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July Budget Deficit Grows By $181 Billion, YTD Individual And Corporate Receipts Tumble
The Congressional Budget Office released its preliminary July 2009 budget numbers - the budget deficit is now expected to be $181 billion, an 80% increase compared to the July 2008 deficit of $101 billion.
The deficit would have been larger had a calendar shift not been incorporated. On the receipt side:
Receipts were about $8 billion (or 5 percent) lower in July 2009 than they were in July 2008, marking the 15th consecutive month in which receipts were lower than those in the same month of the previous year. Withholding for income and payroll taxes was about $11 billion (or 8 percent) less than that in July 2008, CBO estimates; about half of that decline resulted from provisions in ARRA, primarily the Making Work Pay tax credit. The decline would have been larger if not for the effects of the calendar (July had one additional business day this year). Refunds in that month were about $11 billion less than they were in July 2008, primarily because of the rebates paid in July of last year pursuant to the Economic Stimulus Act of 2008. Lower refunds partly offset the decline in other receipts. Corporate income tax receipts continue to show weakness, with a decline of about $7 billion from July 2008.
Outlays paint a grim picture as well:
Outlays were $71 billion higher this July than in the same month last year because of growth in spending and the effects of the calendar. August 1, 2009, fell on a weekend, which shifted about $24 billion in outlays from August to July. Without that timing shift, the growth in outlays this July would have totaled $46 billion (or about 18 percent). TARP spending of $22 billion was the largest contributing factor to that increase. In addition, unemployment benefits and Medicaid outlays rose by $8 billion and $5 billion, respectively, boosted by stimulus spending from ARRA. Adjusted for timing shifts, Medicare and Social Security outlays increased by $6 billion and $5 billion, respectively, compared with last July.
YTD results demonstrate the troubling trends of declining receipts and increasing outalys persists:
CBO estimates that the federal government incurred a deficit of $1.3 trillion in the first 10 months of fiscal year 2009. Outlays were $526 billion greater than those in the October-July period last year, while revenues have fallen by $353 billion.
In the absence of a vibrant economy (and no, no green shoots anywhere on the budgetary horizon that can boost the S&P by a point here or there), the increasing deficit will receive funding only from one place: increasing Treasury auctions: $75 billion this week, and much more as the year progresses.
Full CBO report here:
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What? How could that happen? Didn't they tell us unemployment FELL last month?
I'm sooooo confused. They wouldn't lie to us.
Sigh...it was a great country, once. What have those nitwits in Washington done?
You cannot recover from an asset bubble recession by creating another asset bubble. The Fed is out of options, and will continue burning through 150-200 billion/month to prolong the inevitable.
Great paper by Frank Veneroso:
http://sastocks.files.wordpress.com/2008/07/veneroso-why-the-second-wave...
What is clear is that a consumption tax only should be implemented.
The tax would be 10% State, 5% Fed.
The C Tax would be collected by each state , and tax usage would be directed by State, not Fed mandate. Thus eliminating the outdated, current lobbyist system.
The net result is that the best companies in the world, along with their jobs would flock to the US.
The bottom line is that the manufacturing base must be re-established which means that the US has to position itself to compete head on with BRIC. The C Tax is the proper route for many reasons.
Thus a 10/5 C Tax by State mandate would also reinstate personal freedoms to such an extent that the US would be totally rejuvinated.
The route to taking more from less guarantees the inability to compete, and further wipes away basic human freedoms as well.
I can think of 537 reasons why that won't happen
Ha ha ha ha! Gallows humor, to be sure.
The government's solution to tax revenue management is to add more complexity to the system. My observation is that Main Street is now working outside the tax net more than ever. I can get a "cash money discount" for more and more things these days, and I doubt that any of it is ever reported. Making the tax code more complex (more time consuming, frustrating, and expensive) will just continue to drive away participants, IMO.
How about a Tobin Tax? That would tax ONLY the super-rich (keeping the Liberals happy), impose some strictures on currency trading (keeping the Fed happy), and produce some pretty impressive sums of money for a very, very small percentage of taxation - not even high enough to get traders pissed off.
Oh yeah, Soros runs the government (yeah, he said he had no problem with it....right).
To reestablish the manufacturing base in the United States you will also need to cut wages to $0.50/h to match the world price of unskilled labor. Good luck with that. It's called comparative advantage, and the United States doesn't have it in manufacturing.
Incorrect.
It does not matter what the component of price is. Labor is just one of them.
Review this site:http://en.wikipedia.org/wiki/Tax_rates_around_the_world
Then do the math.
Another category is legal largesse. This component of price needs to be dramatically reduced as well.
Furthermore, what one will be seeing soon, is a type of VAT tax, because the tax take from the current form of taxing will be dwindling, and highly insufficient.
A C Tax only is possibly the only viable solution to re-establishing US manufacturing, as well as its tax base.
Individual everyday freedoms are perhaps the most important benefit.
Can it happen ? Not with this current crop of politiCONs.
Not so fast....
"Receipts were about $8 billion (or 5 percent) lower in July 2009 than they were in July 2008, marking the 15th consecutive month in which receipts were lower than those in the same month of the previous year."
On a long enough time line...this streak will be broken and it will be another GREEN SHOOT.
I'm learning how to play the green shoots game..
;-) for the sarcastic-humor impaired.
Pete
Americas only hope? Eliminate all federal taxation. The government just prints up the monies anyway. Make preparations for the demise of America. When it is run by crooks from Harvard and Washington DC , what else would one expect?
The recession will be over in Q3. 90% of surveyed economist agree with 17% even expecting a V shaped recovery. http://www.reuters.com/article/newsOne/idUSTRE5792C820090810
90% of economist, including myself, can't be wrong.
--Phil
Agreed, there are plenty of green shoots, in fact they are all over the place:
http://yfrog.com/0bgreenshootsj
Apparently the 90% of eonomists surveyed did not include their heads.
Looks like the Joe Biden plan to get our fiscal house in order is working perfectly.
"How about a Tobin Tax? That would tax ONLY the super-rich (keeping the Liberals happy), impose some strictures on currency trading (keeping the Fed happy), and produce some pretty impressive sums of money for a very, very small percentage of taxation - not even high enough to get traders pissed off."
The "Liberals" don't want to offend the super-rich, because they largely are the party of the super-rich. Yes, all that BS about helping the middle class is just that - BS. Why do you think the likes of Soros, Buffett and Gates supported Obama? The whole gameplan of the modern Democratic Party is to prevent any of the middle class from increasing their wealth or political influence, by using class warfare measures that falsely claim to better the working class and lower-middle-class but in fact trap all of them in perpetual subservience. The "Liberals" want higher taxes on the people who actually pay taxes, like college graduates, doctors, lawyers, and small businessmen, and know that the super-rich who support them, and who they covertly work for, will never pay those taxes anyway, whether through outright fraud (not prosecuted by virtue of political connections, ala Turbo Timmy), complicated tax structures that are technically legal but clearly unintended, or blatant government handouts that are only available to the largest players in any given market.
We are now in a fascist regime masquerading as a socialist regime.
nailed it
This is the process regardless of what party is in power. The whole system and everyone involved in it is compromised. Fact of life.
It matters not what instrument one plays in the orchestra when it plays in a bordello the conductor works for the madam.
The recession will be over in Q3. 90% of surveyed economist agree with 17% even expecting a V shaped recovery? 90% of economist, including myself, can't be wrong?
Phil, maybe you should take up painting, or possibly Thai cooking? or something? Where do your projections derive from? I understand that our GDP is composed primarly from consumer spending? Who is spending other then the government? The housing numbers are distorted and the latest employment numbers are a flat out lie. If I was bankrupt and about to go into foreclosure and you lent me 50 thousand dollars to buy some time would that help my situation? No! I could live high on the hog for a while but eventually I will be worse off because now i'm 50k deeper in the hole? Just live off credit cards for a while. Pay all your bills with them and and when one gets maxed out get another to keep the flow going. Keep adding one on top of another on top of another. Sooner or later you will run out of options and when your credit gets snipped you are done! FINI. Just ask the State of California for the answer, they are the model for the rest of us.
A fierce opponent of government intervention in the marketplace, Mr. Gramm, a Republican from Texas, recalled the episode during a 2001 Senate debate over a measure to curb predatory lending. What some view as exploitive, he argued, others see as a gift.
“Some people look at subprime lending and see evil. I look at subprime lending and I see the American dream in action,” he said. “My mother lived it as a result of a finance company making a mortgage loan that a bank would not make.”
On Capitol Hill, Mr. Gramm became the most effective proponent of deregulation in a generation, by dint of his expertise (a Ph.D in economics), free-market ideology, perch on the Senate banking committee and force of personality (a writer in Texas once called him “a snapping turtle”). And in one remarkable stretch from 1999 to 2001, he pushed laws and promoted policies that he says unshackled businesses from needless restraints but his critics charge significantly contributed to the financial crisis that has rattled the nation.
He led the effort to block measures curtailing deceptive or predatory lending, which was just beginning to result in a jump in home foreclosures that would undermine the financial markets. He advanced legislation that fractured oversight of Wall Street while knocking down Depression-era barriers that restricted the rise and reach of financial conglomerates.
So what some people see as the end of the recession? others see as the beginning of the GREATEST DEPRESSION.
Headline #1
The budget deficit is now expected to be $181 billion, an 80% increase compared to the July 2008 deficit of $101 billion.
Headline#2
Congress plans to spend $550 million on luxury jets to accommodate lawmakers' travel