• Steve H. Hanke
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Ryan 2013 Budget Details Released, In Which We Find The US Runs A Deficit Until 2040

Tyler Durden's picture




 

As noted yesterday, Paul Ryan proposed a 2013 budget, which has no chance of passing, and is "focused on deficit reduction." An hour ago, the full 5-page detail was released to the public. And if this is the plan that hopes to cut US budget deficits, then America is royally screwed, as according to page 5, the first time that the US resume a budget surplus is in... 2040.

Keep in mind that of the proposed budgets, as unrealistic as this one is (as it grows revenues miraculously from $2.4 trillion to $4.6 trillion in 10 years by cutting taxes) likely has the best chance of cutting deficits, since earlier today the CBO, which is basically Wall Street's conduit of defining policy (as explained previously by a whistleblower), said the budget is "ungradable", which is simply Wall Street's way to express its dissatisfaction with this attempt to escape from public risk onboarding. That said, if indeed the US, in the most aggressive case, can grow revenues to be greater than outlays, at the earliest in just about 30 years, then it is all over.

Incidentally, if someone can explain to us how US debt as a % of GDP can be declining even as the US continues to post a deficit, please advise.

Full budget link pdf

 

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Tue, 03/20/2012 - 11:22 | 2273277 hedgeless_horseman
hedgeless_horseman's picture

 

 

Just one more hit, bitchezzz!!!

Tue, 03/20/2012 - 11:24 | 2273286 Daily Collateral
Daily Collateral's picture

This must be the NEW Path to Prosperity

Tue, 03/20/2012 - 11:27 | 2273310 hedgeless_horseman
hedgeless_horseman's picture

 

 

Addiction is defined as the continued use of a mood altering substance or behaviour despite adverse consequences.[1] This can include, but is not limited to alcohol abuse, drug abuse, exercise abuse, and gambling. Some defining characteristics of addiction include impaired control over subtances/behaviour, preoccupation with substance/behaviour, continued use despite consequences, and denial.[2] Habits and patterns associated with addiction are typically characterized by immediate gratification (short-term reward), coupled with delayed deleterious effects (long-term costs).[3] Physiological dependence occurs when the body has to adjust to the substance by incorporating the substance into its 'normal' functioning.[4] This state creates the conditions of tolerance, and withdrawal. Tolerance is the process by which the body continually adapts to the substance and requires increasingly larger amounts to achieve the original effects. Withdrawal refers to physical and psychological symptoms people experience when reducing or discontinuing a substance the body had become dependent on. Symptoms of withdrawal generally include but are not limited to anxiety, irritability, intense cravings for the substance, nausea, hallucinations, headaches, cold sweats, and tremors.

http://en.wikipedia.org/wiki/Addiction

 

Tue, 03/20/2012 - 11:29 | 2273321 SheepRevolution
SheepRevolution's picture

The U.S. won't have a deficit in 2040, because the U.S will be long gone by then.

Tue, 03/20/2012 - 11:37 | 2273352 economics9698
economics9698's picture

The deficit can decline as a percentage of the GDP if the economy is growing faster than the growth of government. 

In a healthy economy the productive private sector would grow at a 3 to 5% pace and government at a 2 to 3% pace.  So while the deficit in nominal terms would increase the proportion to the total economy it would decrease.

In the GDP equation, GDP = C + I + G + NX, the G part grows slower than the C or the I part.

 

 

Tue, 03/20/2012 - 11:42 | 2273397 LawsofPhysics
LawsofPhysics's picture

Without cheap oil, growth is not an option.  Now where the fuck are those fusion reactors I ordered?

Tue, 03/20/2012 - 16:29 | 2273969 Normalcy Bias
Normalcy Bias's picture

Aw c'mon! Everyone knows that algae is the energy of the future!

Tue, 03/20/2012 - 11:48 | 2273424 economics9698
economics9698's picture

Some of you seem to be oblivious to taxation policies and the Laffer Curve effect.  Briefly if you increase taxes above 30% people engage in tax avoidance behavior.  From 25% to 30% you get more taxes but at the cost of economic growth.  25% or lower is the optimal tax rate where you want to raise revenue at.  Which is the Ryan proposed top tax rate.

Here is a video from Dan Mitchell of the CATO Institute that explains the Laffer Curve.  Mr. Mitchell is also the most knowledgeable economist I know of on tax policy.  He is a tax policy expert supreme and I would highly recommend Tyler ask Mr. Mitchell to make a guest post on explaining good and bad tax policy to the ZH readers.

 

http://www.youtube.com/watch?v=fIqyCpCPrvU

 

http://www.cato.org/people/daniel-mitchell

Tue, 03/20/2012 - 11:59 | 2273474 LawsofPhysics
LawsofPhysics's picture

Hey moron, the Laffer curve is a fucking joke.  Wake the fuck up, people are already engaged in "tax avoidance behavior".

You want to pay for and maintain your own sewers, power grids, roads, bridges, police, fire, first-responders?  By all means, fucking bring it.

You probably also believe that there is no real cost for creating capital without adding any real value to the system and favor ZIRP.  How has that been working out for Japan again?

Tue, 03/20/2012 - 12:07 | 2273524 Iwanttoknow
Iwanttoknow's picture

We need more Voodoo economics.

Tue, 03/20/2012 - 12:58 | 2273760 TMT
TMT's picture

So you're saying we (you know, the 51% who actually pay federal income taxes) need to be taxed more?

Tue, 03/20/2012 - 12:02 | 2273504 T-roll
T-roll's picture

Romney engages in tax avoidance behavior and his tax rate is only around 15%.

No one likes paying taxes.  We need to get rid of the income tax and institute a national sales tax.

Tue, 03/20/2012 - 15:41 | 2274462 rayduh4life
rayduh4life's picture

So Romney and Buffet can pay less?

Tue, 03/20/2012 - 15:39 | 2274452 rayduh4life
rayduh4life's picture

Hey econ 9698, first it's called a laughter curve, second, if tax cuts are the be all end all of spurring an economy, how come we not in an economic boom (foreclosure business notwithstanding) and lastly, if you want to live in a tax free paradise, move to Greece.

Tue, 03/20/2012 - 12:28 | 2273359 TruthInSunshine
TruthInSunshine's picture

Just think about it.

 

This is the so-called conserv-rat-ive alternative to the demoncratic one!

Yes, some still believe there are two different political choices and republican form of constitutional democracy in the U.S.

These people think Deep Capture is a Discovery Channel fishing show.

 

#DOOOMED

 

*I could wipe out the deficit in approx 1/2 hour using a black sharpie (just give me a very loyal, competent, large, robustly armed & technologically adept security detail having no conflicting loyalties to the MIC) and that would literally have 90%+ of Americans feeling little to no pain and their children far better off, but some will tell you I don't understand the extraordinary complexities of governing in the modern age.

Tue, 03/20/2012 - 11:37 | 2273375 BKbroiler
BKbroiler's picture

U.S will be long gone by then.

or everybody else...

Tue, 03/20/2012 - 12:16 | 2273573 old naughty
old naughty's picture

I used to think these are the two sides of the equation.

Guess I am wrong.

Those who remain are not in the formula !

Tue, 03/20/2012 - 11:37 | 2273379 hedgeless_horseman
hedgeless_horseman's picture

 

 

Governments are addicted to debt.

The banking cabal, as dealers of debt and recipients of interest payments, foster the addiction.

Society pays the price of the addict's behavior.

Tue, 03/20/2012 - 12:10 | 2273547 old naughty
old naughty's picture

Right you are.

Tue, 03/20/2012 - 12:02 | 2273503 grid-b-gone
grid-b-gone's picture

No 2040 deficit if no other Congress or administration adds more programs, federal employees, wars, or spending for the next 28 years.

So, if Ryan and the "wealth creators" get their permanent tax cut, revenues will still not outpace spending for another three decades. How nice of Paul Ryan to permanently lock in debt for the next generation.

I'm sure he's thought of every possible future scenario and his plan saves future politicians from having to look at these bothersome numbers each year.

Tue, 03/20/2012 - 11:24 | 2273284 NotApplicable
NotApplicable's picture

Shouldn't "ungradable" equal impossible therfore equaling disaster, which I'd have to consider a grade.

Just not one they want to mention, as it's beyond computation.

Tue, 03/20/2012 - 11:25 | 2273290 Dr. Engali
Dr. Engali's picture

We aren't going to last until 2040. What a friggen joke.

Tue, 03/20/2012 - 11:29 | 2273328 Doubleguns
Doubleguns's picture

Yep, Wiemer only lasted 24 years till the nazis took over. I wonder where we are on that time line. Seems pretty close to the end I would guess since we became a debtor nation in the 80's well over 24 years ago.

Tue, 03/20/2012 - 11:37 | 2273378 SheepDog-One
SheepDog-One's picture

'We became a debtor nation in the '80's'...

1780's, I assume you meant. 

'The 'Founding Fathers' as constitutors, acknowledged and re-organized the debt in the 'US Constitution' in 1781, Article VI, hence 'CONSTITUTION'. Bankruptcy occurred on Jan 1 1788 based on innability to repay 21 loans from King George from Feb 28 1778 thru July 5 1782, the repayment of which had been ratified by congress on Jan 22 1783. The 'United States Bank' created in 1791 was a private bank with 18,000 of the 25,000 shares owned outright by England.'

Tue, 03/20/2012 - 12:12 | 2273555 SheepDog-One
SheepDog-One's picture

Downvote, yet no informed reply to show where I am wrong. What, you just didnt like seeing the truth?

Wed, 03/21/2012 - 15:55 | 2277582 Doubleguns
Doubleguns's picture

Was not me. Your entitiled to adding to the discussion.

Tue, 03/20/2012 - 11:25 | 2273291 Bam_Man
Bam_Man's picture

Since a budget deficit of less than 10% of GDP is now referred to as "austerity", Uncle Shithead will continue to run budget deficits of at least 10% of GDP until the bond market makes him stop. But I'm thinking this happens long before 2040.

Tue, 03/20/2012 - 11:26 | 2273302 NotApplicable
NotApplicable's picture

Bond market??? Stop it, you're killing me.

Tue, 03/20/2012 - 11:34 | 2273354 Bam_Man
Bam_Man's picture

Many people fail to realize that flooding the world with cheap money can "cut both ways".

Tue, 03/20/2012 - 11:32 | 2273345 alexwest
alexwest's picture

good one

 

Tue, 03/20/2012 - 11:25 | 2273294 NotApplicable
NotApplicable's picture

Oh, and 2040? Major lulz.

That's why he did it.

Tue, 03/20/2012 - 11:25 | 2273296 Mongo
Mongo's picture

By 2040 We will bu assimilated by stupidity and nothing will really matter.

Tue, 03/20/2012 - 13:13 | 2273826 exi1ed0ne
exi1ed0ne's picture

I sure hope so. This being responsible business is starting to suck. Paid down all my debt, bought a house well within my means, no vacation in years, no toys in the yard, etc, etc. Man am I the sucker.

Something tells me that you can't go back into the cave and not see anything but shadows though. Sigh.

Tue, 03/20/2012 - 11:26 | 2273301 SokPOTUS
SokPOTUS's picture

Does this anticipate a 2.00% 10-year Bond through 2040?  Because um, Ben can't even get there now...

 

Tue, 03/20/2012 - 11:26 | 2273303 pods
pods's picture

I love these projections of nirvana x years out.  By the time you reach 1/2x years out the underlying conditions deteriorate so much that it will take 2x more years to get to where you wanted to be.

We are done.  No sense in struggling.  Like a Thompson's gazelle. It kicks while in the cheetahs jaws for a little bit.

Eventually it settles down to inevitability.

pods 

Tue, 03/20/2012 - 11:39 | 2273386 Rainman
Rainman's picture

Correct.....even a 10 year plan is not worth the papyrus upon which it is written.....30 years, fuggitabout it. 

Tue, 03/20/2012 - 11:40 | 2273390 A Lunatic
A Lunatic's picture

Perhaps a substitution of Dorcas Gazelles would buy us a little time.

Tue, 03/20/2012 - 11:32 | 2273304 ShankyS
ShankyS's picture

Sadly the sheeple will not get it till it's over. 

 

Can't you see the 2040 headlines now, "The USSA rises from the depths! Czar Obama balances budget in 8th term."

Tue, 03/20/2012 - 14:01 | 2274021 AgShaman
AgShaman's picture

Sadly...90% of the people in the USSA don't understand simple concepts such as the 'govt. runs a deficit'

(The deer in the headlights look follows....too dumb to know what a deficit is....too stupid and gutless to find out the answer)

Tue, 03/20/2012 - 16:23 | 2274642 r00t61
r00t61's picture

Nah, the people listen to Dr. Paul Krugman, and Darth Cheney, who claim that gov. deficits don't matter.  They then assume it's true and go back to their happy lives.  They might stop to occasionally grumble about the cost of gasoline.

Because, obviously, if they reject the claim as false, they experience ontological shock, and realize that there ain't no such thing as a free lunch, and their neat little manicured world comes a-tumblin' down all around. 

Tue, 03/20/2012 - 11:27 | 2273311 alexwest
alexwest's picture

liar liar pants on fire..
there wont be any USA beyond even 2030 yy.. luckily

alx

Tue, 03/20/2012 - 11:32 | 2273312 LawsofPhysics
LawsofPhysics's picture

Interesting.  So the GOP does not want to raise revenue at all (despite debt servicing obligations they already committed to and the REAL cost of creating capital - interest rate WILL rise) and they want to build their own roads, schools and infrastructure?  No need to pay police, fire, and first responders?  Awesome, they want a free-for-all.  Fine with me, fucking bring it.  At least then we get to find out precisely want everyone's labor is really worth.  More evidence that there is only one party, for the banks, by the banks.  Ron Paul is the only alternative.  Seems like the noise (a.k.a. stupidity) in this country has gotten so damn loud we can't even here the true signal.  Anyone else think politicians should be limited on how long they can campaign ahead of an election, how much they can spend, how long they can serve, as well as how long their fucking benefits last?

Have the means to fund your own private army?  You better.

Tue, 03/20/2012 - 11:36 | 2273370 haskelslocal
haskelslocal's picture

Republicans? These guys ate the republicans and are now wolves in sheeps clothing.

How odd that the very people who cater to corporations where growth on revenue is mandatory choose to run the business they manage without convern for an income stream.

This is game theory 101. These nuts are playing the fringe trying to pull conversation off the page and away from their perpetual stupidity.

Tue, 03/20/2012 - 11:43 | 2273409 LawsofPhysics
LawsofPhysics's picture

precisely, all with the blessing and funding of the central banks via the rape of the taxpayer.

Tue, 03/20/2012 - 12:18 | 2273579 Lednbrass
Lednbrass's picture

Police, fire, and first responders are functions of state and local government- they are not federal issues.

Tue, 03/20/2012 - 12:52 | 2273731 LawsofPhysics
LawsofPhysics's picture

Right, so you are saying all states are solvent and none take any federal dollars?  FAIL!

Wed, 03/21/2012 - 01:52 | 2275948 StychoKiller
StychoKiller's picture

WHERE do those Federal buck$ come from again?  Check your premises.

Tue, 03/20/2012 - 12:55 | 2273743 odatruf
odatruf's picture

Every person in the USA should have the above sentence tattooed on the inside of at least one eyelids.  Every Congressman, Senator and Governor ought to have it imprinted on both.

FFS - if the feds are going to keep doing most of the state and local work, why does that spending ALWAYS go up too?  Make it stop!!!!

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