GayPatriot notes that the US government ran a surplus in December:
The U.S. government ran a $1 billion budget surplus in December, helped by a rise in corporate tax payments, the Congressional Budget Office said in its latest budget report released on Friday.
The surplus, which compared with an $18 billion deficit in the previous December, helped create a smaller fiscal deficit for the first three months of the 2005 fiscal year, than in the same quarter of the prior year.
Of course, it helps that Congress wasn’t in session and therefore couldn’t spend any money and screw more things up. The fact that corporate tax payments have increased despite Bush’s tax cuts shouldn’t be a surprise to those who understand supply-side economics — when American enterprise does well, they create more taxable wealth. This shows that we’re on the right side of Laffer curve and revenues are doing well.
But revenues are only one side of the equation. Congress must restrain its prolifigate spending habits. Given that Congress seems to be habitually unable to stop spending like drunken sailors, I’m not holding my breath for that – which is why the President may have to use his veto power in order to make sure that this good budgetary news isn’t wiped away in a flood of pork.
After four years of lagging economic growth and lagging revenue growth, the economy has finally hit a cyclical upsurge. With trillions of dollars in tax cuts having been in place nearly the entire four years, it’s amazing that stimulus has taken this long. Ultimately, the business cycle goes much farther in explaining current growth than does tax policy. If Clinton-era tax rates were still in place, the economy would still be growing at its current clip because the business cycle demands it. The only difference would be that revenues from corporate taxes would be higher because their rate of taxation would be higher.
This growth in corporate revenue (and apparent stalled growth in income tax revenue since you are not reporting growth in that sector) is largely the product of business decisions that have laid off thousands of American workers and outsourced operations to the Third World. With this in mind, one can expect the rising share of revenues being collected through corporate taxes to elevate the GOP onto another of their reverse Robin Hood pedestals this year….arguing how the would-be working people outsourced from their jobs aren’t paying their fair share of taxes and the burden is falling disproportionately on the oppressed corporations profiting handsomely from exporting the jobs of the freeloaders.
In regards to spending, there is zero chance of it being restrained. Assuming you support Bush’s plans to borrow more than a trillion dollars to help give away Social Security to Wall Street stock brokers, you have no business even suggesting fiscal restraint in Washington. Ditto to your support for a blindly hawkish foreign policy that requires hundreds of billions of dollars annually to finance.
Spending like Democrats is the only way Republicans can maintain short-term power in a nation where the public demands abundant government services (financial aid for college students, state-financed prescription drugs). Long-term, runaway spending is the only way Republicans can realize Milton Friedman’s “starve the beast” thesis of spending and tax-cutting GOP-despised government services bankrupt. Once this occurs, neither party will have the financial capacity to court voters with spending proposals and the Democratic Party will be neutered for generations. In other words, any wishes for spending restraint among principled conservatives (there must be some out there) stand no chance of overcoming the leadership of the Republican Party.
Sure, and as Mark predicts doom and gloom, unemployment continues to drop. The rate of unemployment is about what it was during this time in Clinton’s second term – you know, the time that was supposed to be the golden years of the American economy.
While we’re at it, let’s raise the corporate income tax rates through the roof once again. I’m sure that will incent corporations to keep jobs at home. Or they’ll do what they have to, which means laying off more people.
Giving trillions to Wall Street stock brokers? Give me a break! The majority of Americans are already in the stock market in one form or another. The “transition costs” to Social Security can be done in the same way that Social Security costs are now – off budget. Even if the wild-eyed predictions of $2 trillion in transition costs are right (which they aren’t), it pales in comparison to a few years from now when Social Security liabilities will be well over $10 trillion and growing.
Either we reform Social Security now, or everyone below the age of 30 shouldn’t expect to see one dime of the money they’re putting into the system. By 2017 Social Security goes into negative revenue. By 2042, it goes bankrupt. Either we give younger workers the ability to invest a segment of their Social Security into a private account, or we dramatically cut benefits to reduce future obligations.
Of course, the Democrats would rather protect a system that gives at best a 2% return and shafts millions of workers rather than giving people the freedom to invest.
Unemployment is going down and underemployment is going up. Given the abundance of low-wage jobs available in most regions of this country (not to mention the parasite stigma attached to any American out of work for more than a month), the ranks of the actual unemployed in this country are always going to be fairly low. As the economy grows, the likelihood of reduced unemployment is high, but the outlook can only be an unquestioned positive if one believes “a job is a job.” Certainly, well-to-do Republican power players are likely to believe a job is a job, but the former steelworker who lost his union job and pension to outsourcing and now has to card 17-year-olds buying Marlboros at the 7-11 might disagree.
Either way, the growth in corporate tax revenues and stagnation of income tax revenues virtually assures us of one thing this year. Republicans will use the figures to reinforce their claims of oppressive unfairness in our society. Not the unfairness of corporate profits (and thus tax burden) rising disproportionately to the average income earner, but the unfairness of the average income earner paying too few taxes in proportion to those who sign their small paychecks.
For years now, supply-side ideologues have been telling us that trillion dollar tax cuts are actually free. However, your suggestion that trillion dollar redistributions of Social Security dollars from the government to private investment firms can also be done for free is a new one. Virtually everything government does ends up costing infinitely more than originally projected, so your suggestion that Congress is overstating the cost burden of “reforming” Social Security is very intriguing. Care to validate your premise that the government is highballing is projected Social Security transition costs? If not, you’re simply providing another example of your ongoing plunge into irreversible delusion.
It’s also amusing how the ruinous budget deficits, trade deficits and foreign policy decisions of today are “overblown problems” in the minds of conservatives, yet their apocalyptic prophesies of the bankrupting of Social Security a half century into the future are supposed to be heeded. Raising the SS eligibility age to 67 or 68, and raising the income cap on the payroll tax would take care of Social Security problems for many additional years beyond 2042.
There’s an old saying that when you hear something galloping behind you, don’t expect to turn around and find a zebra. In other words, the obvious answer is far more likely to be right than the exotic. Social Security “reformers” are basically telling us the zebra of privatization is more likely to save the program than the horse of minor structural fixes. Too bad the American public is unlikely to learn that Bush’s five largest individual campaign donors this year were all stock brokers. If they did, they might realize why Bush is telling them to expect a zebra when they turn around.
Except the data doesn’t back that up. Wages have been increasingly steadily, and the biggest fields are education, health care, and financial services. Health care is one of the biggest creator of jobs, and those jobs pay extremely well. (Hint, if you want to get a good job, get a nursing degree. The shortage of nurses is becoming critical.)
In fact the job market outlook is very positive:
Hardly the same image that you paint – and they have the numbers to back it up.
Except again, the numbers say something else entirely.
The Social Security Administration estimated $500 billion in transition costs. Under the current system Social Security will consume an inflation-adjusted $27 trillion over the next 75 years. PRAs would drop these obligations down to $7-$8 billion – one third of the obligations of the current system.
And billions to private investment firms? Pure fantasy. State Street Investing, one of the largest investment firms in the country has estimated that the costs for administering PRAs would be 0.19%-0.35% of total contributions – hardly a cash industy. Most workers would opt just to contribute this money into the 401(k) or IRA they already have as part of their job.
Under the federal Thrift Savings Plan given to federal workers, the administrative costs are only .1%.
Six years to be exact. You’d have to cover $27 trillion over 75 years. Even with a rate of economic growth comparable to past years, there’s no way you can cover that much revenue without major tax hikes.
Unless you want to start raising the tax rate on every middle-income worker to 60%, you can’t cover that kind of gap by such minor changes.
Which is completely irrelevant. The plan for PRAs is a sound one, the numbers are correct, and Social Security will begin to lose money by 2018. If something isn’t done then, the system will collapse long before you, I, or any worker under the age of 30 ever sees a dime of our contributions back, and older workers will be unable to get the benefits they were promised. Social Security is statutorially limited to only paying back what it gets in – which means that unless something is done, the government will have to find $27 trillion over the next 75 years just to stay afloat.
The health care industry is the biggest employer in most rural communities, and I seldom see too many Cadillacs in the employee parking lots of the clinics and nursing homes in my neck of the woods. While there are certainly a number of good jobs in health care, including nursing, a higher-than-average level of intelligence is necessary to obtain the positions that pay above the poverty line. Only a small percentage of the factory workers who jobs get outsourced will be able to go back to school and obtain a nursing degree. If they were smart enough to be nurses, they wouldn’t have been working in a factory in the first place. Given my lackluster math and science resume, I certainly wouldn’t be able to make it if I were put in that position. Furthermore, the health care industry’s “median wage” would be propped up by the physicians salaries. The average nurse’s aides, the most prominent open position in health care, pays well below $16 an hour.
In general, the prospects for short-term job growth are probably decent, even though few of the new jobs will be financially desirable compared to those we’ve said arriva derci to in the past five years. Then again, the job growth outlook has looked far better than it has ended up being for the last two years. Employment growth has not met expectations in 2003 or 2004, and the deindustrialization of America does not appear likely to relent even under the rosiest of scenarios. Most troubling about 2005 is the likely implosion of the airlines. Being some of the biggest employers in the nation, the endless concessions of airline workers and likely bankruptcy of the major airlines represents a huge threat to what’s left of the American middle class and their purchasing power. I can’t imagine how the meltdown of the airlines wouldn’t plunge us back into recession by itself.
Regarding the income tax rate information you linked, you merely reinforced my point that the GOP is likely to use as a political weapon the shrinking tax burden (due to correlating reduction of proportional income) of income earners. I can already hear the bellyaching about the rich in this country are STILL overtaxed. Read what you will into the linked numbers, but if the wealthiest quintile can receive the largest percentage rate cut and still see their overall share of the tax burden increase, it’s frightening proof positive of the ongoing maldistribution of financial resources…which directly relates to disparity of political power and the entire constitutional premise of political equality.
Furthermore, the income tax rate figures manipulate the overall tax dynamic in this country. Largely in response to declining income tax rates, the burden of taxation has shifted to regressive and supersized property taxes, sales taxes and excise taxes in recent years, necessary to fill the revenue void of plummeting income taxes, dividend taxes and estate taxes. John Kerry’s argument of tax burden shifting from rich to poor couldn’t be more accurate unless you pretend income taxes are the only form of taxes.
Everybody has their own set of data regarding Social Security. Reports on the program’s solvency that I have read are far less apocalyptic than yours. The truth is nobody can project the economic growth rates of the coming decades with any intellectual honesty, meaning all of the studies and figures are merely hypotheses. The bottom line is that Social Security is a problem far into the future, and the best way to ensure its survival is sustained economic growth which is being jeopardized by many current trends in this country, specifically our Goliath-sized twin deficits which threaten American livelihood far sooner than does Social Security’s hypothetical problems in the middle of the century.
Just for the record, the idea of PRA’s is a good one….as a voluntary addition to existing Social Security benefits as Bill Clinton proposed. However, when using current Social Security dollars to finance PRA’s becomes the argument, the proposal immediately fails in that it guarantees the same money to two different groups of people, current and upcoming retirees, and younger workers investing it in the PRA’s. There’s no way both groups can get this same pot of money, even though Republicans are suggesting they can.