How We Can Prevail - Newsweek World News - MSNBC.com
Monday, July 11, 2005
Un-Spin the Budget - New York Times (Krugman Editorial)
Un-Spin the Budget - New York Times
Un-Spin the Budget
By PAUL KRUGMAN
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.
Un-Spin the Budget
By PAUL KRUGMAN
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.
'Police shot bombers' reports New Zealander
'Police shot bombers' reports New Zealander
'Police shot bombers' reports New Zealander
09.07.05
A New Zealander working for Reuters in London says two colleagues witnessed the unconfirmed shooting by police of two apparent suicide bombers outside the HSBC tower at Canary Wharf in London.
The New Zealander, who did not want to be named, said the killing of the two men wearing bombs happened at 10.30am on Thursday (London time).
Following the shooting, the 8000 workers in the 44-storey tower were told to stay away from windows and remain in the building for at least six hours, the New Zealand man said.
He was not prepared to give the names of his two English colleagues, who he said witnessed the shooting from a building across the road from the tower.
Reports of attacks carried out by suicide bombers have been rife in London.
Canada's Globe and Mail newspaper reported an unconfirmed incident of police shooting a bomber outside the HSBC tower.
Canadian Brendan Spinks, who works on the 18th floor of the tower, said he saw a "massive rush of policemen" outside the building after London was rocked by the bombings.
'Police shot bombers' reports New Zealander
09.07.05
A New Zealander working for Reuters in London says two colleagues witnessed the unconfirmed shooting by police of two apparent suicide bombers outside the HSBC tower at Canary Wharf in London.
The New Zealander, who did not want to be named, said the killing of the two men wearing bombs happened at 10.30am on Thursday (London time).
Following the shooting, the 8000 workers in the 44-storey tower were told to stay away from windows and remain in the building for at least six hours, the New Zealand man said.
He was not prepared to give the names of his two English colleagues, who he said witnessed the shooting from a building across the road from the tower.
Reports of attacks carried out by suicide bombers have been rife in London.
Canada's Globe and Mail newspaper reported an unconfirmed incident of police shooting a bomber outside the HSBC tower.
Canadian Brendan Spinks, who works on the 18th floor of the tower, said he saw a "massive rush of policemen" outside the building after London was rocked by the bombings.
What We Owe What We Eat - Newsweek Columnists - MSNBC.com
What We Owe What We Eat - Newsweek Columnists - MSNBC.com
BG: In this time of war and terrorism, what does George Will write his column on?....
BG: In this time of war and terrorism, what does George Will write his column on?....
Audio: Indymedia Radio, Lukes Rant 7-10-05
Skip past music intro if you want....
paul harvey, London Bombing...
wingtv.net (my opinion is that Luke is out of line...)
paul harvey, London Bombing...
wingtv.net (my opinion is that Luke is out of line...)
Bush's Crusade for Democracy
Bush's Crusade for Democracy: "Bush's Crusade for Democracy "
BG: de Borchgrave still talks truth on newsmax.com. Kind of like a grain of sand on the beach as the hurricane hits shore.
BG: de Borchgrave still talks truth on newsmax.com. Kind of like a grain of sand on the beach as the hurricane hits shore.
Rove, Reporters, Psychiatrists, Rabbis, and Priests
The Huffington Post | The Blog: "Rove, Reporters, Psychiatrists, Rabbis, and Priests"
Explosive New Rove Revelation Coming Soon? UPDATE: It's Here
The Huffington Post | The Blog: "Explosive New Rove Revelation Coming Soon? UPDATE: It's Here"
Ridiculous New York Times Anonymous Source of the Day
Eschaton: "Ridiculous New York Times Anonymous Source of the Day "
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