We are 50% over budget.
...In the middle of the worst economic slump in 70 years. In an economic slump, tax revenues fall and automatic payments rise. Using now to assess a deficit is like diagnosing me with vertigo when I am drunk as a skunk. Of course I'm staggering around now, but in the morning I'm gonna be sober. If the economy was back to normal, our deficit would be manageable by just waiting for "temporary" deficits to expire. Just look at the CBO current law assessments sometime. No really, go do that right now:
http://www.cbo.gov/ftpdocs/115xx/doc11579/06-30-LTBO.pdf
Look at the chart on the cover, it compares what the current law says and what we expect future congress to do.
Look at page 5 (page 5 by the numbers at the bottom) in this document, it has both what the law says will happen and what the CBO expects congress to do in the future.
The "current law says" aint great, but it shows that the deficit is in now way out of our control. The deficit is entirely due to "temporary" laws like the bush tax cuts and the current economic downturn.
As for people saying higher taxes are the problem: how's that supply side workin' for ya? We need a leaner more efficient government because then we are getting more for our money. But it just aint so that higher taxes are killing growth.
One thing I learned about projection is that they always compare the best with a worst scenario to make the result look good. But I am not trying to say that this projection is over-optimistic, but the truth is if you look at the table 1-1, you will see the "actual" and "projection" line clearly make a small hill on the expenditure line.
And by compare the 2000 expenditure level of 16% federal of GDP with about 24% GDP expenditure in 2009 (The 2010 data has not yet included in the 2010 report), and now we are at 2011, let's see what really happened in 2010 in the
this year's new congressional report. And you can see, the spending didn't went down as the old projection expected, but stay at 23.8% of GDP, since things doesn't go as plan, and many off-budget spending happens. And the original expected expenditure should go down from the peak 2009, but the projection of expenditure in 2011 this year actually climbing back to 24.3%. What government planning to spend is one thing, but the reality is things do go south in the future. If the market losing faith in the debt right now, the future expenditure may increase further more (raise the "off-budget" again), since borrowing will have extra cost.
That's what I am worried about an aggressive policy may lead. (Like the projection of government expenditure policy continue it's expending on % of GDP, to stay at the level near 25%). The expenditure habit will become normal, and with more and more expenditures are NOT cut back with the support of more government revenues. Politicians will likely not try any passive policy in the future at all, until the aggressive policy leading the future expenditures into disasters. But I think they do realize the problems and possible outcomes now. Started planning to cut back the expenditure level to 19% level from 2012. Only if things all going as they planned. (And the same groups of politicians still running the congress and house, which I highly doubt that.)
Projections are just a guild line of what people's intentions are, not what actually might happens. And I believe the current aggressive plans to keep up high expenditure and increase tax revenue to maintain it will only add fuel into the fire. Giving future politicians reasons to spend more. Thus the running away deficit will keep rolling. But it's only my personal opinions. And I strongly believe that we can't defeat the recession by just keeping government expenditures, and it will only lead to sink into further deficit and debts, create a bigger storm waiting.
P.S And I do agree to reform tax should take away the temporary tax cut measure, but in the mean time also remove the increasing boost in insurance taxes. And maintain the revenue level. Letting the income and business tax to cover the social security spending, not just redistribute wealth amount general populations. (collecting most insurance taxes from middle class, and spending them on the poor, letting the rifts between mass middle-low income with the upper income groups even larger.)
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Topic: The Debt Ceiling Deal... ing (Read 25105 times)