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-- Federal deficit expected to approach $500 billion next year
Federal deficit expected to approach $500 billion next year
Mmmm we are getting close to the "red ink" . what you think?
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| Federal deficit expected to approach $500 billion next year Democrats say analysis understates fiscal crunch WASHINGTON (AP) --The federal deficit, already at record levels this year, will almost certainly get worse next year, congressional budget analysts are expected to say in a report Tuesday. But House Democrats said Monday that the Congressional Budget Office analysis would understate the gravity of the fiscal crisis. The nonpartisan CBO, which has estimated the federal deficit at $401 billion for the fiscal year ending September 30, is likely to project red ink approaching or even surpassing $500 billion next year, said Rep. John Spratt, D-South Carolina, top Democrat on the House Budget Committee. But Spratt said the actual deficits next year and in the subsequent years could be substantially higher because the CBO generally does not take into account future policy changes such as increased defense costs or new tax cuts. The CBO is expected to lay out various scenarios, including the added budgetary burden if the cost of the war in Iraq and the rebuilding of that country becomes a permanent fixture. The rebuilding of Iraq is not part of current budgetary projections. The CBO in March, in its last long-range projection, predicted a 2003 deficit of $246 billion and an accumulated $891 billion surplus through 2013. The numbers this time are sure to be more pessimistic. The Budget Committee Democrats said their analysis shows that the deficit will hit $495 billion in 2004, and will never go below $300 billion in the 2004-2013 period, reaching a total over the decade of $3.7 trillion. If money from the Social Security surpluses now being used to pay for other federal programs is not factored in, the decade-long deficit will be $6.3 trillion, they said. GOP blueprint Sean Spicer, spokesman for House Budget Committee Chairman Jim Nussle, R-Iowa, disputed the Democratic conclusions, saying Republicans do have a blueprint for getting the budget back in balance. He said the keys were promoting a strong economic recovery and controlling federal spending and "we're trying to do both." The Bush administration blamed the swift reversal from budget surpluses to perennial deficits to the faltering economy, the Sept. 11 attacks and the sharp rise in defense and homeland security costs. The White House says the fiscal situation will improve as the economy, bolstered by the Bush tax cuts, becomes more robust. But Spratt contended that budget projections already assume strong growth of more than 3 percent a year over the next few years. "Even with growth we still have deep deficits getting even deeper," he said. The CBO numbers, he said, do not take into account the $1.2 trillion that will be lost if tax cuts scheduled to expire over the next decade are made permanent, and another $878 billion in new tax cuts over the decade being sought by the White House. Also not included is a $400 billion Medicare prescription drug benefit Congress is trying to pass this year, increased defense and anti-terrorism spending and addressing natural disasters. This fiscal year's deficit has already exceeded the old record of $290.4 billion set in 1992 when President Bush's father was president. Republicans argue that the economy is much larger today than it was then, so the budget shortfall has less of an impact. |
it seems that bush and his dick (or was it dick and his bush?) havent been doing a good job. like father, like son, huh?
Budget deficits have not been so damaging to presidents in the past considering that 1998 was the first year in which the president submitted a balanced budget to congress since 1969.
MrS
The Deficit May Be Back on a Leash
Uncle Sam's red ink for 2003 is likely to defy the worst predictions -- and as a percentage of GDP, far from unprecedented
The red ink from the U.S. Treasury has turned into a torrent, with the annual budget deficit deepening in July to a record $324 billion. The growing shortfall further highlights the deterioration in the government's finances this year. Not surprisingly, the expanding deficit for fiscal 2003, which ends September 30, has generated a considerable amount of handwringing among Democrats and Republicans alike.
Their concerns are certainly not out of place, given that the U.S. government's books were in surplus only two years ago. The speed with which the Bush Administration and Congress have plunged into deficit spending again is worrisome. But let's take a step back: when the deficit is put in the context of previous periods of rising government debt, the impending shortfall doesn't appear to be as alarming.
TRENDING DOWN. With only two months left in this fiscal year, the deficit will likely swell to more than $400 billion. There's no mystery to why: government outlays have surged on the back of waging a war and an occupation in Iraq and homeland security spending, as well as the usual counter-cyclical spending that accompanies a slowdown in economic growth.
On the other side of the ledger -- receipts -- a slowing economy took a toll early this year. While a subsequent pickup in the economy has bolstered money inflows, the implementation of President Bush's tax-cut package means further erosion in government revenue.
Here's the more encouraging news, however: It looks as if the Office on Management and Budget (OMB) overshot the mark in forecasting a $455 billion deficit for the full fiscal year. It would be quite a stretch for the deficit to swell another $130 billion in the final two months of bookkeeping. Even in the worst deficit years of the 1980s and 1990s, the total deficit for the last two months totaled less than $60 billion.
DOCILE DEFICIT? It will likely turn out that the Congressional Budget Office's (CBO) cautious forecast of a $400 billion deficit will be closer to the real number. Given increasing signs that growth in the gross domestic product should exceed 4% in the second half of 2003, before posting further solid gains in 2004, we at MMS International now expect a $425 billion deficit for fiscal 2003.
Moreover, the prospects for an even larger deficit during 2004 are looking increasingly remote, notwithstanding the OMB forecast that the shortfall will balloon to $475 billion. We have left our forecast of a $400 billion deficit in place for 2004, but the risk is clearly skewed toward an even smaller amount of red ink, given the upside prospects for the economy.
Even though the deficit should fall short of the worst-case scenario, a final number in excess of $400 billion is likely to generate a controversy. That's especially true given that election-year politics will be heating up in October. The $425 billion shortfall we expect would dwarf the previous record $290 billion deficit seen in 1992.
BONDS AND RATES. A little perspective is in order, however. The deficit accounted for 4.7% of GDP in 1992, which exceeds the 4.0% ratio for fiscal 2004 implied by our forecasts. Even the OMB's projection of a larger deficit boosts the ratio by only 0.2%, to 4.2% of GDP.
As a percentage of GDP, this deficit should be well short of the record 5.7% in 1983. And looking ahead, a stronger economy, along with a reduced deficit, should sharply reduce the deficit's share of future GDP. A deficit in line with our forecast in 2004 would pull the ratio to 3.5% of anticipated GDP. Even the OMB's increasingly unrealistic deficit estimate for 2004, when compared to our growth estimate, translates to 4.2% of GDP.
The upshot for the markets: Given the elevated deficit fears just a few months ago, a fiscal 2003 figure that fell short of the OMB's worst-case scenario would likely be viewed favorably by Treasury market players. Moreover, since an even larger deficit next year is looking increasingly unlikely, the budget figures may help support bond prices -- and keep a lid on interest rates -- through 2004.
http://www.businessweek.com/investo..._6863_pi031.htm
Well there is speculation on both sides. Bush is definitely thinking short-term and is putting a strain on the government's financial institutions.
If this continues and he gets elected, he better have a plan for Social Security b/c that shit will hit the fan in 7 years. Yes it is convenient since he will be out of office but the Republican Party does want to win an election after the Bush reign of terror. That won't happen if he continues to spend recklessly.
I don't think people should be assuming the economy will/is recovering. Sheesh for every argument made that it is recovering there is always a better counter to that.
For me this comes back to "was going to war with Iraq worth it". Once again I find myself saying no. As boring as Clinton sounded when he talked about his bridge to the 21st Century, he had a point that is being completely ignored. 
P.S. I know my line of thought is frazzled, but that is only because my brain is. 
The gross national debt (different to the fiscal deficit) has increased by over $1 trillion since Bush took over from Clinton (that milestone was reached in late July). Just enter in the day of Bush's inauguration (1/19/2001) enter in todays date for proof:
http://www.publicdebt.treas.gov/cgi...ww/opdpnhis.cgi
01/19/2001 --> $5,727,776,738,304.64
08/22/2003 --> $6,787,289,153,093.89
For a comparison, the debt increased by about $1.5 trillion during Clinton's 8 years in office:
01/20/1993 --> $4,188,092,107,183.60
01/19/2001 --> $5,727,776,738,304.64
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| Originally posted by NYGblue I don't think people should be assuming the economy will/is recovering. Sheesh for every argument made that it is recovering there is always a better counter to that. |
I stick to newspapers for my news. So I go by that. So far I have seen indications that it is recovering somewhat, but also plenty that say it isn't. With interest rates being about as low as they can go, if things don't brighten up by the end of the year, I think that theory can get debunked. The economy is being strained, but once again, only time will tell what will happen. 
http://www.reuters.com/financeNewsA...storyID=3339135
The labor market generally lags behind the other data. I think we'll continue to see additional drops in jobless claims as confidence and spending picks up. A pity ... I was kind of hoping the economy would suck a little bit longer so Bush stands a worse chance of getting reelected. Once the economy picks up momentum I want to see reduced spending and budget surpluses to begin paying off the debt. Something I don't expect from Bush.
Oh and btw, what do you think newspaper use to gauge economic performance? Cut out the middle man and get the straight up dope yourself
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| Originally posted by occrider http://www.reuters.com/financeNewsA...storyID=3339135 The labor market generally lags behind the other data. I think we'll continue to see additional drops in jobless claims as confidence and spending picks up. A pity ... I was kind of hoping the economy would suck a little bit longer so Bush stands a worse chance of getting reelected. Once the economy picks up momentum I want to see reduced spending and budget surpluses to begin paying off the debt. Something I don't expect from Bush. Oh and btw, what do you think newspaper use to gauge economic performance? Cut out the middle man and get the straight up dope yourself |
This doesn't surprise me. Bush doesn't realize that if he keeps declaring war on people there's gonna be less money. People are not gonna spend as much, cause there's less money to go around in a bad economy. On a side note, look at gas prices. (at least here in NJ), they've been climbing non-stop. It's a shitty economy we're dealing with.
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| Originally posted by DrummeRaver86 This doesn't surprise me. Bush doesn't realize that if he keeps declaring war on people there's gonna be less money. People are not gonna spend as much, cause there's less money to go around in a bad economy. On a side note, look at gas prices. (at least here in NJ), they've been climbing non-stop. It's a shitty economy we're dealing with. |
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| Originally posted by occrider Actually rising prices are good. We're more in danger of encountering deflation rather than inflation. At any rate I wouldn't place that much emphasis on energy prices as an indicator of the consumer price index. Energy prices are typically extremely volatile and undergo short term price shocks all the time. |
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| Originally posted by LiquidX But as gas/energy prices goes up, the impact on the economy is pretty seginificant, affecting relatively everything. From the food you eat to the cloth you buy. Meaning.. a rise of price, meaning, less people buying, meaning, less spending, meaning.. oh oh oh oh... economy in a struggle. Isnt it?.. Its a chain reaction. |
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New York, August 18, 1999 - While rising gasoline prices are causing consternation for U.S. consumers, they are helping to revive corporate lending to the oil & gas industry, according to Loan Pricing Corporation (LPC), which tracks and analyzes the global loan and high-yield bond markets. Lending to U.S.-based oil and gas companies topped $16 billion during the second quarter of 1999, an 86% increase over a slower first quarter of the year, according to LPC. Much of this increase is a direct result of the reduced supply of oil (brought about by unprecedented compliance among OPEC members regarding production cuts) and increased demand world-wide (prompted in part by the summer vacation/travel season and the recovering Asian economies). Companies are taking advantage of the situation. http://about.reuters.com/newsreleas...-1999_id201.asp |
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Several U.S. oil refineries were closed on Friday, which sent gasoline prices sharply higher and added to worries over already low fuel inventories. If energy prices climb in a sustained way, they could act as a tax on the U.S. consumer, the backbone of the U.S. economy. http://www.reuters.com/newsArticle....storyID=3286911 |
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| Originally posted by occrider Certainly they can have an effect on consumer spending, however, they are temporary shocks with wide variability and are therefore not included in the core cpi ... along with food prices. And believe it or not, Bush has had very little to do with the recent increases in energy prices. They are largely influenced by consumer demand, and the prices set by OPEC. Additionally, if you remember back to that little power outtage we had, the closing of US oil refineries for several days certainly did not help gas prices. At either rate, if gas prices get too high, OPEC will likely step in to reduce prices. |
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| Originally posted by NYGblue Who cares.. Buzz is back @ Nation! THREAD-JACK! |
check under USA on TA, I posted the Buzzboard link. they are officially returning 9/12/2003.
CBO: Government Faces 8 More Years of Deficits:
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| WASHINGTON - The federal government is in store for at least eight more years of budget deficits, including a record $480 billion shortfall in 2004, congressional budget analysts said Tuesday. The Congressional Budget Office also warned that the numbers will become more dire if the White House gets its way on tax cuts and Congress fails to rein in spending. They said the budget outlook "has worsened substantially" since its last review in March, when it put next year's deficit at $200 billion. Much of that is the result of subsequent acts of Congress to cut taxes and increase spending for defense and the war in Iraq, it said. The CBO, a nonpartisan group, said the budget will edge back into the black in 2012 and 2013, but will record an accumulated deficit of almost $1.4 trillion in the 2004-2013 period. |
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