich" are taxed high enough, spending is the problem. Best solution is one flat rate of 15%, no deductions for anything, paid form first dollar you make. Yes, "the poor" have to pitch in. This is the only way to end the class warfare and end politicians running on raising taxes on someone else.
One more thing on Mr Buffet--he has lost any respect I had for him as a businessman. The proper tax rate on divadends and capital gains is zero (tax was paid at the corporate level on this income, the rest is a merely a transfer.) Unless he can, show how less money for investment means more investment that is.
Quote: NareedAs stupid as those demanding higher taxes on "the rich"?
Warren Buffet is one of the richest men in the USA. He is simply saying that the taxes are not equitable. He isn't saying that is the only solution.
In the 6 years from 2006 to 2012 government revenue has gone up $62 billion (2.5%), while the GDP has gone up $2,905 billion (22.5%) . If revenue had gone up 22.5% that would cut the deficit in half, while the other half would have to be met with decreased spending.
The deficit is $2.5 million per minute. Buffet is saying that even if he made a huge personal contribution at best his impact would be a few hours. Buffets entire fortune (one of the world's greatest) would only last 2 weeks.
Quote: pacomartin
In the 6 years from 2006 to 2012 government revenue has gone up $62 billion (2.5%), while the GDP has gone up $2,905 billion (22.5%) . If revenue had gone up 22.5% that would cut the deficit in half, while the other half would have to be met with decreased spending.
It is a spending problem, not a revenue problem. Spending is "baseline based" meaning it goes up no matter what. This does not happen with revenue. If we got rid of the early-1970s baseline law and actually made Congress do its job yearly we would go a big way towards getting back to balance. Ditto if we got back to the still-too-high 18%/GDP average spending vs the near 25%/GDP we have now.
Be careful if you demand a tax increase instead, to work any increase needs to be broad-based. If Obama and Democrats run and win on higher taxes you can bet it will hit everyone and people will cry because they were fooled yet again on taxes.
Quote: AZDuffmanIt is a spending problem, not a revenue problem. Spending is "baseline based" meaning it goes up no matter what. This does not happen with revenue. If we got rid of the early-1970s baseline law and actually made Congress do its job yearly we would go a big way towards getting back to balance. Ditto if we got back to the still-too-high 18%/GDP average spending vs the near 25%/GDP we have now.
Be careful if you demand a tax increase instead, to work any increase needs to be broad-based. If Obama and Democrats run and win on higher taxes you can bet it will hit everyone and people will cry because they were fooled yet again on taxes.
My belief is that it is a little of both. Back when the budget was balanced or ran a surplus, both revenue and spending were about 19% of GDP
As a percent of GDP
Year Revenue Spending
1997 19.2% 19.5%
1998 19.9% 19.1%
1999 19.8% 18.5%
2000 20.6% 18.2%
2012 15.8% 24.3%
As you pointed out, spending is nearly 25%/GDP , but revenue needs to go up to pre-recession levels.
Historically, our only year with a significant surplus (2000) was because revenue was a historic high (over 20% of GDP) .
1951 16.1%
1952 19.0
1953 18.7
1954 18.5
1955 16.5
1956 17.5
1957 17.7
1958 17.3
1959 16.2
1960 17.8
1961 17.8
1962 17.6
1963 17.8
1964 17.6
1965 17.0
1966 17.3
1967 18.4
1968 17.6
1969 19.7
1970 19.0
1971 17.3
1972 17.6
1973 17.6
1974 18.3
1975 17.9
1976 17.1
1977 18.0
1978 18.0
1979 18.5
1980 19.0
1981 19.6
1982 19.2
1983 17.5
1984 17.3
1985 17.7
1986 17.5
1987 18.4
1988 18.2
1989 18.4
1990 18.0
1991 17.8
1992 17.5
1993 17.5
1994 18.0
1995 18.4
1996 18.8
1997 19.2
1998 19.9
1999 19.8
2000 20.6% Largest positive surplus
2001 19.5
2002 17.6
2003 16.2
2004 16.1
2005 17.3
2006 18.2
2007 18.5
2008 17.6
2009 15.1
2010 15.1
2011 15.4
2012 15.8 estimate
It's not much of a stretch to say that if the budget balances, it will be much closer to 19%.
Quote: AZDuffmanAnd how much of YOUR money are YOU willing to give to help the cause?
"The Rich" are taxed high enough, spending is the problem. Best solution is one flat rate of 15%, no deductions for anything, paid form first dollar you make. Yes, "the poor" have to pitch in. This is the only way to end the class warfare and end politicians running on raising taxes on someone else.
One more thing on Mr Buffet--he has lost any respect I had for him as a businessman. The proper tax rate on divadends and capital gains is zero (tax was paid at the corporate level on this income, the rest is a merely a transfer.) Unless he can, show how less money for investment means more investment that is.
Coroprate taxes for the last 10 years have been at the lowest level in history. How's that working out?
Can't wait till we get a Republican in the White House so the deficit won't matter !
Quote: AZDuffmanAnd how much of YOUR money are YOU willing to give to help the cause?
"The Rich" are taxed high enough, spending is the problem. Best solution is one flat rate of 15%, no deductions for anything, paid form first dollar you make. Yes, "the poor" have to pitch in. This is the only way to end the class warfare and end politicians running on raising taxes on someone else.
Well, clearly spending is a big part of the problem. But asking for a flat percentage tax is little more than grunting like a cave man. If someone makes $10,000 and must support dependents, then you can't ask them to give $1500 to the government while asking someone who makes $10 million to give $1.5 million in taxes.
I understand asking for severe or complete limitation on deductions. But I don't get the calls for a flat tax. It's not as if we are in the middle ages and it is difficult to calculate percentages. It is impossible for anyone to think that a flat tax is somehow more fair.
Quote: pacomartinWell, clearly spending is a big part of the problem. But asking for a flat percentage tax is little more than grunting like a cave man. If someone makes $10,000 and must support dependents, then you can't ask them to give $1500 to the government while asking someone who makes $10 million to give $1.5 million in taxes.
I understand asking for severe or complete limitation on deductions. But I don't get the calls for a flat tax. It's not as if we are in the middle ages and it is difficult to calculate percentages. It is impossible for anyone to think that a flat tax is somehow more fair.
It is actually the most fair. How is everyone giving the same % not fair?
And I don't see many people making $10,000 and supporting dependents. But I do see the bottom 50% or so paying nothing. How is THAT fair?
Everyone should pay something.
Quote: pacomartinHere is a quick review of the federal budget bottom line.
For 2011 the budget deficit has gotten worse by $165 million since the budget was originally written last year. Receipts are $54 million worse than expected and outlays are $111 million higher than expected.
The deficit of $1.645 trillion could actually go higher when the final tally is made at the end of the fiscal year. The deficit for 2011 is now close to both the cumulative deficit of $2 billion during the 8 years of GW Bush's presidency. It is also close to the total outlay of $1.789 trillion of Clinton's final budget in 200.
President Year Receipts Outlays Surplus or Deficit (−) Clinton 2000 $2,025,191 $1,788,950 $236,241 GW Bush 2001 $1,991,082 $1,862,846 $128,236 GW Bush 2002 $1,853,136 $2,010,894 -$157,758 GW Bush 2003 $1,782,314 $2,159,899 -$377,585 GW Bush 2004 $1,880,114 $2,292,841 -$412,727 GW Bush 2005 $2,153,611 $2,471,957 -$318,346 GW Bush 2006 $2,406,869 $2,655,050 -$248,181 GW Bush 2007 $2,567,985 $2,728,686 -$160,701 GW Bush 2008 $2,523,991 $2,982,544 -$458,553 Obama 2009 $2,104,989 $3,517,677 -$1,412,688 Obama 2010 $2,162,724 $3,456,213 -$1,293,489 Obama 2011 estimate $2,173,700 $3,818,819 -$1,645,119 Obama 2011 original $2,228,000 $3,708,000 -$1,480,000 Obama 2012 estimate $2,627,449 $3,728,686 -$1,101,237
The typically optimistic prediction is that the deficit will decrease in 2012 to $1.1 trillion. I always feel that these prediction should come with a warning. The president is predicting a 21% increase in revenues which hasn't happened since 1969. At the same time he is predicting a 2.4% drop in outlays, which hasn't happened since 1955.
Almost every budget by any president usually gets worse as the year goes on. The glaring exception was Clinton, where receipts were much better than he predicted near the end of his 2nd term.
We may see the first truly post racial presidential election in 2012. The cry in pain and fear of meltdown may overshadow both race and party.
wow.. never knew obama went immediately to $1T above gw Bush's deficit amount.
thought it slowly rised to $1T+.
WTF!?!?!?!
what was the reason given for such a HUGE jump?
Quote: AZDuffmanQuote: pacomartinWell, clearly spending is a big part of the problem. But asking for a flat percentage tax is little more than grunting like a cave man. If someone makes $10,000 and must support dependents, then you can't ask them to give $1500 to the government while asking someone who makes $10 million to give $1.5 million in taxes.
I understand asking for severe or complete limitation on deductions. But I don't get the calls for a flat tax. It's not as if we are in the middle ages and it is difficult to calculate percentages. It is impossible for anyone to think that a flat tax is somehow more fair.
It is actually the most fair. How is everyone giving the same % not fair?
Marginal Value of money, which I am sure you know all about. A fair system, to me, at least, would be where everyone's tax rate rate resulted in the same marginal rate value to everyone. I have no idea if that's even possible (almost certainly not as even with similar wage earners, their marginal values will be different). But a flat rate isn't a fair solution where there is a huge spread of incomes.
Quote:And I don't see many people making $10,000 and supporting dependents. But I do see the bottom 50% or so paying nothing. How is THAT fair?
Taxing the bottom 50% of wage earners at a flat rate of 15% wouldn't solve the problem, though it would have more of an effect that I first assumed. The bottom quartile in the US of household income is about $25,000. 15% of that is $3,750. So lets assume on average the bottom 50% (*) each started paying $3,750.
That's 55 million households, so would result in around $200 Billion of receipts, which about 1/6th of the 2011 US government over spend.
Quote:Everyone should pay something.
This I agree with. I think the simple flat rate looks all simple and easy, but isn't the solution. The problem I've noticed is there's a huge number of tax-rebates and deductions for Americans. I suspect there is bottom 50% of earners paying income tax, and some of the higher earning households paying a smaller marginal rate or nothing at all. The drop off between a single income $50,000 earner with no spouse or kids and a dual income $50,000 household with two kids is MUCH bigger than in Canada and the UK. Like a factor of two. Mortgage exemptions are very nice benefit that your Northern neighbours don't get.
There's possibly a good right-leaning argument for a bottom rate tax band that effects everyone, that is an absolute minimum rate you pay regardless of deductions (5% say?). The graphs of spending and receipts are very interesting... there's a been a wild divergence since Obama's presidenct started (there was some of this effect with Bush 43 as well, but nothing like on the same scale).
Quote: thecesspit
This I agree with. I think the simple flat rate looks all simple and easy, but isn't the solution. The problem I've noticed is there's a huge number of tax-rebates and deductions for Americans. I suspect there is bottom 50% of earners paying income tax, and some of the higher earning households paying a smaller marginal rate or nothing at all. The drop off between a single income $50,000 earner with no spouse or kids and a dual income $50,000 household with two kids is MUCH bigger than in Canada and the UK. Like a factor of two. Mortgage exemptions are very nice benefit that your Northern neighbours don't get.
The "refundable" credits need to end, pronto. The EIC does some good, but the child-care credits are what makes low earners pay zero and in fact get a check. I won't repeat the sick multiplier effect to all the inner-city business that prey on the math-challenged. But what we have now is insane. When we all pay into the system there is less cheering for the next "free" handout.
I really don't know about Canadian taxes other than the GST I get raped with when I visit.
I pay Federal Income tax at 15% on the first 42,000, 22% on the next 42,000, 26% on the next 46,000 and 29% on everything above that in income tax (well -I- don't, but people in those rarified tax brackets do). There's a variety of Provincial Income taxes that go from 4-16% in BC. I pay 2,300 per year into the Canadian Pension Plan and 840 per year into Employment insurance.
The only rebate I get back is my pension contributions and charitable donations. There are other things like education credits, public transport credits and various kid-friendly credits I never look at.
The first 14k of income for me is non-refundable tax credits (so effectively I pay 0% of the first 14k, and 15% on the next 28k).
My net tax paid rate was therefore 22% of my total income.
Quote: 100xOdds
wow.. never knew obama went immediately to $1T above gw Bush's deficit amount.
thought it slowly rised to $1T+.
WTF!?!?!?!
what was the reason given for such a HUGE jump?
One argument is that 2009 was the first time the GDP went down year over year since the Great Depression. But the GDP dropped $400 billion, while it was expected to go up $600 billion. But as you pointed out while $1 trillion is a lot of money ($400 + $600 = $1 trillion), you wouldn't expect a change in GDP to be reflected entirely in the government deficit. The government expenditures are only supposed to be a percentage of GDP.
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The 2009 budget is first written published in February 2008, and is officially considered a Bush budget. When it was written, the predicted deficit was -$400 billion. Now GW Bush doesn't leave office for another 11 months.
At the Mid-Session review in August 2008, Bush predicted relatively minor changes. He said receipts for FY2009 are projected to be $49 billion lower than estimated in February because of the stimulus package and because of revised economic assumptions. Outlays for FY2009 were projected to be $26 billion higher than projected in February (mostly due to higher interest). So now the predicted deficit was -$475 billion .
But after August 2008 Bush recommended bailing out some firms on Wall Street (including Goldman Sachs). I saw an interview with him after his presidency, and he considers it one of the more savvy things he did as president.
The Emergency Economic Stabilization Act of 2008 was proposed in September 2008.
In the final tally, expenditures went up by $400 billion. But the crashing economy meant revenue plunged by another $600 billion. So the $400 billion deficit originally predicted soared by a trillion dollars to $1400 billion.
So GW Bush is president for 20 weeks of the fiscal year, while Obama was president for 32 weeks of that fiscal year. Now at the time, Obama protested that he inherited a terrible situation. But that point is now rather moot, as there was no change for the next 3 budgets.
Fiscal, Revenue, Expenditure as %/GDP
2009, 15.1%, 25.2% (20 weeks GW Bush, 32 weeks Obama)
2010, 15.1%, 24.1%
2011, 15.4%, 24.1%
2012, 15.8%, 24.3% (there are 23 weeks remaining in this fiscal year)
Both percentages are at the extrema. Revenue is among the smallest percentage of GDP since WWII, and expenditures are the largest.
My argument is that the only period of balanced budgets we have had in five decades were at around 19% of GDP. So revenue must increase. There is no possible way to cut spending from 24.3% to 15.8%.
Green is revenue, and black is expenditures