Fed Revenues Increased Due To Tax Cuts
The NYT reports that the overall deficit will be $100 billion lower this year, even with all of the insane spending increases, because the federal revenues were double what had been estimated.
As discussed below in my “NJ Exodus” comment, dynamic scoring understands how tax cuts generally increase revenues while tax increases generally reduce revenues. It takes a few years to happen but tax cuts increase capital investment and personal wealth. As a result, businesses grow and provide higher wages to employees and higher dividends and capital gains to investors. As well, employment rises as we have seen. The so-called Clinton boom was similarly spurred by the tax cuts of 1994.
Democrats disagree with this explanation per the NYT story:
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.
We are talking increased revenues reducing the deficit.
However, while Dems are talking about this government thievery, was it not an important feature of the proposed social security privatization plan? i.e. that Congress would be unable to pocket the private accounts assets as they regularly do to the Social Security “Fund”?
As I recall Dems have been running Congress for a larger part of the past 40 years doing this borrowing from the “Fund”. And has anyone heard a Dem argue in favor of the private account proposal since Clinton was president and suggested it himself?
The real cause of the deficit is spending as stated in the NYT article:
Government spending under Mr. Bush continued to climb rapidly this year, more than twice as fast as the economy. Spending on the war in Iraq has accelerated, to about $120 billion this year. Far more ominously, the nation's oldest baby boomers will be eligible for Social Security benefits in just two years. Conservatives and liberals alike predict a huge escalation in costs of Social Security and Medicare over the next several decades.
No doubt the Iraq War and related terror/security measures are costly. Agree with the strategy or not, we all should recognize that providing national security is the government’s primary function. The expense side of the government ledger or made up of a larger percentage of social entitlement spending. Meanwhile, the Dems apparently recognize the danger posed by social security as baby boomer retirement looms. Still, they oppose privatization?
We see contradictory messages here from the party out of power. Towing the line as things fall apart is quite a message from “Progressives”.