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Banned
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ace, we went 'round on this on October 12, 2006: (I tried to show ace, back then, that all of the "stimulus" he seemed to think was a positive result of Bush tax cutting, was instead a result of "MEW"...a rapid increase in the amount of "Mortgage Equity Withdrawal", made possible by a rapidly emerging residential real estate bubble that drove housing valuations dramatically upward, in a very brief period of time.....while dramatically increasing federal spending was adding $3-1/2 trillion to the national debt in just seven years.)
http://www.tfproject.org/tfp/showpos...0&postcount=44
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Originally Posted by aceventura3
I agreed that spending is out of control.
In regard to Bush's tax cuts -
In '04 revenues increased 5.4%
In '05 revenues increased 14.5%
In '06 revenues increased 11.8%
I am sure the '06 numbers are still subject to revision. As I look at the numbers I can not conclude that the tax cuts have been the cause of the deficits during Bush's term. However, I can support orther causes: 1) Recession 2) War on terror (including homeland security issues) 3) Spending
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ace, your post #39 on this thread....a PR piece from the white house that falsely touts spending cloaked in "off-budget" machinations as "deficit reduction", was thoroughly debunked in my post #31, on your thread:
http://www.tfproject.org/tfp/showthread.php?t=105663
.....4 months ago, when you tried to "offer it" here, the last time.
These points in the OP, IMO, put the points in your last post, in proper context:
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GDP growth 2000-2005, 27% total, 4.9%/year.
<b>Revenue growth 2000-2005, 6.3% total, 1.2%/year.</b>
Spending growth 2000-2005, 38% total, 6.7%/year.
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So, combined MEW and deficit stimulus to the economy of $1,153 billion, only increased GDP by $753 billion in 2005. Receding housing prices will result in huge decreases in economic stimulus from MEW, as "cashout" refinancing disappears, and with a deficit forecast to decline, what will be left to "prop up "GDP? IMO, it won't be possible to raise tax rates without further strain on a GDP that needed an $1,153 billion input in 2005, to effect a $753 billion, 2005 GDP increase.
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ace, anybody....even incompetent management.....can "increase" GDP (or....revenue) by 75 cents for every 1.15 dollars of combined "true" deficit spending and Mortgage Equity Extraction, added to the economy annually....
ace, this will probably be my last post related to our discussion here....the message that you telegraph to me in post #39 is a repeat of this, on the last post on your thread of four months ago:
http://www.tfproject.org/tfp/showthread.php?t=105663
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Originally Posted by aceventura3
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Originally Posted by host
<h3>I've demonstrated that in the 48 months prior to Sept. 28, 2001, federal deficit spending of $394,317,400,802.72 combined with "MEW" of $797.8 billion, totalled $1.192 trillion, and in the 48 months after Sept. 28, 2001, federal deficit spending of $2,125246,249,523.44 combined with "MEW" of $1823.9 billion, totalled $3.948 trillion.</h3>
My point is that I see no point to the core premise of this thread, because, on average, the increase in fiscal stimulation that was added to the economy, via increased federal deficit spending, combined with increased "MEW", in the 48 months after Sept. 30, 2005, was $2.756 trillion greater than in the 48 month period before Sept. 28, 2001. The effect of Bush era "tax cut" policy, diluted by a $2.756 trillion spending "injection", in the four year period, should produce a positive effect on federal revenue streams from personal income and corporate taxes, but it seems disingenuous and rather one sided to try to "credit" the same folks who managed our treasury into a huge new deficit amount, for increases in the amount of taxes collected in the same period, or with deficit "reduction" that simply places part of the increasing debt, "off budget".
This week, the news media reported that there have been 9 "off budget" appropriations approved by our elected federal officials for war expenses and disaster relief. There were also defeated proposals to actually budget for Pentagon war expenses. If that happened, it would be impossible for claims to be made that falsely imply that the rate of new federal borrowing is "dropping"....the actual increase in total debt proves that this is not true.
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Did you think Bush's tax cuts would lead to less total tax dollars collected? Or did you think the cuts would have no impact at all because of the other factors as you point to? If you say no impact, why not support lower taxes? |
......ace, when the Bush administration came into office, it brought an agenda that included two major "to do" items: ....removing Saddam from power in Iraq, and reversing the tax burden of it's wealthy patrons.
We see the results....dual fiascos... in Iraq, and in federal spending. Just as the stable and cost effective system of containing Saddam with a "no fly zone" and sanctions strategy had cost no downed aircraft in 12 years of allies "no fly zone" enforcement, and by Wolfowitz's estimate to congress in early 2003, about $30 billion.
The following table must be posted again, because it contains the federal treasury annual debt total....(that is why I call it "total") actually accrued.
The marketwatch PR piece that you posted in #39 here, continues part of the debt and some excuses. The following uses the same criteria for the last four presidents...."total debt".
It displays a parallel to what happened since 2001 in Iraq. A budget and taxation regimen that had produced a downward trend in deficits, from 1993 to 2000.... ($360 billion annual deficit, down to $18 billion, annually), and still afforded satisfactory GDP growth, was "revised" by the incoming Bush administration, and the results are similar to the "results" in Iraq:
Quote:
http://www.publicdebt.treas.gov/opd/opdhisto4.htm
<a href="http://www.publicdebt.treas.gov/opd/opdpdodt.htm">09/29/2006 $8,506,973,899,215.23</a>
09/30/2005 $7,932,709,661,723.50
09/30/2004 $7,379,052,696,330.32
09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/30/2001 $5,807,463,412,200.06
09/30/2000 $5,674,178,209,886.86
09/30/1999 5,656,270,901,615.43
09/30/1998 5,526,193,008,897.62
09/30/1997 5,413,146,011,397.34
09/30/1996 5,224,810,939,135.73
09/29/1995 4,973,982,900,709.39
09/30/1994 4,692,749,910,013.32
09/30/1993 4,411,488,883,139.38
09/30/1992 4,064,620,655,521.66
09/30/1991 3,665,303,351,697.03
09/28/1990 3,233,313,451,777.25
09/29/1989 2,857,430,960,187.32
09/30/1988 2,602,337,712,041.16
09/30/1987 2,350,276,890,953.00
09/30/1986 2,125,302,616,658.42
12/31/1985 1,945,941,616,459.88
12/31/1984 1,662,966,000,000.00 *
12/31/1983 1,410,702,000,000.00 *
12/31/1982 1,197,073,000,000.00 *
12/31/1981 1,028,729,000,000.00 *
12/31/1980______930,210,000,000.00
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IMO, ace, the Bush II era tax cuts have been a fiscal disaster, much like the decision to discontinue the "no fly zone" and sanctions to keep Saddam in what Cheney described in 2001, as "a box", and replace that policy with invasion and occupation.
MEW and a smaller deficit would, without budget busting tax cuts, have supported GDP growth. Temporary and more progressively designed tax cuts, (as in the 1993 tax cut compromise between Clinton and republicans in congress) in response to severe recession....which, thanks to the ramping of the housing bubble, never happened, should have been saved, along with large federal deficit spending, until an actual GDP decline, emergency.
What recession fighting "weapons" are left for the next presidential administration, ace? The one that took office in january 2001, had three key options available.... the option to lower interest rates, easy because there was no predicament of huge federal borrowing needs that forced higher interest rates to attract potential foreign treasury bond purchasers....
...the option to increase deficit spending for it's stimulative effect on GDP growth, either by temporarily cutting taxes, or investment in capital projects as the Japanese officials have done since 1990....or....when oil prices starting rising...by funding R&D and tax incentives for alternative energy investment, as Carter had done in the late 1970's.....
ace, you get the idea, I'm sure. The next administration has only one option,
lowering interest rates. Cutting taxes and increasing deficit spending are harder to do now than in 2001....before five years of vigorous tax cutting and when the deficit was no higher than $32 billion annually..........
It they try to lower interest rates, they run into the problem of how to attract buyers of $500 billion in annual treasury bill issuance, vs. just $32 billion in 2001. They also have the gnawing, deficit aggravating problem of servicing the interest on existing debt of $8500 billion, compared to only $5674 billion on Sept. 30, 2001....
NEW COMMENT, on May 21, 2008.,,, I'm going to look for 2007 tax revenue, 2007 MEW, and 2007 national debt increase. As far as national debt, we have the $32 billion increase for the 12 months prior to 2000 year end 9/30/00.
Stay tuned !
Okay, I'm back.... here is recent data:
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http://www.cbo.gov/ftpdocs/87xx/doc8792/11-2007-MBR.htm
TOTAL RECEIPTS
(Billions of dollars)
Major Source............2005.....2006....2007....Percentage
Change,
2006-2007
Individual Income _____ 927 ___ 1,044 _ 1,163 _ 11.5
Corporate Income ______ 278 ____ 354 __ 370 _ 4.6
Social Insurance ______ 794 _____ 838 ___ 870 _ 3.8
Other _________________ 154 _____ 171 ___ 164 _-3.9
Total ________________ 2,154 __ 2,407 __ 2,568 _6.7
Percentage of GDP _____ 17.6 ___ 18.4 ___ 18.8 __n.a.
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Here is the amount the federal government spent in FY ending 9/30/07 that was greater than it's FY 2007 revenue:
http://www.treasurydirect.gov/govt/r...ebt_histo5.htm
09/30/2007 ____ $9,007,653,372,262.48
VS
09/29/2006 ____ $8,506,973,899,215.23
So, we have an "artificial" stimulus to the economy of $501 billion, in FY 2007 vs. just $32 billion, in FY 2000.
(Remember...the amount spent in FY 2000 that was greater than FY 2000 revenue, was just $32 billion....)
Here is a MEW graph, ace:
Quote:
http://calculatedrisk.blogspot.com/2...t-on-2007.html
Wednesday, January 03, 2007
MEW's Impact on 2007
by CalculatedRisk
First, I'd like to clarify a previous post on Mortgage Equity Withdrawal's (MEW) impact on GDP.
Click on graph for larger image.
To construct this graph, I used the reported GDP for the previous year, and then removed 50% of the Greenspan-Kennedy MEW from GDP for the target year. The intention was to show how important MEW has been in recent years.
Note: the 50% is Greenspan estimate of MEW flowing to consumption of domestic goods and services.
From the questions I've received, I clearly didn't provide an adequate description of this chart. Or perhaps the presentation is misleading......
<img src="http://photos1.blogger.com/x/blogger/2825/754/1600/877707/GDPMEW2006.jpg">
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Moving forward, another year:
Quote:
http://calculatedrisk.blogspot.com/2...ge-equity.html
Saturday, March 15, 2008
Trade Deficit and Mortgage Equity Withdrawal
by CalculatedRisk
The following graph shows an interesting relationship (Caution: correlation doesn't imply causation!). As Mortgage Equity Withdrawal (MEW) rose, so did the trade deficit. Note: both are shown as a percent of GDP.
Now that MEW is falling, the trade deficit is also falling - especially if we exclude petroleum imports.
Trade Deficit as Percent of GDP <a href="http://bp1.blogger.com/_pMscxxELHEg/R9w6lrWRZGI/AAAAAAAABsQ/w2sS2vd1blE/s1600-h/TradeDeficitGDP.jpg">Click on graph</a> for GRAPH image.
The dashed green line is the Kennedy-Greenspan MEW estimates as a percent of GDP.
Clearly the housing bust led to less MEW, and less MEW might have contributed to the declining trade deficit. (Something I predicted in 2005).
Looking forward, it appears MEW will decline sharply in 2008, as housing prices decline further, lending standards are tightened, especially for HELOCs, and since homeowner percent equity is already at record lows. In other words, the Home ATM is closing.
This suggests that the trade deficit (especially ex-petroleum) might decline sharply too. Part of the decline in the trade deficit is related to the falling dollar and higher U.S. exports (See Krugman's Good news on the dollar)
However, to complete the global rebalancing, two things must happen: both petroleum imports (in dollars) and the deficit with China must decline. The good news is the January trade deficit with China - although still huge at $20.3 billion - was actually less than the $21.3 billion in January 2007. The bad news is oil imports (in dollars) were at record levels.
Unless we see these key components of the trade deficit start to decline (oil and China), other exporters to the U.S. will have to bear the burden of the possibly sharp rebalancing of global trade.
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<h6>My point, ace... is that there is, and has been since FY 2001, massive fiscal stimulus from the sources of nearly $3-1/2 trillion in federal debt created from 10/01/00 through 9/30/07, accompanied by historically unprecedented stimulus from MEW....but even with that, these figures haven't grown impressively:</h6>
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http://www.cbo.gov/doc.cfm?index=2685&type=0
TOTAL RECEIPTS
(Billions of dollars)
Major Source...........Actual 1999 Actual 2000 __ 2005 ..... 2006 ....2007....Percentage
Change,
1999-2007
Individual Income _____ 879 ________ 1,004 _______ 927___ 1,044 _ 1,163 _ 11.5
Corporate Income ______ 185 _________ 207 _______ 278 ____ 354 __ 370 _ 4.6
Social Insurance _______ 612 __________ 653 _______ 794 ____ 838 ___ 870 _ 3.8
Other _________________ 151 _________ 160 _______ 154 ___ 171 ___ 164 _-3.9
Total ________________ 1,827 _______ 2,025 ______ 2,154 _ 2,407 __ 2,568 _6.7
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I do not understand how you can present a chart for discussion, as your OP does, that does not examine the catalysts for GDP growth, except to credit tax cuts as the principle driver. It is especially suspect to do so, during a period when the national debt increased from $5.65 trillion, to $9 trillion, and MEW was contributing to consumer spending in a suddenly upward spike
Last edited by host; 05-20-2008 at 10:01 PM..
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