Tax cuts = Deficit reduction!

www.washingtonpost.com...

from the article...

"After three years of rising federal budget deficits, a surge of April tax receipts brought unexpected good news to fiscal policymakers -- the tide of government red ink appears to be receding.

The Treasury Department this week reported there would be a $54 billion swing from projected deficit to surplus in the April-to-June quarter, after an unanticipated gush of tax payments poured into the Treasury before the April 15 deadline. That prompted private forecasters to lower their deficit projections for the fiscal year that ends in September."


Tax cuts reducing the deficit? Wasn't raising taxes the only way this could happen?

Now if we could cut spending and lower taxes more, we could wipe out this deficit it no time!

Can't accept the good economic news? Don't reply then...

from the article, third paragraph:

Budget analysts inside and outside the government said the positive turn is likely to be short-lived. Indeed, after a four-year absence, the Treasury Department announced yesterday it is considering reissuing its 30-year Treasury bond to help finance long-term government debt, jolting the bond markets and pushing down the price of existing 30-year securities.

Where's teh good news?

The article continues:

Treasury officials have long resisted reissuing 30-year bonds, in part, because "nobody wanted to admit the deficits were permanent," said Wyss, the Standard & Poor's economist.

Treasury officials disputed that notion during a meeting with reporters yesterday.

"The deficit has nothing to do with it," said Timothy S. Bitsberger, assistant Treasury secretary for financial markets. "In fact, we think the deficits are coming down."

Wall Street wasn't buying it. "If you weren't borrowing this much, you wouldn't be doing it," Wyss said. "No question."

...

With a 2001 forecast of surpluses totaling $5.6 trillion over 10 years, Treasury officials figured they could focus on reducing debt, not adding to it. And eliminating the 30-year bond would push buyers to the 10-year Treasury bond. Since 30-year mortgages are closely tied to the 10-year bond, the added demand for that bond would drive down mortgage rates and help the economy.

But forecasted surpluses turned into huge, forecasted deficits. Since President Bush entered office, the total federal debt -- including debt to the public and debt owed the Social Security system -- has risen from $5.7 trillion to $7.8 trillion. Long-term interest rates should begin rising in the near term, so the government should lock in interest rates on 30-year bonds soon, Wyss said, before the cost of federal borrowing begins to rise.

Great article Carseller4! Thank God Bush's scheme to give social security to the corporatists failed, or we'd be even in a bigger economic mess!

Maybe you should change the title: Tax cuts = Deficit reduction for a month!

The article by Curme misses the point made by Carseller4. Tax rates were cut and "tax revenues" INCREASED. Although the deficit may still increase if the Government spends beyond it's increased revenue, that does not change the fact that tax revenues increased while tax rates were cut! I believe that is because tax reductions stimulate the economy and the resulting improved economy generates additional tax revenues.

Would you turn down a raise in pay because other family members want to spend more than your raise? Responsible people would take the raise and attempt to hold down expenses so that their family improves financially.

So the statement made by Carseller4 when he wrote "Tax cuts = Deficit reduction!" is true when the Government doesn't increase it's spending. Obviously Tax Cuts don't = Deficit Reduction when the Government increases spending beyond the increased revenues. That's a no brainer. Nevertheless, Tax Cuts do = Increased Tax Revenues!

The article by Curme arguing that the decreased deficit may be short lived misses the point regarding tax cuts. Sure, the decreased deficit may be short lived if Government increases spending due to increased Social Security & medicare debt, or other expenses. Curme asked, "Where's the good news? The good news is our deficit is less because of tax cuts regardless of the amount of Government spending. The deficit would be even greater if tax cuts had not been made.

Curme cites statements made by Mr. Wyss. However, even with the future Government expenses, Mr. Wyss also said,

"That should reduce the 2005 deficit while bringing down war costs next year. Wyss said the deficit should continue to fall in 2006 and 2007."

We have been told by certain people that the "only" way to reduce the deficit is to increase the tax rates. Well, that has been proved wrong.