$1.5Tr 2011 deficit

[RandomGuy]

CBO Sees Record Budget Gap At Nearly $1.5 Trillion



A continuing weak economy and last month's bipartisan tax cut legislation will drive the government's deficit to a record $1.5 trillion this year, a new government estimates predicts. The eye-popping numbers mean the government will continue to borrow 40 cents for every dollar it spends.

The new Congressional Budget Office estimates will add fuel to a raging debate over cutting spending and looming legislation that's required to allow the government to borrow more money as the national debt nears the $14.3 trillion cap set by law. Republicans controlling the House say there's no way they'll raise the limit without significant cuts in spending, starting with a government funding bill that will advance next month.

The CBO analysis predicts the economy will grow by 3.1 percent this year, but that joblessness will remain above 9 percent this year. Dauntingly for President Obama, the nonpartisan agency estimates a nationwide unemployment rate of 8.2 percent on Election Day in 2012.

The latest figures are up from previous estimates because of bipartisan legislation passed in December that extended Bush-era tax cuts, unemployment benefits for the long-term jobless and provided a 2 percent payroll tax cut this year.

That measure added almost $400 billion to this year's deficit, CBO says.

The deficit is on track to beat the record of $1.4 trillion set in 2009. That figure reflected huge outlays from the Wall St. bailout. The nonpartisan budget agency predicts the deficit will drop to $1.1 trillion next year.

"The fiscal challenge confronting us is enormous. To solve this problem, it will require real compromise and a great deal of political will," said Budget Committee Chairman Kent Conrad, D-N.D. "We need to have both sides, Democrats and Republicans, willing to move off their fixed positions and find common ground."

The chilling figures come the morning after Obama called for a five-year freeze on domestic agency budgets passed by Congress each year. But those nondefense programs make up just 18 percent of the $3.7 trillion budget, which means any upcoming deficit reduction package - at least one that begins to significantly slow the gush of red ink - will require politically dangerous curbs to popular benefit programs, which include Social Security, Medicare, the Medicaid health care program for the poor and disabled, and food stamps.

Neither Obama nor his GOP rivals on Capitol Hill have yet come forward with specific proposals for cutting such benefit programs. Successful efforts to curb the deficit always require active, engaged presidential leadership but Obama's unwillingness to thus far take chances has deficit hawks discouraged. Obama will release his 2012 budget proposal next month.

"Somebody is going to have to bite the bullet and get this process going," said Maya MacGuineas of the Committee for a Responsible Federal Budget, a bipartisan group that advocates fiscal responsibility. "And that somebody has to be the president."

Obama has pointedly steered clear of the recommendations of his deficit commissions, which in December called for politically difficult moves such as increasing the Social Security retirement age and reducing future increases in benefits. It also proposed a 15 cents a gallon increase in the gas tax and eliminating or scaling back tax breaks — including the child tax credit, mortgage interest deduction and deduction claimed by employers who provide health insurance — in exchange for rate cuts on corporate and income taxes.

CBO predicts that the deficit will fall to $551 billion by 2015, down to a sustainable 3 percent of the size of the economy.

But under its rules, the CBO assumes that recently extended cuts in taxes on income, investment and people inheriting large estates will expire in two years. If those tax cuts, and numerous others, are extended, the deficit for that year would be almost three times as large.

Tax revenues, which dropped significantly in 2009 because of the recession, have stabilized. But revenue growth will continue to be constrained because of the slow pace of economic growth and the extension of Bush era tax cuts passed by Congress in December. The CBO projects revenues to be 6 percent higher in 2011 than they were two years ago, which will not keep pace with the growth in spending.

As a share of the economy, tax revenues in 2011 are projected to reach their lowest levels since 1950. The CBO projects that tax revenues will be 14.8 percent of GDP in 2011, which would be 0.1 percentage point lower than in 2009.

"The United States faces daunting economic and budgetary challenges. The economy has struggled to recover from the recent recession, which was triggered by a large decline in house prices and a financial crisis — events unlike anything this country has seen since the Great Depression," the CBO report says.
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God forbid we should let taxes on the only people whose incomes actually rose in the past 20 years go up slightly.

I am willing to see all sorts of cuts in social and military spending. That won't do it by a long shot. We will have to raise taxes.

If you don't like that, GTFO, and let the grown-ups handle it, or suck up the fact that the debt will keep getting bigger relative to the economy.

http://www.npr.org/2011/01/26/133238...y-1-5-trillion

[coyotes_geek]

God forbid we should let taxes on the only people whose incomes actually rose in the past 20 years go up slightly.

I am willing to see all sorts of cuts in social and military spending. That won't do it by a long shot. We will have to raise taxes.

If you don't like that, GTFO, and let the grown-ups handle it, or suck up the fact that the debt will keep getting bigger relative to the economy.

http://www.npr.org/2011/01/26/133238...y-1-5-trillion

Yep. Tax increases have to be part of the solution no matter how much republicans want to pretend that they aren't.

[sickdsm]

How about we raise taxes on the ones that DON'T pay them?


Highest corporate tax rate in the world? Is that what Obama said last night? I had no idea.

[Nbadan]

How about we raise taxes on the ones that DON'T pay them?

Highest corporate tax rate in the world? Is that what Obama said last night? I had no idea.

There's a big difference between effective tax rates and actual tax rates...the U.S. may have a high effective tax rate, which is clearly what Obama speakth of last night, but with all the deductions and give-aways corporations get, the actual tax rate is nothing for many companies...

[sickdsm]

I always hear "Raise taxes" on here when talking about this. Apparently Obama and I agree that you should close loopholes and make sure everyone pays them, but only if your an employer or spend your money conservatively.

[boutons_deux]

Barry has clearly gone over to the Dark Side and joined totally with capitalists and corps to America harder and longer.

[RandomGuy]

How about we raise taxes on the ones that DON'T pay them?


Highest corporate tax rate in the world? Is that what Obama said last night? I had no idea.

Sort of. many other countries have what are called VAT systems (value-added taxes) that aren't exactly income taxes per se.

Many others don't have as many loopholes, so don't have to charge higher rates.

People who have actually gone in and actually done some objective analysis say that the effective rates are a LOT closer together for industrialized countries than the nominal tax rates suggest.

Of course, we all know how that bit of information will be ignored or dismissed by people making political arguments.

That said, I am all for getting rid of loopholes and gimmies. We as a nation, spend far too much time figuring out how much tax we owe.

[TeyshaBlue]

That said, I am all for getting rid of loopholes and gimmies. We as a nation, spend far too much time figuring out how much tax we owe.

Bingo. I'm still wondering why we haven't slapped a .50/gallon tax on gasoline for starters. That's a quick 70 billion/year.

[boutons_deux]

"too much time figuring out how much tax we owe"

The tax code, for individuals and corps, is engineered by capitalists/super-wealthy to be so complex that only they can afford the expertise to exploit the tax loopholes. It's just another way of gaming the system and neutralizing/regressing progressive tax rates.

Reducing taxes on those pitiful, disadvantaged, put-upon corporations and super-wealthy is a just more of the VRWC gaming the system so the lower 98% are suckers, and the top 2% predators ac ulate more wealth they can ever spend.

That Barry even talks about corporate taxes as high proves he's completely gone over to their Dark Side.

[RandomGuy]

Bingo. I'm still wondering why we haven't slapped a .50/gallon tax on gasoline for starters. That's a quick 70 billion/year.

Non-starter.

Democrats: it's a regressive tax that will disproportionately affect people with smaller incomes

Republicans: it's a tax.


I agree with you 100%. We MUST address our aging infrastructure, the sooner, the better.

[RandomGuy]

"too much time figuring out how much tax we owe"

The tax code, for individuals and corps, is engineered by capitalists/super-wealthy to be so complex that only they can afford the expertise to exploit the tax loopholes. It's just another way of gaming the system.

Close. Only need to change a word or two to get it right:

The tax code, for individuals and corps, is engineered by capitalists/super-wealthy to be so complex as they can afford the expertise to exploit the tax loopholes. It's just another way of gaming the system.

The wealthy aren't doing that to spite the rest of us, they are doing it because it is in their interest to do so.

When accountants start telling you that the tax code is too Byzantine, time to start worrying.

[SnakeBoy]

There's a big difference between effective tax rates and actual tax rates...the U.S. may have a high effective tax rate, which is clearly what Obama speakth of last night, but with all the deductions and give-aways corporations get, the actual tax rate is nothing for many companies...

What's your actual tax rate Dan?

[Wild Cobra]

Bingo. I'm still wondering why we haven't slapped a .50/gallon tax on gasoline for starters. That's a quick 70 billion/year.

An increase in fuel tax is a no-brainer. Should have had it indexed for inflation all along.

[boutons_deux]

A Blast From the Past, still true



Critics Still Wrong on What’s Driving Deficits in Coming Years
Economic Downturn, Financial Rescues, and Bush-Era Policies Drive the Numbers

http://www.cbpp.org/cms/index.cfm?fa=view&id=3036

[RandomGuy]

One should note here, that if we actually balanced the budget without raising taxes, i.e. just through cuts, that would drive down GDP in 2011 by an immediate 8.3%, and cons ute the largest one year decline since we started measuring it, to my understanding.

As a Democrat, such a drastic downturn in the economy laid at the feet of the Republicans would be politically beneficial.

Remember this is exactly what the GOP/tea party wants.

If there were little human cost involved, I would say go for it.

As it is, I know how stupid it would be, and how utterly cataclysmic it would be for the economy to lose one out of every 11 dollars.

Cut spending, sure, I can live with that. But then raise taxes. It is the only responsible thing to do, and don't let the idiots who couldn't tell you what a supply or demand curve was to save their life drive the discussion.

[greyforest]

"too much time figuring out how much tax we owe"

The tax code, for individuals and corps, is engineered by capitalists/super-wealthy to be so complex that only they can afford the expertise to exploit the tax loopholes. It's just another way of gaming the system and neutralizing/regressing progressive tax rates.

Reducing taxes on those pitiful, disadvantaged, put-upon corporations and super-wealthy is a just more of the VRWC gaming the system so the lower 98% are suckers, and the top 2% predators ac ulate more wealth they can ever spend.

yeah all that 's gonna stop working pretty soon, dont worry

[fyatuk]

Cut spending, sure, I can live with that. But then raise taxes. It is the only responsible thing to do, and don't let the idiots who couldn't tell you what a supply or demand curve was to save their life drive the discussion.

It's certainly got to be both at this moment. Once you get the deficit under control and closer to a balanced budget, then you can worry about the big government/bigger government argument.

Right now, spending needs to drop, and taxes need to hike.

[boutons_deux]

"spending needs to drop"

easy to say, Repugs have no concrete proposals of any significance.

[RandomGuy]

"spending needs to drop"

easy to say, Repugs have no concrete proposals of any significance.

To be fair, neither do Democrats at the moment that I am aware of.

Both parties have members in Congress who are too chicken or ideologically blind to do what needs to be done. That seems to describe a majority of them.

[fyatuk]

To be fair, neither do Democrats at the moment that I am aware of.

Both parties have members in Congress who are too chicken ...

That's the big one. No one wants to touch the third rails (en lements and military). Say what you want about Bush, but at least he had the balls (or ego to believe he was untouchable) to push, even half-heartedly, for a massive overhaul to a broken system. Whether you agree with his changes or not is another story, but at least he wasn't a chicken like almost every politician.

[boutons_deux]

"the third rails (en lements and military)"

more specifically, trucking money to MIC spending is off the table.

Money for vets, to be cut heavily.

"Thanks for your service, patriot, now GFY"

Tea party hero Rep. Michele Bachmann (R-MN) this week proposed a blueprint to eliminate $400 billion from the federal budget, which included billions in cuts to veterans' health care and disability benefits.

Her plan would freeze health care funding for the Department of Veterans Affairs (VA), and slash $4.5 billion in disability benefits to military veterans.

http://www.rawstory.com/rs/2011/01/b...veterans-cuts/

[BlairForceDejuan]

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If you don't like that, GTFO, and let the grown-ups handle it, or suck up the fact that the debt will keep getting bigger relative to the economy.

looool, this line is so awesome. Grown-ups have been "handling it". RG, do you want to know who the REAL grown-ups are? The small business owners that built their companies from the ground up. The small business owners who provide for their employees' families. The small business owners who understand the delicate balance between debits, credits, and cash flow. Not these sucking politicians who get to steal peoples' money and spend an infinite amount without any consequences whatsoever.

I like how Obama is now the "grown-up". He is a politician who has never had a real job. I'm sure he will steer this multi-trillion dollar corporation into a new age. gmafb

[DJ Mbenga]

i might suck at math but last time i checked to reduce the defecit. cut spending. raise taxes. dont know why that 40 yr old dude wants to only raise taxes on the non rich. doesnt make any sense.