This one will have heads exploding all over the liberal blogosphere. Of course the media will only mention this once. If Clinton were in office it would be the lead story for a week.
WASHINGTON, July 8 — An unexpectedly steep rise in tax revenues from corporations and the wealthy [What happened to the tax cuts for the rich? -ed] is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.
On Tuesday, White House officials are expected to announce that the tax receipts will be about $250 billion above last year’s levels and that the deficit will be about $100 billion less than what they projected six months ago. The rising tide in tax payments has been building for months, but the increased scale is surprising even seasoned budget analysts and making it easier for both the administration and Congress to finesse the big run-up in spending over the past year.
Tax revenues are climbing twice as fast as the administration predicted in February, so fast that the budget deficit could actually decline this year.
The main reason is a big spike in corporate tax receipts, which have nearly tripled since 2003, as well as what appears to be a big increase in individual taxes on stock market profits and executive bonuses.[Gasp! You mean Reagan was right?]
On Friday, the Congressional Budget Office reported that corporate tax receipts for the nine months ending in June hit $250 billion — nearly 26 percent higher than the same time last year — and that overall revenues were $206 billion higher than at this point in 2005.
Congressional analysts say the surprise windfall could shrink the deficit this year to $300 billion, from $318 billion in 2005 and an all-time high of $412 billion in 2004.
Time and time and time again we reprove the same lesson. When we lower the tax RATE we collect more REVENUE. Somehow the liberals don’t understand this idea when it is as simple looking at your local Walmart.
Walmart, the world’s largest discounter, has the lowest PRICES but makes the most MONEY.
But this wouldn’t be a New York Times story without the biased spin….
Republicans are already arguing that the revenue jump proves that their tax cuts, especially the 2003 tax cut on stock dividends, would spur the economy and ultimately increase revenues.
“The tax relief we delivered has helped unleash the entrepreneurial spirit of America and kept our economy the envy of the world,” President Bush said in his weekly radio address on Saturday.
Democrats and many independent budget analysts note [STOP STOP STOP]
Did you get that spin??? Republicans argue XXX but Democrats AND MANY INDEPENDENT BUDGET ANALYSTS…
As if everyone with a brain knows the Republcians are wrong. — Of course there are many “independent budget analysts” who will back the Republicans but the Times is all about the spin. They seek to marganize the Republicans’ arguements.
But I’ll let the spin continue so I can debunk it.
Democrats and many independent budget analysts note that overall revenues have barely climbed back to the levels reached in 2000, and that the government has borrowed trillions of dollars against Social Security surpluses just as the first of the nation’s baby boomers are nearing retirement.
HUH? Social Security is now important to Democrats? Since when? For years now all we’ve heard is that Social Security wasn’t a problem. Now, faced with the reality that supply-siders are right, they change the subject? But I digress.
What this story proves, other than the fact that all the Democratic talking points about tax cuts for the rich are just wrong, is that the fastest way for the feds to decrease the deficit is to cut taxes and grow the economy. (not cut spending per se) And conversely the fastest way to grow the deficit is to increase spending.
-In short, cutting spending is not near as effective as economic growth at reducing the deficit but increasing spending is most effective way to blow the deficit out of control.
The great irony is that liberals (well, in the modern era, many so-called conservatives too) want to spend as much as possible BUT they want to raise tax rates which -paradoxically- limits the amount of money they have to spend.
In theory, “conservatives” (term used ever loosely of late) want to lower RATES to maximize economic growth AND limit spending. Unfortunately under both Reagan and Bush spending ballooned so we’ve never seen this come to fruition.
One could argue that both men were winning wars while the Dems have ignored foreign problems leaving them for Republicans to solve; but that argument, while it has merit, only goes so far. Spending under Bush has been out of control since the earliest days of his administration.
Growing the economy is the most effective way to fight the deficit. Even under Bill Clinton’s so-called “balanced budget for the next 10,000 years” his numbers relied on economic growth increasing revenues. The Bush tax cuts have been EXTREMELY effective doing exactly what supply-siders said they would do, increase revenues.
Now if we could hold spending in check (much less cut it) we’d have something.