The Incredible Shrinking Surplus

[AuntieEmma[$]]

Step 1: We've got so much money around here, it's just getting in the way. Clutter, clutter, clutter. Let's do some spring cleaning and give that money back, get it out of here.

Step 2: Ooops. Looks like we made a wee bit of a mistake. Stupid calculator needs new batteries! Seems we're short on money now. Have to go take it out of Social Security.

So are we being scammed here or what?

[frazzledspice]

I have heard conservatives say that tax cuts usually result in more money being collected by the federal government. People who are holding on to stocks, for example, may trade more frequently when capital gains rates are lower.

People have more of an incentive to make money when less of it goes to the federal government.

I don't think it's the tax cut that has made us lose our surplus. I think it's the economic downturn.

The stock market is down. Capital gains are down. Worse, people may actually be cashing in to cut their losses, and declaring capital losses.

Unemployment is up. The dot.com's aren't roaring anymore.

I think that the surplus would have been in trouble whether there was a tax cut or not. The question is whether the stimulus affect it provides will help.

I'll tell you what I did with MY tax cut. We pay our property taxes three times a year, 25% in April and July, and 50% in November.

I got it at the end of July and paid my property taxes the next day. How's that for a stimulus?

[erik_kosberg]

It makes life so much easier when you’ve got a slush fund to dip into:
http://www.cnn.com/2001/ALLPOLITICS/...get/index.html

Now if only there weren’t all of those tapes and transcripts from the campaign promising not to touch that money.

[AuntieEmma[$]]

I think this was all planned out carefully in advance -- that they deliberately did the tax refunds in order to cause a budget crisis so they'd have an excuse to dip into the otherwise untouchable social security fund and an excuse to cut spending on programs that they don't want to fund (betcha we don't see military spending being one of the things that gets cut).

Does anyone really believe for a second that the administration didn't see the economic downturn coming?

It's Robin Hood in reverse -- the wealthy got hundreds of thousands in their tax refunds, middle class got several hundred, the poor got nothing. Spending cuts, you can be sure, are going to hit the poor the hardest. Social security is too much of a political hot potato to do away with altogether, but I think we're going to see a big push real soon for privatization.

How are they getting away with this?

[drmomentum[$]]

Originally posted by AuntieEmma
Does anyone really believe for a second that the administration didn't see the economic downturn coming?

You mean the downturn they wouldn't stop talking about constantly a few months back. That downturn? Looking at the evidence, I'd say "no."

-JP

[erik_kosberg]

Oh never mind, promising to not raid the Social Security surplus was just a “symbolic goal” but programs that Bush wants to have money for are “fundamental”.



edit = trust fund --> surplus

[poseidon]

1. The "surplus" has been shrunk precisely by the amount that Congress and the President agreed to. It would be interesting to note that the Democratic plan for a tax rebate (remember that they had an alternate plan?) would have returned nearly twice as much as what Bush and the Republican plan had in the first year.

2. Money staying in Washington will get spent. A surplus represents an overpayment by the taxpayer. Frankly, I'm happy to get any amount of money back, but I'd rather have back the amount that I overpayed instead of returning $300 to each taxpayer on a blanket basis. The overpayment should be returned to the taxpayer. If you handed the clerk a $50 bill at the store to pay for a $22 shirt, wouldn't you demand your $38 in change? I would -- then again maybe you're more generous with your money than I am.

3. The notion that there is some "lockbox" on social security and medicare is laughable at best. At no time in history does this "lockbox" exist. The money is all pooled in a general fund and is open for spending. A certain amount is budgeted for social security. But to think that the money is there and safely tucked away is burying your head in the sand.

[erik_kosberg]

I don’t have my head in the sand; it’s just that I don’t like being lied to.


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I suppose then that a deficit represents an underpayment by the taxpayer. When we start running big deficits again, will you whip out your checkbook and do your part to make up the difference?

A surplus represents an overpayment by the taxpayer.

[poseidon]

No I would expect that the government do what every working family does -- tighten our belts and make due with the money we have.

I don't see why the government shouldn't have to do belt tightening the same as any other responsible entity in this country.

[erik_kosberg]

Unless words have no meaning, a surplus is the opposite of a deficit. If “surplus” means that taxpayers have paid too much, why then doesn’t “deficit” mean that taxpayers have paid too little?

[poseidon]

Because it means that the PTB haven't budgeted correctly and need to live within the means of the budget that they've set, same as you and me.

I don't know about you, Erik, but I can't just decide that my wedding budget has gone over what I've anticipated and thus demand that my boss pay me more money because I'm in a deficit spending mode.

[AuntieEmma[$]]

Here's how I would plan a wedding if I were like Bush&Co:

Let's say I really wanted a small wedding with just my friends, but my parents wanted all their 200 cousins, who I can't stand, to come. Then my parents gave me some money for the wedding, but they made me to promise that I would invite all the cousins. So I said, "Sure. I promise."

A few months later, I tell my parents that I did really well at work this year and I was sure I was going to get a huge bonus and I would be able to pay for the wedding all by myself. And I wanted to give them back the money they had given me for the wedding, because I didn't need it, and it was their money. They said, "Are you sure you don't need it? Our 200 cousins sure like to eat a lot." I said, "No I really don't need it."

So I gave them the money back, and they were really happy, and they went on a trip and spent it all.

Next month I tell them that, oops, the bonus never came through after all, so now I hardly have any money left at all, and I can't invite the cousins. They remind me that I promised that I would invite the cousins. I tell my parents that if they keep on pushing me to spend money I don't have, I'm going to have to call off the wedding altogether. I tell them I would love to invite the cousins if I could, but I don't have the money, and they spent the money I gave them on their trip, and it's just impossible, and I'm sorry.

Pretty slick. I've gotten exactly what I've wanted: a wedding without any of the cousins, who I can't stand, being there. And I get to blame it on my boss for not giving me the bonus that, in reality, I had never expected to get in the first place.

[erik_kosberg]

[CeeJay62]

Actually Erik, your cartoon applies to most of the last couple of decades, with the exception of last year. In 1997 (I believe) when we first began to run a surplus, it was $49 billion, all of which was Social Security funds. Of course at that time there was a Democrat in the oval office, so of course we didn't mention the fact that the entire surplus was Social Security funds.

Secondly, this isn't a situation were the numbers are set in concrete. The congressional budget office says 9 billion needs to come from Social Security, the White House says we have a billion extra. No one will know until for several more months what the real numbers are. BTW, I do believe the Democrats were squawking about how inaccurate the the congressional budget office is back when they were forcasting a ten year surplus that would allow a tax cut. Somehow magically, in the last seven months congressional budget office has become the gold standard for accuracy.

Also, the Democarts are running around acting like we are broke. We have a surplus, OVER the nearly 2 trillion dollar budget. We have a ton of money. The purpose of the tax cut was to decrease the surplus. In a poor economoy you do NOT want the federal government eating up nearly 22% of the GNP. Actually, those of us on the right NEVER want the federal government to take up more than 18% of the GNP, but that is another discussion.

The reason Bush wanted the tax cut was to get the money out of Washington so Congress could not use it to grow the government (in the two previous years, the budget grew by a huge 8% a year, trimming 2 trillion dollars off the ten year surplus estimate because of the bloated bottom line it created for base line budgeting). If the Democrats were honest they would have to admit by most measures (negative and positive) he just about nailed it. President Bush calls this a fiscal straight jacket that will help Congress adhere to the budget that has already been agreed upon.

I personally, am pleased with the outcome.

[erik_kosberg]

That might indeed be the case if it was across the board, but Dubya seems far more interested in using the tax cut as a way to gut programs that he disagrees with but is on the other had quite willing to “grow the government” when it’s time to fund his pet projects. I don’t fault him for wanting to try to do that (after all, what President doesn’t want his pet projects funded?), but he should at least be honest about it. Republican claims to want to prevent the growth of government tend to all sound just a tiny bit fakey in light of the fact that the deficit boomed during the Reagan years.

The reason Bush wanted the tax cut was to get the money out of Washington so Congress could not use it to grow the government

[CeeJay62]

Originally posted by erik_kosberg
That might indeed be the case if it was across the board, but Dubya seems far more interested in using the tax cut as a way to gut programs that he disagrees with but is on the other had quite willing to “grow the government” when it’s time to fund his pet projects. I don’t fault him for wanting to try to do that (after all, what President doesn’t want his pet projects funded?), but he should at least be honest about it. Republican claims to want to prevent the growth of government tend to all sound just a tiny bit fakey in light of the fact that the deficit boomed during the Reagan years.

Reagan had to deal with a Democratic House for both of his two terms and the Republicans only held the Senate for the first two years of his first term. True, he was the one to sign off, but Congress is responsible for most of the spending. Did you know there were 6,000 pork amendments added to last year's budget at the last minute? Pork is probably the biggest spending problem this country faces, and both parties are responsible. If the government would stop that, and stop the purported wasting of 30% of every dollar they take in we would all be a lot better off.

Which programs are Bush trying to gut? I keep hearing about he isn't protecting programs for woman and children, but that is usually from special interest groups opposed to him, I've not seen an actual news story on the matter. Around here they advertise for clients for WIC and CHIPS, so that tells me that have a plenty of funds and are looking for takers.

As far as I've read his pet projects are education, energy and defense, that doesn't sound too nefarious to me. What I'm concerned about is increasing entitlement programs and regulation, basically getting to the point where the majority of wealth is sucked into Washingtion DC, then dispersed back out at pleasure of the Congress. Basically buying our votes with our own money. It is all about the balance of power.

[erik_kosberg]

Which programs are Bush trying to gut?

It’s not gotten much attention in the media, but Dubya’s Treasury Secretary wants to gut Medicare. From the Financial Times article:
Among other controversial ideas, Mr O'Neill questioned the the guarantees the government provides for full public subsidy of senior citizens' health care and retirement programmes. "Able-bodied adults who have the ability to earn income have an obligation not to pass part of their own responsibility on to a broader population," he said.

True, he was the one to sign off, but Congress is responsible for most of the spending.....It is all about the balance of power.

If a President “signed off”, he’s just as “responsible” for the spending as Congress is. It is indeed all about the balance of power — Congress writes the laws and the President either signs or vetoes them. By signing, he’s due equal blame or praise for what follows. If he was really interested in not “growing the government”, Reagan could have vetoed spending bills left and right (no pun intended). Instead, in two terms, he only used a veto 78 times (in contrast, Harry Truman vetoed 250 bills in his two terms), and of those 78, Congress was only able to override 9.

[CeeJay62]

Originally posted by erik_kosberg

If a President “signed off”, he’s just as “responsible” for the spending as Congress is. It is indeed all about the balance of power — Congress writes the laws and the President either signs or vetoes them. By signing, he’s due equal blame or praise for what follows. If he was really interested in not “growing the government”, Reagan could have vetoed spending bills left and right (no pun intended). Instead, in two terms, he only used a veto 78 times (in contrast, Harry Truman vetoed 250 bills in his two terms), and of those 78, Congress was only able to override 9.

You have a good point. I think it is a very complex issue. I knew there was a pork problem, but I had no idea the 6,000 items were stuck on to the budget after everything was agreed upon. Both parties are a fault, one of the items that sticks in my mind is a Navy boat that the Navy didn't want, but Trent Lott got it passed for the jobs back home in Mississippi. There are butterfly studies, fly sex studies...........the list goes on and on. The problem is they stick them on at the last minute after all the other details are agreed upon and the President has to either sign it, or scrap the whole thing and start from scratch (What happened to line item veto? The whole concept seems to have just diappeared). I have heard reports that Bush did threatened the veto and got what was termed "pretty clean" defense and farm bills to sign, but that could mean it only had 4 ridders on it, not 50. I heard he called on of all people, Senator Byrd, for help in keeping the pork off those particular bills.
We shall see, I'm hoping Bush will follow through and put a stop to this nonsense. I am certain our founding fathers did not construct our Congress with this in mind.

[poseidon]

Equal responsibility and blame? Hah! Where's the blame going on now? It's being directed at Bush. I've not heard a single complaint against Congress, especially the Democrat-controlled Senate.

And when Clinton was in office, blame was assessed against the Republican-controlled Congress and Senate, and Clinton was seen as some poor soul who was left to their whims and wishes.

A President isn't going to veto legistlation that is deemed popular or that passes by vast majorities. A President knows that his veto will simply be over-ridden in those cases. Does that make it right? No -- I'd veto something just to make a point. Then again that's political suicide, so again I understand where the various presidents are coming from.

I'm rambling... I'm tired... I'm not even sure if this is making sense anymore. I'm going.

[CeeJay62]

Originally posted by poseidon
Equal responsibility and blame? Hah! Where's the blame going on now? It's being directed at Bush. I've not heard a single complaint against Congress, especially the Democrat-controlled Senate.

I was speaking of actual responsibility, not what is crafted by the Democrats and their helpful handmaidens, the liberal media.

Which brings up another point. There have been several articles lately regarding the fact that the popular conception of a liberal bias in the media is actually true. Once the twins get rolling with Kindergarten I'll dig them up and we can all fight about that.

[drmomentum[$]]

Originally posted by poseidon
And when Clinton was in office, blame was assessed against the Republican-controlled Congress and Senate, and Clinton was seen as some poor soul who was left to their whims and wishes.

Blame for the surplus?

-JP

[CeeJay62]

Originally posted by drmomentum


Blame for the surplus?

-JP

More likely the government shutdown of 95.........surpluses didn't start until (I believe) 97.

[erik_kosberg]

Although we may gripe about “Entitlements” and “Pork”, none of that is really new. They were called “Bread” and “Circuses” back in the Roman Empire.

BTW, I’m pretty sure that the line item veto was passed, Clinton used it once or twice in test cases, and it was then ruled unconstitutional by the Supremes.

[erik_kosberg]

Might not they be articles are from media sources with a conservative bias?

There have been several articles lately regarding the fact that the popular conception of a liberal bias in the media is actually true.