USA is 455 billion dollars in the hole!! Bush Administration reports

[sasser]

In Canton Ohio today, Bush insisted the economy is improving (http://www.reuters.com/newsArticle.jhtml?type=domesticNews&storyID=5835340), but according to his own administration reports, his claims of an improving economy proves nothing more than misleading.

RECORD $445B SHORTFALL

U.S. deficit a political football

BY JAMES TOEDTMAN

CHIEF ECONOMIC CORRESPONDENT

July 31, 2004

WASHINGTON - The federal government's budget deficit has grown from $375 billion last year to a record $445 billion this year, the Bush administration reported Friday.

But accounting in an election year is never so simple, and the routine, midyear White House announcement immediately ignited a round of partisan rhetoric. Joshua Bolten, the Bush administration's budget director, called the growing deficit both "unwelcome" and "good news" and positive evidence of "the ongoing effects of the president's pro-growth economic policies." Gene Sperling, economic adviser to Democratic presidential candidate Sen. John Kerry, said the deficit reflected "the record deterioration George Bush has caused for the long-term fiscal health of the country."

Bolten forecast a $445-billion deficit in the $2.3-trillion budget for the 2004 fiscal year, which ends Sept. 30. Bolten said that was better than $521 billion he had forecast just seven months ago.

Bolten said the lower forecast was the result of higher-than-expected tax revenues that were the result of recent improvement in the nation's economy. "This improved budget outlook is the direct result of the strong economic growth the president's tax relief has fueled," he said.

But Democrats compared that $445-billion deficit projection to the $201-billion surplus for this year's budget that Bush had forecast in 2001 when he was advocating a giant $1.3-trillion tax cut.

"Don't believe this for a minute. The deficit this year is once again getting worse, not better," said Sen. Kent Conrad (D-N.D.), ranking Democrat on the Senate Budget Committee.

Bolten insisted that a $445-billion deficit is manageable because it would equal 3.8 percent of overall economy. By comparison, the deficit was 6 percent of the gross domestic product in 1983.

But bipartisan budget watchdog groups including the Concord Coalition and the Committee for a Responsible Federal Budget are increasingly concerned by the size and the continued growth of the deficit. "We cannot continue to allow this burden to multiply for our children and our children's children," said Maya MacGuineas, the committee's executive director.

Bolten projected a budget deficit of $364 billion for next year's budget and $268 billion in 2006, but acknowledged that they did not include additional spending for the Iraq war. He said the administration would request additional war funds early next year.

He also said that capping the deficit at $364 billion depended on congressional restraint, always difficult in an election year.

http://www.newsday.com/news/local/longisland/politics/ny-bzdef313913654jul31,0,3126326.story?coll=ny-lipolitics-print

I like to see you republicans try to spin your way out of this...

[siceone]

what are you Blind do you not see the words projected? and that article is inacurate that figure is a down grade from the previous number

[sasser]

what are you Blind do you not see the words projected? and that article is inacurate that figure is a down grade from the previous number

Give it a rest son. Take some prozac.

[obby]

For a 3 trillion dollar annual budget thats a drop in the bucket.

[vicman]

what are you Blind do you not see the words projected? and that article is inacurate that figure is a down grade from the previous number

so they overinflate the initial projected number so they can come below their projection, is that how it works now a days?

Bush's Biggest Deficit: Consistency

Mon Aug 2, 8:08 AM ET Add Business - BusinessWeek Online to My Yahoo!

In its latest fiscal forecast, released on July 30, the Bush Administration projects the deficit for the year ending on Sept. 30 will hit $445 billion. That would be $70 billion more than the record $375 billion deficit we hit last year. According to the White House and its GOP allies, this shows great progress in the battle against deficits.

"Because the President's economic policies are working," says Budget Director Joshua B. Bolten, "We are ahead of pace to meet the goal of cutting the deficit in half within five years." Adds House Budget Committee Chairman Jim Nussle (R-Okla.): "Our budget outlook has significantly improved in the past seven months due to strong economic growth and spending restraint."

MISOVERESTIMATE. Say what? How does the idea of the deficit getting $70 billion bigger translate into fiscal success? It's easy, when you combine Washington's bizarre budget accounting rules, the increasingly superheated campaign season, and some Orwellian rhetoric. You see, last February, President Bush (news - web sites) projected the deficit for this year would hit $521 billion. Now, thanks to a growing economy, the Bushies figure it will come in $76 billion below that number. Thus, we have a whole new way to game the budget debate: Overestimate deficits at the beginning of the year, come in below that forecast, and declare victory.

It's a pity that the real world isn't that rosy. Look more closely at the Bush numbers and you'll see that spending from '03 to '04 is up by a staggering $160 billion. Only $14 billion of that can be attributed to homeland security and Pentagon (news - web sites) spending, including the war in Iraq (news - web sites). The rest is scattered throughout government, with much of it in programs such as Medicare, Medicaid, and Social Security (news - web sites).

The deficit would have been even bigger, except that a growing economy is boosting tax revenues across the board from last year. Individual income tax receipts are expected to be up by $23 billion, corporate taxes up by a whopping $50 billion -- thanks to higher profits -- and Social Security and Medicare payroll taxes up by $18 billion. Those Social Security taxes, of course, are not saved to pay retirement benefits. They are spent on the rest of government.

THE REAL NUMBERS. And what about Bush's promise to cut the deficit in half in five years? The new Bush budget claims he can do it even faster -- by 2007. But don't hold your breath. That happy prediction assumes the U.S. will spend no more money on Iraq and Afghanistan (news - web sites) after Sept. 30. And it ignores the need to fix the dreaded alternative minimum tax (AMT). Without a fix, the levy will hit more than 30 million taxpayers by the end of the decade.

The reality is that protecting millions of middle-class taxpayers from the AMT would cost close to $50 billion a year over the next decade. Once Washington fixes the AMT and pays for the war in Iraq, you can add at least $100 billion a year to Bush's deficit estimates over the next five years. That means forgetting about all that cutting-the-deficit-in-half business.

If anyone pays attention to the real numbers, the fiscal situation is more bad news for Bush's reelection chances and good news for his newly minted Democratic challenger, John Kerry (news - web sites). The bad news for Kerry, of course, is that if gets elected, he'll actually have to do something about this mess. And while he at least can credibly claim he won't make matters much worse, he hasn't yet shown any inclination to make things better.

[sasser]

so they overinflate the initial projected number so they can come below their projection, is that how it works now a days?

Bush's Biggest Deficit: Consistency

Mon Aug 2, 8:08 AM ET Add Business - BusinessWeek Online to My Yahoo!

In its latest fiscal forecast, released on July 30, the Bush Administration projects the deficit for the year ending on Sept. 30 will hit $445 billion. That would be $70 billion more than the record $375 billion deficit we hit last year. According to the White House and its GOP allies, this shows great progress in the battle against deficits.

"Because the President's economic policies are working," says Budget Director Joshua B. Bolten, "We are ahead of pace to meet the goal of cutting the deficit in half within five years." Adds House Budget Committee Chairman Jim Nussle (R-Okla.): "Our budget outlook has significantly improved in the past seven months due to strong economic growth and spending restraint."

MISOVERESTIMATE. Say what? How does the idea of the deficit getting $70 billion bigger translate into fiscal success? It's easy, when you combine Washington's bizarre budget accounting rules, the increasingly superheated campaign season, and some Orwellian rhetoric. You see, last February, President Bush (news - web sites) projected the deficit for this year would hit $521 billion. Now, thanks to a growing economy, the Bushies figure it will come in $76 billion below that number. Thus, we have a whole new way to game the budget debate: Overestimate deficits at the beginning of the year, come in below that forecast, and declare victory.

It's a pity that the real world isn't that rosy. Look more closely at the Bush numbers and you'll see that spending from '03 to '04 is up by a staggering $160 billion. Only $14 billion of that can be attributed to homeland security and Pentagon (news - web sites) spending, including the war in Iraq (news - web sites). The rest is scattered throughout government, with much of it in programs such as Medicare, Medicaid, and Social Security (news - web sites).

The deficit would have been even bigger, except that a growing economy is boosting tax revenues across the board from last year. Individual income tax receipts are expected to be up by $23 billion, corporate taxes up by a whopping $50 billion -- thanks to higher profits -- and Social Security and Medicare payroll taxes up by $18 billion. Those Social Security taxes, of course, are not saved to pay retirement benefits. They are spent on the rest of government.

THE REAL NUMBERS. And what about Bush's promise to cut the deficit in half in five years? The new Bush budget claims he can do it even faster -- by 2007. But don't hold your breath. That happy prediction assumes the U.S. will spend no more money on Iraq and Afghanistan (news - web sites) after Sept. 30. And it ignores the need to fix the dreaded alternative minimum tax (AMT). Without a fix, the levy will hit more than 30 million taxpayers by the end of the decade.

The reality is that protecting millions of middle-class taxpayers from the AMT would cost close to $50 billion a year over the next decade. Once Washington fixes the AMT and pays for the war in Iraq, you can add at least $100 billion a year to Bush's deficit estimates over the next five years. That means forgetting about all that cutting-the-deficit-in-half business.

If anyone pays attention to the real numbers, the fiscal situation is more bad news for Bush's reelection chances and good news for his newly minted Democratic challenger, John Kerry (news - web sites). The bad news for Kerry, of course, is that if gets elected, he'll actually have to do something about this mess. And while he at least can credibly claim he won't make matters much worse, he hasn't yet shown any inclination to make things better.

In the "economy" according to Sicone (and clones like him) it works that way... So far he's failed to back his words beyond the as predicted pointless drivel. What a way to strenghten an arguement with a weak rebuttal. Typical of the "Blame Clinton for the economy" club.

DISAPPOINTING DATA

Economic growth slows

GDP up just 3% in 2nd quarter as rising interest rates, high gas prices spur consumers to curtail spending

http://www.newsday.com/business/local/newyork/ny-bzecon313913428jul31,0,2406681,print.story?coll=ny-nybusiness-headlines

BY RANDI F. MARSHALL

STAFF WRITER

July 31, 2004

The nation's economy grew at a slow-paced 3 percent annual rate in the second quarter, renewing concerns about a weak overall recovery and the potential for mediocre future job growth.

The change in the gross domestic product, a broad measure of U.S. economic activity, was the slowest growth rate since the beginning of last year. It compares with a revised 4.5 percent growth rate in the first quarter.

The data disappointed experts, who worried that while the GDP growth was good, it wasn't good enough.

"It doesn't paint a picture of a recovery as robust as we need this one to be at this point," said economist Jared Bernstein, with the Economic Policy Institute, a Washington, D.C. think tank. "We need a more robust economy in order for the growth to start reaching middle and working class families."

A strong economy is key to President George W. Bush's re-election efforts, and the administration Friday was quick to emphasize that better GDP growth was likely in the second half of the year.

The consumer is mostly to blame for the slower gains, as high gasoline prices and rising interest rates led many people to stop spending in other areas. Consumer spending rose just 1 percent in the second quarter, compared with 4.1 percent in the first.

The continued rise in energy prices throughout the second quarter probably had a big impact on consumers, who didn't have money to spend elsewhere or didn't want to drive to spend whatever money they did have.

"For an awful lot of low- to moderate-income families, this is really taking the extra spending money out of their pockets," said Commerce Bank chief economist Joel L. Naroff.

But the problem goes beyond gas prices. Higher interest rates and larger tax bills also are hurting the consumer, and wages are not growing at a fast enough pace to counteract those factors, according to Mark M. Zandi, chief economist at Economy.com in West Chester, Pa.

"Take-home pay is not increasing as much as I would have thought at this point and that's beginning to cut into the willingness and ability of consumers to spend aggressively," Zandi said.

The soft GDP gains may not bode well for job growth, which was relatively weak in May. June's payroll statistics will be released next Friday.

"The key is businesses are spending and are they going to start hiring more," said Standard & Poor's economist Beth Ann Bovino. "If [GDP growth] keeps at a low level, there is a concern in terms of whether the economy is going to keep plowing along."

But Bovino is still expecting better growth in the second half of the year. And the quarter's weakness could be an oil price-related "speed bump" that, while disappointing, may not have a long-term impact, JPMorgan Chase senior economist James Glassman said.

On the more positive side, New York City's business activity expanded for the 11th month in a row, according to the National Association of Purchasing Management-New York's survey. Glassman said the growth was primarily due to financial services.

And do you want more....

DEFICITS AND THE MID-SESSION REVIEW

The Administration’s Efforts to Make Harmful Deficits Appear Benign

On July 30, the Office of Management and Budget released new projections stating that the budget deficit will grow to $445 billion in fiscal year 2004. This is $70 billion larger than the 2003 deficit, which stood at $375 billion. Despite the recovery, the deficit has continued to rise significantly.

The $445 billion projected deficit also is more than $700 billion worse than what the Administration projected for fiscal year 2004 in its first budget, submitted in February 2001. At that time, the Administration forecast a $262 billion surplus for 2004.

In the face of this dramatic fiscal deterioration, the Administration is now attempting to downplay the deficits and is citing the new figures as evidence it is making progress on the fiscal front. In spinning the new deficit numbers, the Administration and others have made several dubious claims.

The 2004 deficit. The Administration has hailed the 2004 projected deficit as evidence that its policies are working. The Administration notes that the $445 billion deficit it now forecasts for 2004 represents a significant improvement compared with the larger, $521 billion deficit it projected last February. As the Center on Budget and Policy Priorities reported at that time, however, the Administration’s February forecast artificially inflated the projected deficit for 2004, apparently so that subsequent downward adjustments in the deficit estimate could be presented as progress rather than as being, in significant part, the substitution of more realistic estimates for overstated ones.[1] Furthermore, as noted above, the $445 billion deficit now forecast for 2004 represents a deterioration from the level of the deficit in 2003, when the deficit stood at $375 billion.

Stronger economic growth. The Administration also is portraying the drop in the projected 2004 deficit as a sign of stronger-than-expected economic growth. Such a portrayal is not accurate. Overall economic growth has been no faster than the Administration forecast earlier this year. The economy grew at a 3.9 percent annual real rate in the first three quarters of the fiscal year, in line with what the Administration projected when it released its earlier deficit projection in February. Indeed, economic growth has been below the growth rate the Congressional Budget Office projected at the start of the year.

Revenues coming in modestly higher than expected. Although economic growth has not been faster than expected, revenues are coming in modestly above what CBO projected in February. (At the time of CBO’s projection, we noted that there already was evidence suggesting its revenue estimate would prove too low.) Possible factors that may help to explain the higher revenues include a greater-than-expected concentration of income among high-income individuals and higher-than-expected inflation (see box on page 5). Even so, revenues remain at unusually low levels. The Administration’s new projection shows that federal revenues this year will be at their lowest level since 1959, measured as a share of the economy.

Cutting the deficit in half by 2009. The Administration is again contending that under its proposed budget policies, the deficit would be cut in half by 2009. But, the Administration uses a further set of unrealistic budget estimates for years after 2004 to make this case; the Administration omits major costs from its projections for those years, such as the costs of continuing relief from the Alternative Minimum Tax, something that the Administration has made clear it favors. Moreover, the Administration’s budget figures are provided for five years rather than ten, leaving out the years from 2010-2014 when the baby-boom generation will begin to retire in large numbers and the deficit is expected to rise.

Causes of the deficit. On a related front, a number of policymakers and activists with an ideological axe to grind have claimed the recent tax cuts have had little or nothing to do with the deterioration of the budget outlook. The Administration’s own data show, however, that among the deficit-increasing factors over which policymakers have had control, the tax cuts constitute the single largest cause of the shift from surpluses to deficits. Table 7 of the mid-session review shows that tax cuts account for 57 percent of the budget deterioration in 2004 that has been caused by legislation enacted since the start of 2001.

Examining overall spending and revenue as a share of the economy provides further evidence that it is the low level of revenues, not a high spending level, that is driving the deficit. As noted above, revenues will fall this year to their lowest level, measured as a share of the economy, since 1959. By contrast, spending as a share of the economy, is below its average level of the past four decades.

Spinning the 2004 Budget Deficit

In its mid-session budget review, the Administration forecasts a deficit of $445 billion for 2004, lower than its $521 billion estimate of last February. Based on this revision, the Administration has tried to spin the new deficit forecast for 2004 as a sign that its policies are working to reduce federal borrowing and that the deficit is manageable. Does the new forecast represent real progress?

For inquiring minds....

http://www.cbpp.org/7-30-04bud.htm