The federal deficit is even worse than we thought, columnist David Broder warned. Though the “official” deficit for fiscal year 2005 was reported as $319 billion, which is bad, the real deficit was actually $706 billion, according to The Financial Report of the United State Government, a document that few people know about or have seen. The higher number, Broder wrote, is the difference between the money the government received and the obligations it added that year. In other words, the government is running up bills, as we might do with a credit card, but isn’t counting it as an expense because it hasn’t had to pay for it yet. “Congress today is balking at even minimal actions needed to get a grip on the budget,” Broder wrote. “The long-term problem is far tougher, and will require more leadership and courage than can be found today.”
Posted by Phillip Brownlee
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54 Comments
Time to cut more taxes! That’s stimulate the economy and generate more revenue to pay down the deficit!
Oh, wait a minute…
Let us suppose that we are working for a business. The head of the business has decided to not consider debt that is not being paid as real debt. Further, it is our business leader’s wishes to help out those customers who have the greatest ability to pay by not charging them for the goods and services our company provides. Our business head justifies these actions because he says: 1) those wealthy customers we’re not charging may give some of their money to other people who will buy our goods and 2) our company has never worked anyhow, so what does it matter?
Yup, we’ve got one dandy CEO president, huh? Just makes ya proud.
The theory is the federal government is incapable of going bankrupt. With nearly trillion dollar yearly deficits, I guess we’ll find out fairly soon whether that theory is correct.
That’s Congress more than its the Pres, DD. Besides, tricks like that can be done fairly easily with governmental accounting because it is much different from “normal” accounting. Good luck getting GASB to change any rules.
Time to cut spending. Not cut taxes. But that will never happen. They can tax us to oblivion and we would still have a defict.
Total federal income taxes collected last year: $932 billion. That works out to $6,650 per employee.
In addition to income taxes, the federal government collected another $1.286 trillion in taxes, mostly Social Security taxes.The total state and local tax burden amounts to $1.14 trillion.The grand sum here — paid by employees and proprietors — is $3.358 trillion. That’s $3,358,000,000,000.00This works out to $24,000 per employee.
The total compensation earned by employees and individual proprietors last year was $8.2 trillion.This means that 40% of income goes to taxes of some sort.That rate, of course, is much higher for those earning higher incomes. Much lower for those in low income brackets.
Federal expenditures you have:$495 billion for national defense.
$272 billion spent by the federal government for the purchase of goods and payment of employees
$1.69 trillion sent to someone else. That is $1.69 trillion in income redistribution.
Shocker 07:”The theory is the federal government is incapable of going bankrupt. With nearly trillion dollar yearly deficits, I guess we’ll find out fairly soon whether that theory is correct.”
I know NY City was once close to bankruptcy. I have heard that there have been counties which have gone bankrupt. Has bankruptcy ever been declared by a state?
What would it look like, what would be the results of a state or larger government entity declaring bankruptcy?
“That’s Congress more than its the Pres, DD”.
This goes back to the rather stange notions we have these days about balance of power. Our pres has not utilized his veto power one time. Granted Congress has spent like drunken sailors on all manner of pork. However, our president cannot legitimately escape accountability on this problem.
Actually most if not all states have a Constitutional requirement not to go into deficit spending. Kansas has that requirement. That is why it is difficult for it to get additional money for schools. If they could deficit spend like the Federal Government does, we wouldn’t have a school finance problem (short term).
Although much of the structural overhang has existed for some time the real fiscal disaster has taken place over the past 6 years with the “fiscally responsible” GOP following their leader Bush in lockstep. At least we were in surplus on cash basis for a few years back in the 90s.
Bush 2 has definitely outdone his daddy on this!
This is an interesting pdf from Georgia State on the subnational government entity bankruptcy question:
http://isp-aysps.gsu.edu/papers/ispwp0221.pdf
Bill O’Reilly keeps saying that the government is spending like drunken liberals.
Actually, they’re spending like ordinary pseudo-conservatives. Clinton/Gore showed how taxes could be modestly raised, the budget balanced, national debt reduced, and the economy prosper.
Unfortunately, Bush took us right back to the “voodoo economics” of Reagan.
Spend, spend, and spend some more. Gov’t funds know no limit when it’s Halliburton and other cronies cashing in.
Let the suckers pay for it.
The true cost of the war in Iraq is off the books, as is the cost of illegal immigration. The deficit is worse than you can imagine and the end game is collaps of the currency and an horrific depression.
viva la raza Blanco!!
And pay for it we will in future decades. I rember well the fights Clinton and Congress would have over budgets. Guess Bush has no stomach for fighting, unless it’s being done by the peons.
We just need to spend more money on the National Endowment for the Arts. With more lights on more bridges we can balance the budget with magic politically correct diversity dust.
As Steve suggested, TruMad, it’s not so much Clinton/Gore, it is the Congress who holds the purse strings. The defict is Bush’s fault, because Congress knows that Bush will not veto a bill so they pack it with so much spending and pork its rediculous.
The only thing that Clinton did do was veto a bill now and then to put Congress in check. So it wasn’t all Clinton that balance the budget during the economic bubble, but Congress knowing they can’t slide any spending bill through (bridge to nowhere).
If it were Kerry and a Democrat controlled Congress and Kerry never vetoed a bill, we would see the same thing.
Bush will become the 1st President in history to go through two terms without a single veto. It is unheard of and a mark of a weak person.
Broder’s right; it’s a godawful mess, and while the current occupants of both ends of Pennsylvania avenue are responsible, it’s deeper than that. It’s structural, and both parties are responsible.
Joe hit it earlier. 1 2/3 trillion in income redistribution, most of that considered “entitlements.” It’s automatic payout if you qualify, and thus Congress doesn’t really vote on it, except to fund it. Consider cutting one of those entitlements, and watch the howling begin, depending on who’s ox is being gored.
And we, yes we, all of us, are responsible, for 1) we keep electing them, and 2) most of us are on the receiving end of one of those gov’t benefits or another.
We have met the enemy, and he is us.
Discipline. But all of us must accept that some of what we want must be cut.
And, as a conservative, even a conservative, there are times when taxes must be raised to pay for it. Now is that time. The Bush cuts should not be made permanent.
You know.. I remember the doomsday clock in Times Square showing the deficit and interest blamed on Regan. I remember the doom and gloom, the whining and crying. But then, Regan is instrumental in ending the 40 plus year cold war and military spending went down. Clinton shows up and lucks out with the dot com boom. They had to take the doomsday clock down from times square. But then the dems spent the bonanza on pure pork and the dot coms fizzled and by the end of his last year in office the recession began. One year in office Bush has 9/11, the airline and tourism industries almost collapsed, we had a war in Afganistan, Iraq, and the ongoing war on terror, multiple hurricanes of epic proportion. Yet our economy is roaring, unemployment at historic lows, home ownership highest in history, and Bush lowered taxes for small business like me. This guy has overcome more than any prez since Roosvelt. You need to put your anger at congress and all the crap pork spending they are doing. You guys need to get a grip. Or, if you feel that strongly, tomorrow is tax day how about rebel and not pay your taxes?
Only President in history to launch a war and simultaneously cut taxes.
Repeal of the Estate tax for the hyper rich.
Repeal of the capital gains tax for the investor class.Most favored nation trade status for China and an attendant and ever increasing trade deficit.
And now the non counting of accumulated but as yet not posted debt.
And we are surprised at the deficit?
DD, I can’t recall any state ever going bankrupt, but I could be wrong. I do know California was dangerously close just a few years ago, they may still be. A state bankruptcy would not be as catastrophic as a national bankruptcy since it does not control a currency. The bankruptcy of the federal government would most likely cause a financial panic many times worse than the Great Depression, but I doubt that’s a revelation to any of us.
Joe, interesting figures. Do these numbers exclude the income tax collected from corporations? If I recall, most income tax paid in the United States comes from corps and not individuals. If so, those are some scary numbers, man.
You said it GMC, cut the spending. As a society, we’ve got to trim back our government handouts. How about getting rid of Social Security? No one who’s paid in should go without, but how about the government say anyone born after 2010 will not pay in and will not receive benefits, effectively eliminating the program by 2100? Oh, wait, that’s a long term solution–would never happen…
YYPICAL BLOWJOB – COMPLAIN ABOUT A FEW PENNIES WHILE HIS BUNCH SQUANDER BILLIONS! GET THAT STAIN OFF YOUR SHIRT BJ!
Shocker ‘07 seems to imply that if a tax is paid by a corporation, it’s not the same as if an individual paid the tax. I would ask this person this: who owns the corporations?
For those who believe the State of Kansas is not borrowing money, I would refer you to the article titled “Growth of debt worries” published in the January 8, 2006 Wichita Eagle. In part, it reads:
“Kansas debt stands at nearly $4 billion.
Among the 50 states, Kansas went from 43rd in its amount of debt per person to 17th from 1992 to 2004.”
And later:
“In addition to current debt, Hildreth’s report identifies $634 million in debt that has been authorized by the Legislature but not yet issued.”
KCL is right.
The term employee and properitor. Corporations do not pay taxes. All taxes are levied against wealth, and only individuals hold wealth.
So when you say the taxes that the corporations paid in income, the shareholders in reality (your 401 K), paid income taxes.
In a round about way. Yes! Those figures include the taxes that corporations paid. Nothing was left out.
Don’t forget the capital that is going out of this country to Mexcio in the form of illegal immigrant earnings, which are also largely un taxed. Too the fiscal burden in schooling and accomodating illegal immigrants.
“It’s structural, and both parties are responsible.”
WRONG!
1. The Congress takes its lead from the budget that THE PRESIDENT sends over. Just as in Reagan’s era, the difference between what the Congress passes and what the President proposes is miniscule.
A lot of people tried to blame the Reagan deficit and the huge run-up in the national debt to “the Democratic Congress,” but actually there wasn’t a dime’s worth of difference between Reagan’s budget and Congress. Also, Reagan could have vetoed the budget if he couldn’t live with it.
Similarly, conservatives want to try to take credit for Clinton’s fiscal responsibility by claiming that the Republican Congress kept him honest.
Hardly.
He passed a tax increase that balanced the budget with every single Republican in Congress voting “nay.”
Republicans control the White House, the Senate, the House, and the Supreme Court.
If you don’t like the budget for the last five years, you have no one to blame but the people in charge–the Republican Party.
Also, GMC, Tmac, et al.,
“Entitlements” aren’t the budget busters you claim them to be. Income taxes don’t even pay for Medicare or Social Security. There are special taxes–the FICA and Medicare taxes taken out of your paycheck every month–for that. In fact, thanks to Social security, the budget is less bad than it would be, because the SS is taking in more than it pays out right now. It’s the only part of the budget that ISN’T IN DEFICIT.
Your taxes are for the most part WAR TAXES. About 50 percent–and it’s going up–of the income taxes you pay go to current and past military expenses. Plus there’s the interest on the money we’ve borrowed to pay for war.
Harper’s Magazine estimated that the Iraq War has so far cost every American household 20,000 dollars.
What has done more for America? Mandatory spending for Endless War in Iraq or letting every household buy a brand-new American car?
Ks Classic Lib: Also don’t forget that Sedgwick County just this week agreed to finance approximately $30 million in “revenue bonds” (but where is the revenue coming from) for a technical school and a similar amount for a new Sedgwick County jail. If anybody knows the exact amount of these bonds, please correct my figures.
Kansas did have a “cash basis law” that said governmental entities couldn’t contract debt without a vote of the people. A cash basis law was adopted in many states back in the depression days to prevent city/county governments from building subdivisions complete with streets and sewers in hopes of attracting new residents who sometimes didn’t show up. “Build it and they didn’t come!”
Today, unfortunately for taxpayers, there seems to be clever country bookkeeping ways to detour around the Kansas cash basis law. Is anyone knowledgable on this law?
This just in–Cheney’s tax return shows he made 9 MILLION DOLLARS last year.
He cashed in some of his stock options from Halliburton . . . you know, the company he has “no relationship with” except of course for the 8.5 million dollars he earned on their soaring stock price.
My God, how long will we tolerate this legal graft!
I read the editorial today quoted above about the current deficit and the postings hereto. However, I don’t see the total FEDERAL DEBT figure which is the accumulated amount of the annual deficits. The FEDERAL DEBT is supported by various debt instruments most of which are owned by foreign countries.
I began noticing this FEDERAL DEBT situation since my grade school days in the old Weekly Reader. Does anyone know this figure? And do you really think a future President will scrimp on federal spending to offset gigantic overspending by former presidents? I doubt it.
WORST . PRESIDENT . EVER
JWink:
Here you go – http://www.publicdebt.treas.gov/
Revenue bonds can only be paid by the specific fund source. General Obligation Bonds are paid back by taxes.
Good point JWink. What funding source is going to be used to pay back the bond? Lottery money?
The GOP is busy looting America. They gave away the surplus to the top 1%, and they’re now busy giving away more of the nation’s wealth thru no-bid contracts to Halliburton and other Bush administration pals. The reason we have a deficit is because there are no adults in charge in Washington. We need a change. Big time.
Joe Williams, I checked your U.S. Public Debt web site. The U.S. government stated that our current public debt is as follows:
Debt held by the public:$4,904,229,841,852
Intragovernmental holdings:$3,501,912,807,889
I added these two figures to be:$8,406,142,649,741
Now these figures are NOT millions, in fact they are NOT billions, and they are NOT trillions! I don’t know if there is a word for this tremendous governmental waste but I suspect it would be “zillions.” Only our federal government can do this because it has the power TO PRINT MONEY! As long as the world continues to have confidence in our dollar, our federal government can get away with this massive shell game.
Sen. Byron Dorgan, N.D., who is an economist, and others have been reporting the limited-circulation report and real deficit for months. This news got to North Dakota faster than to South Central Kansas’s biggest city. Maybe nobody here watches C-SPAN. Maybe that’s why Cox doesn’t offer C-SPAN3 as mid-tier cable cos in big cities (and a lot of smaller communities) do. Like Fargo, North Dakota.
I mean mid-tier cable package
“Now these figures are NOT millions, in fact they are NOT billions, and they are NOT trillions!”
Uhm, JWink, ya know I’m with you on this one, but take another look, a little more carefully this time ;-) :
$8,406,142,649,741
That’s 8.4 trillion.
Let’s see if we make it to the end of the fiscal year (Sept. 30) before hitting the debt ceiling ($9 trillion). I’m predicting no (sigh. . .).
I remain amused at those who continue to try to blame the deficits on Democrats and liberals, in stark defiance of the political realities of the past quarter-century. Reagan never submitted, let alone signed, a balanced budget. He didn’t give a damn.
Shall we blame the current deficits on filibusters by Senate Democrats? Come on, now, we KNOW the Democrats did it somehow! There’s GOTTA be a way!
Sincerely,A registered Independent
That IS trillions JWink.
Four times in the last five years. That is the number of times congress has had to raise the debt ceiling because of the current administrations fiscal irresponsibility. Of course it is the Democrats fault, Clinton should have reduced the debt more in his eight years so shrub could have gone two or three years without asking for the ceiling increase.
Ben and Rage: Guys, you are correct. To use an old cliche, I stand corrected. The debt figure is in trillions, not zillions as I thought.
So, millions, billions, trillions but not yet zillions. If the federal government finds out, they will go on another spending spree. Couple more wars plus inflation and we will soon be there. Then we will be talking real money!!
Zillions? Jwink, we still got 3 years of Bush. Maybe we’ll get to zillions yet. The deficit is obscene to the point of being criminal, thanks to the party of smaller government and less taxes. At some point, somebody’s going to have to clean up this mess. It’ll probably be a Democrat that has to do it, since republicans have shown total fiscal irresponsibility.
On default, maybe the U.S. should try it. Argentina did that a few years ago, and they seem none the worse for it. If we default, China takes the hit, and somehow, that doesn’t bother me a lot.
“It’ll probably be a Democrat that has to do it, since republicans have shown total fiscal irresponsibility.”
And I can hear the Republicans now: “The spendthrift Democrats are raising taxes!”
Yes Ben, damn those Democrats for trying to balance the budget and pay down the deficit during the Clinton years! How could Dems waste their time on such trivia when Clinton got a blowjob. Where are the priorities?!
Oh, the travisty of it all!!!
This conversation about billions and trillions and zillions reminds me of what Ben’s favorite prez :) said. LBJ’s words were something like “a billion here and a billion there and pretty soon, you are talking about real money”.
Guy up North was right.NO INCUMBENTS!!
The crroks have even stopped reprting the M3 numvers because they are going to print dollars into oblivion to try and stave off economic collapse. In the end it won’t work and the end results will be horrific. I would advise evryone to load up on gold as I have advised my clients to do and as I have done myself!
V.L.R.B!!
Ian, funny you should mention that. Been thinking along that line myself….
“total fiscal irresponsibility”
Sounds like a total overstatement to me.
Cutting taxes and launching two wars is not only”total fiscal irresponsibility”
it is UNPRECEDENTED total fiscal irresponsibility.
How much worse would it have to get for Nathan to admit to “total fiscal irresponsibility?”
How about increasing the cost of government by 33 percent in five years?
Yup, been done.
“How much worse would it have to get for Nathan to admit to ‘total fiscal irresponsibility?’ ”
Maybe if they took the total net receipts of the U.S., purchased rare paintings and other highly expensive items, and burned it all on the White House lawn?
Nahhh!
Nathan, you gotta be kidding.
“A billion here, a billion there and pretty soon you are talking about real money.”
I I think this quote is popularly attributed to Senator Everett Dirksen, but according to http://www.dirksen.org, he attributed it to a reporter who took literary license after an interview.
Joe, just to clarify, I’m not being argumentative, we agree on practically everything. I’m just curious. I see what you and KCL are saying, that ultimately, the shareholders see reduced returns because of the taxes the corps pay. But I think your formula might get fouled up by the double taxation on corp dividends. In effect, shareholders hold a disproportionate (double) tax burden than people who own no stock. Oh well, it’s probably a wash anyway. Touche.
Somebody check the temperature in hell!! JWink, we’ve finally found some common ground! :) The dollar has long been the world’s “standard” currency. We could rack up bazillions in debt and nothing would happen until other countries lose confidence in the dollar. When that happens, watch out. Hopefully, none of us are around then (of course, our children will have to deal with it…)
SIR:WHAT WE HAVE TO DO HERE IN AMERICA IS, STOP BITCHING AND START A NONVIOLENT REVOLUTION…THE MONEY IS THE ANSWER…. THAT IS THE FUEL OF THE WORLDS ENGINE..NO FUEL, EVERYTHING STOPS !!!! BUT, IT TAKES SACRIFICE AND SOLIDARTY…… SOMETHING NEW HERE IN AMERICA…..