RSSRecord Federal Budget Deficit of $482 Billion Projected for 2009
The WhiteHouse Office of Management and Budget stated that the budget deficit projected for fiscal year 2009 will rise to a record $482 billion in its mid-session review delivered to Congress on July 28, 2008.
The estimate of $482 billion is approximately 50% deeper in the red than the worst case estimate prepared by the Congressional Budget Office in January, 2008 which is displayed in this chart. The estimate is $74 billion higher than the Office of Management and Budget predicted just six months ago.
The budget deficit is the highest ever recorded, exceeding the record of $413 billion in 2004.
According to the N. Y. Times, the actual budget deficit may be worse than this estimate because it “does not reflect the full cost of military operations in Iraq and Afghanistan, the potential $50 billion cost of another economic stimulus package, or the possibility of steeper losses in tax revenues if individual income or corporate profits decline. “
In addition, the new budget deficit projection does not include any estimate of spending that may occur due to the recently passed housing rescue bill. The Congressional Budget Office estimated that the rescue bill could add up to $25 billion in new spending over the next two years, but but that there was a better than even chance that this spending authority would not be used.
3 Responses to “Record Federal Budget Deficit of $482 Billion Projected for 2009”
Leave a Reply
You must be logged in to post a comment.
August 26th, 2008 at 1:49 am
The federal government has been authorized in the constitution to collect revenue to pay government expenses. When taxpayers are allowed to keep that revenue through tax breaks, tax credits, loopholes, right-offs, and unpaid fines or royalties it is the equivalent to government spending. The Republican tax cuts for big business and the wealthy has pushed government spending over the top to a record.
According to the “Budget of the United States Government, Historical Tables, FY 2006.” In 1953 the Corporate Income Tax as a Share of GDP was 6 % and in 2004 it was down to 1.3 %. Senator John McCain’s tax plan will reduce the maximum corporate tax rate to 25 percent. A study by the Government Accountability Office said that two-thirds of U.S. corporations paid no federal income taxes, and about 68 percent of foreign companies doing business in the U.S. avoided paying corporate taxes between 1998 and 2005.
According to “Effective Tax Rates for Taxpayers with the Top 400 Adjusted Gross Income”
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm
When we look at the effective tax rates for the top 400 we find the number of top 400 taxpayers paying less than 20 % was: 1995 – 25; 2000 – 136; and in 2005 – 255. The number of top 400 taxpayers paying less than 15 % was: 1995 – 12; 2000 – 40; 2005 – 144. This is much less than the average middle class worker. Over half of the top 400 taxpayers pay less than 20 percent and over a third pay less than 15 percent. Part of good citizenship is paying one’s fair share of the cost of running the country. Because successive GOP administrations have promoted the culture of the rich freeloader, the refusal of folks such as Warren Buffet to freeload was greeted with shock. (Buffet pointed out that the tax laws allow him to pay less tax than his secretary; an example of correctable inequity.)
The United States is the most economically stratified society in the western world. As THE WALL STREET JOURNAL reported, a recent study found that the top .01% or 14,000 American families hold 22.2% of wealth — the bottom 90%, or over 133 million families, just 4% of the nation’s wealth. Steve Fraser said on Bill Moyers Journal said that the 50 top hedge fund managers had accumulated 29 billion dollars in 2007. That is an average of more than $500 million each taxed at a capital gains rate of 15 percent. Only the wealthy have benefited from these tax breaks and in the process we also take from the many to enrich the few.
The standard Republican response to problems is to recommend a tax break. If the Republicans get their way, revenue will shrink to zero and government will shrink to anarchy. This undermines confidence that no one can beat the system and the system is fair for all. To build an inclusive society, Congress must structure the tax system to do the greatest amount of good for the largest number of people, not just big business and the super wealthy. Sooner or later, we have to clean up from the economic decisions of the past eight years. That’s a burden that should be borne by business as well as individuals.
August 26th, 2008 at 7:35 pm
Bruce is at it again (see the previous comment). But in the interest of encouraging debate, we will post his comment and add our caveat: While we may not agree with every opinion that Bruce puts forth and while we are unable to fact check every piece of data that he cites, we will post his comment for others to read and consider. We would encourage Bruce and other readers to check out the following chart (the data for which was taken from the Internal Revenue Service) about the amount of tax and the effective tax rates paid by the various strata of federal taxapayers.
http://perotcharts.com/category/challenges/taxation/
September 11th, 2008 at 6:58 pm
2 or 3 books by Ravi Batra go very far to explain or track what’s gone wrong with tax and trade policies in this country. The Great American Deception, the Myth of Free Trade, and Greenspan’s Fraud. Read them before you die!
Inflation can be explained by the growth in the infrastructure and professional credentials everyone needs these days. Suburban sprawl, professionalism creep, and over-consolidation. This is gone over in books like Asphalt Nation, and Turbo Capitalism.
There are limits to what the United States can achieve in the world. We can undoubtedly demolish the conventional militaries of developing countries like Iraq. but force feeding them democracy seems to have a poor track record of success. And it seems to get more expensive each time we try. World on Fire by Amy Chua documents and analyzes this pretty thoroughly.