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The Real Budget Deficit $1.4 Trillion 2nd Qtr 2003
To add additional perspective to your fine discussion I submit the following:
Conventional wisdom holds that the fiscal policies of the Clinton Administration produced a $236 billion surplus for FY 2000. A big lie.
Actually, there was a $137.6 billion deficit.
The Clinton/Bush fiscal policies produced a 2001 deficit of $623.8 billion. At the end of CY 2002, government borrowing raced along at an annual rate of $814.9 billion. And, this year, 2003, the current annual rate of borrowing to finance the deficit was, at the end of the 2nd quarter, $1.348.6 trillion. At the end of the 1st quarter of 2003 it was only $531.9 billion. At years end the amount of borrowing to cover the deficit, will approach $2 trillion.
I know this sounds implausible, but if you have a computer go to
www.federalreserve.gov/releases/Z1
Click on 'Current releases' , then click on 'Flows tables (171 KB PDF)' then scroll down to table F4 'Credit Market Borrowing, All Sectors, by Instrument.'
Please, check line 3 'U.S. government securities.' This is irrefutable evidence of the amount of borrowing needed to finance the operations of the Federal Government. This is the real world deficit
The huge discrepancies, between the Treasury and the Fed budget numbers, occur when the Treasury employs a series of accounting manipulations.
First, the Treasury takes all the debts of agencies like Freddie Mac, Sallie Mae, Federal Home Loan Bank Board and other agencies that are guaranteed by the Government, and classifies their debt as U.S. Government Securities. However, these agency budgets are never consolidated with the Treasury accounts so they don't get reflected in the Budget Deficit.
The Federal Reserves' numbers have never been used by any Administration because they are so damaging to the image of the Administration. Table F4 reveals the amount actually borrowed in new money over and above refunding of past debt for eash calendar year. The money is used soley to finance the deficit.
Second, there is the abuse of the Social Security Trust Fund (SSTF). These funds are now in surplus, and are intended for the 50-60 million current and near-term retirees. These surpluses should never be used as a fungible resource in the operation of the Federal Government. Yet, Administration after Administration has used them to hide all or a portion of the deficit. Instead of just moving numbers around the Federal Government takes the earmarked cash and actually spends it on government operations.
The consequences of massive securities borrowing/raiding the social security surplus will soon show up in higher mortgage rates, and the bankruptcy of the SSTF, along with a crash in corporate and Treasury bonds.
It would be helpful if the mainline press really reported the true deficit to American taxpayers instead of accepting the spoon feeding exercises conducted by past and current administrations. Particularly, when the real, 2003, 2nd quarter deficit reported by the Federal Reserve was $1.348.6 trillion three times the levels announced by the White House, CBO, and others who are in on the cover-up.
posted by
Cebes
on December 31, 2003 at 9:22 PM
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A properly structured VAT will only tax upon purchase.
Your friend is paying a property tax on her car in addition to whatever she paid when she purchased it. The real danger of a VAT is that Congress will get greedy and reinstate the income tax sometime in the future.
posted by
arGee
on October 24, 2003 at 6:33 AM
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You'd have to be careful, though
I have a friend who lives in a state with a VAT, and she has to pay tax on her car every year---and her car is older than my 1984 barge. Which seems awfully goofy to me.
posted by
editormum
on October 23, 2003 at 8:28 PM
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This has been looked at in detail by many observers
Ten percent probably is too high, but one of the big problems still remains: the IRS. The "Value added tax" seems like a better solution to me for the following reasons:
1. The tax is collected by merchants, and so the IRS goes away.
2. By exempting basic necessities for life (such as food, basic medicines, etc), the average low-income family will not be taxed at all, whereas a high-end family will spend more of its money on luxury goods, and so will pay a much higher percentage and total tax.
3. Because the tax is a simple flat percentage added to everything except items specifically exempted, collecting it is a no-brainer. This would remove a significant drain on our economy.
posted by
arGee
on October 23, 2003 at 7:42 PM
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I've Always Wondered...
what would happen if we completely scrapped the tax code and instituted an across-the-board ten percent income tax on every person who earns money in the US.
posted by
editormum
on October 23, 2003 at 6:50 PM
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