Discrepancy in the Budget Deficit
Today the budget deficit is in the news. As you know, I follow the Daily Treasury Statement as a reflection of liquidity and short-term prediction of market movement. What I read from the news release, claims a budget deficit of 413 billion, think 0.413 trillion for perspective. The spending was, if I read it right, 2.29 trillion. The DTS shows year-end collections from all sources as 1.728848t. 2.29t minus 1.729t, however suggests a year-end short fall of more like 0.56t or 560 billion not 413b. I do not know where the discrepancy lies. Maybe there was money left over from last year, otherwise that is a lot of bills to hide under the blotter. One would have to assume that the figures are true; there are too many people looking. John Snow apparently re-routed some funds from pensions and made some accounting changes to avoid the total National debt exceeding the limit set by Congress of 7.384t. September 30th debt was 7.333t.. Today the debt is 7.379t. These politicians have more ways of playing the shell game than a subway huckster.
Would the budget deficit be less if we had not had a tax cut? Nooo, or at least probably not and it might have been greater. One side may be playing a shell game with 140 some billion. The other side, however is just plain lying to you when they say that a billion dollar tax cut amounts to that much less money that the treasury takes in as tax. Some politicians are dumb enough to believe it, but most that have anything to do with finance know better, yet it has become a political mantra. The budget deficit, not counting the missing 147 billion, amounts to only 3.75 % of the economy, while the budget itself amounted to 20% of the projected GDP. In truth, the economy need only sneeze to create wide swings in the treasury department collections. A small growth in the economy creates a large growth in government revenue. For example, this year’s tax receipts amount to 69 billion more than last year.
Microsoft’s dividend, new in 2004 probably had a greater effect on available government revenue than increasing tax as suggested in the debate. How can that be? Simple, the tax takes productive dollars out of the economy where it turns over four or five times during the year (taxed each time) and sequesters it in the public sector where it turns once if it is lucky or gets wasted completely. (Note that the GDP is 3 to 5 times the money supply. Money is taxed only when it changes hands.) An over simplification too but you get the idea. Keep productive dollars productive. You might resent the guys with all the wealth, and I do too (especially over paid executives) but all that wealth is invested and very wisely. That is why they are wealthy. That is why their invested capital pays tax and pays it multiple times as it moves rapidly through supply channels and wages creating wealth along the way.
I get off on this issue because it is preached with such conviction and is such a lie. They have so convinced a gullible following that the true believers treat it as religious gospel.
D. None of the above___
Would the budget deficit be less if we had not had a tax cut? Nooo, or at least probably not and it might have been greater. One side may be playing a shell game with 140 some billion. The other side, however is just plain lying to you when they say that a billion dollar tax cut amounts to that much less money that the treasury takes in as tax. Some politicians are dumb enough to believe it, but most that have anything to do with finance know better, yet it has become a political mantra. The budget deficit, not counting the missing 147 billion, amounts to only 3.75 % of the economy, while the budget itself amounted to 20% of the projected GDP. In truth, the economy need only sneeze to create wide swings in the treasury department collections. A small growth in the economy creates a large growth in government revenue. For example, this year’s tax receipts amount to 69 billion more than last year.
Microsoft’s dividend, new in 2004 probably had a greater effect on available government revenue than increasing tax as suggested in the debate. How can that be? Simple, the tax takes productive dollars out of the economy where it turns over four or five times during the year (taxed each time) and sequesters it in the public sector where it turns once if it is lucky or gets wasted completely. (Note that the GDP is 3 to 5 times the money supply. Money is taxed only when it changes hands.) An over simplification too but you get the idea. Keep productive dollars productive. You might resent the guys with all the wealth, and I do too (especially over paid executives) but all that wealth is invested and very wisely. That is why they are wealthy. That is why their invested capital pays tax and pays it multiple times as it moves rapidly through supply channels and wages creating wealth along the way.
I get off on this issue because it is preached with such conviction and is such a lie. They have so convinced a gullible following that the true believers treat it as religious gospel.
D. None of the above___
posted by Clancy Hughes | 10/14/2004 09:23:00 PM
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