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While the posers, the grifters, the self-righteous, the liars, and the thieves in corporate media and D.C. politics have gone on endlessly about debt, deficits, Grand Bargains, fiscal cliffs, and the Holy Grail...a bipartisan agreement to "solve" something or other.....the national deficit has been cut in half. Shocked? Shouldn't be unless your sources for information are limited to corporate media.
The federal budget deficit is shrinking rapidly. ...[I]n the 12 months through March 2013, the deficit totaled $911 billion, or 5.7% of GDP. In the first three months of calendar 2013--that is, since the increase in payroll and income tax rates took effect on January 1--we estimate that the deficit has averaged just 4.5% of GDP on a seasonally adjusted basis. This is less than half the peak annual deficit of 10.1% of GDP in fiscal 2009.
To hear the likes of Ed Rendell, JoeScar, Wolfie, or anyone at Fox....the nation is dying a slow death because of deficits and debt.....and if some Grand Bipartisan Bargain Circlejerk is not agreed to very soon.....then....."Greece" and "bankruptcy" are our only options.
Under the ultra-conservative leadership of Barack Hussein Obama, and at the same time that Tea Party members were getting their full-freak on.....this happened....
1. Lower spending. On a 12-month average basis, federal outlays have fallen by a total of 4% in the past two years, the first decline in nominal dollar terms over a comparable period since the demobilization from the Korean War in the mid-1950s.
See that phrase...."since...the mid 1950's"? Haven't I been repeatedly explaining how Obama's presidency has seen the lowest growth in federal spending since Dwight Eisenhower sat in the Oval Office? Goldman agrees. That one statistic should be enough to disprove the uninformed notion that Obama is some big time spender. It won't of course, because most criticism of Obama's handling of the economy is not based on facts. but instead, faith.
2. Higher tax rates. The increase in payroll tax rates in January 2013 has boosted federal receipts by around $120 billion (annualized), or about 0.8% of GDP.
This blogger was totally against ending the payroll tax holiday, another year was necessary, in my opinion....conservatives, on the other hand, remained mute about ending the payroll tax cut. Ending the payroll tax cut was a big tax increase on most Americans....however, I don't remember any conservatives or Republicans loudly complaining.
And while I'm on the subject.....Republicans claim today that Obama got his tax increases in January and so that means that Republicans are never going to consider any other increases...ever again. But Republicans didn't simply agree voluntarily to raise taxes on the top .6% back in January. Republicans had no choice. Either ALL of the egregious Bush-era tax cuts expired by law January 1st.......or Republicans could agree to increasing taxes only on the top 1%. As it turned out, Republicans walked Obama back to the $450,000 level, as well as on capital gains rates and estate tax rates. Point being.....Republicans didn't voluntarily offer to raise tax rates on the top .6%....they had no choice..
3. Economic improvement. Although real GDP has only grown at a sluggish 2%-2.5% pace since the end of the 2007-2009 recession, this has been enough to generate a sizable improvement in tax receipts, over and above the more recent impact of higher tax rates. Even prior to the tax hike that took effect in early 2013, total federal receipts had grown by 7% (annualized) from the 2009 bottom, nearly twice the growth rate of nominal GDP.
Obama has often been labeled a redistributionist, a socialist, someone who has no clue about business or making profit, a Big Gub'mint regulator and squelcher of the capitalistic spirit. During the 2nd worst economic depression in modern U.S. history, Obama has over seen a 7% growth in federal receipts......and that doesn't include the small tax hike on the extraordinarily wealthy that passed in January.
The claim by Democrats that we are slowly recovering from the bank, mortgage, appraiser and insurance fraud of the 00's.....says Goldman's chief economist.....is true.
In our view, the most important implication from the reduction in the budget deficit for the near-term economic outlook is reduced pressure for further fiscal retrenchment. Partly for this reason, we expect the drag from fiscal policy on real GDP growth to decline sharply from around 2% of GDP in 2013 to around 0.5% in coming years. This is a key reason for our expectation that real GDP growth will accelerate from around 2% (annualized) in Q2/Q3 2013 to 3%-3.5% in 2014-2016.
In other words, expectations are higher at Goldman because the federal government won't be under as much pressure to cut government spending....leading to optimism about growth.