"The Rapidly Shrinking Federal Deficit"

[DEATH ROW JOE]

From a research note by Goldman Sachs chief economist Jan Hatzius: The Rapidly Shrinking Federal Deficit.

He must read my posts on Sludge. Been saying these things for about a year now.

The federal budget deficit is shrinking rapidly. ...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.

There are three main reasons for the sharp reduction in the deficit:

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.

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.

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.

We expect the deficit to continue to decline and are forecasting a deficit of 3% of GDP or less in fiscal 2015. Some of this is policy-related. ... But the more important reason, in our view, is that there is still a great deal of room for the economic recovery to reduce the deficit for cyclical reasons. ...

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.

[Sheep_Mafia]

Nah, if he were reading you here, he'd be going on about how reducing the deficit is a bad thing, especially when it comes to reduction in spending. He'd be saying borrow more and crank up the debt cause it doesn't matter as cheap as the money is.

He's right in that there is a whole lot of room for improvement in the recovery so things should improve as is the cyclical nature of economics.

Those numbers are still across the board pretty horrible.

[KneelandBobDylan]

Nah, if he were reading you here, he'd be going on about how reducing the deficit is a bad thing, especially when it comes to reduction in spending. He'd be saying borrow more and crank up the debt cause it doesn't matter as cheap as the money is.

He's right in that there is a whole lot of room for improvement in the recovery so things should improve as is the cyclical nature of economics.

Those numbers are still across the board pretty horrible.

But I know you'll continue to blame the Dems and Obama anyway.

[Sheep_Mafia]

But I know you'll continue to blame the Dems and Obama anyway.

You liberals just love electing folk and giving them no accountability. It's a strange deal. Me on the other hand, expect the people I elect to "obstruct" the oppositions agenda when it's not in the best interests of our great nation.

The whole obstructionist mantra that liberals have wrapped themselves in is indeed odd logic. So had Romney won, you would be good with the Democrats just rolling over? Perhaps the Democrats should have been obstructing Bush while he was in office? We have a two party system for a reason. While neither party does a particularily good job of truely representing their constituents, that is part of their responsibility (another word I know liberals hate).

[KneelandBobDylan]

But I know you'll continue to blame the Dems and Obama anyway.

You liberals just love electing folk and giving them no accountability. It's a strange deal. Me on the other hand, expect the people I elect to "obstruct" the oppositions agenda when it's not in the best interests of our great nation.

The whole obstructionist mantra that liberals have wrapped themselves in is indeed odd logic. So had Romney won, you would be good with the Democrats just rolling over? Perhaps the Democrats should have been obstructing Bush while he was in office? We have a two party system for a reason. While neither party does a particularily good job of truely representing their constituents, that is part of their responsibility (another word I know liberals hate).

Thanks for validating my previous post. Much appreciated.

You've said the recovery isn't going all that well, which may or may not be true, so then how is it his and the Dems fault that we haven't recovered quicker if Republicans are in opposition to EVERYTHING Obama and the Dems propose, since most things Dems propose never reach the floor of the House.

[Moggio]

US National Debt when Bush Jnr. left office:

Just over $10 TRILLION

US National Debt after over 4 years of Obama in office:

$16.5 TRILLION

[tin00can]

US National Debt when Bush Jnr. left office:

Just over $10 TRILLION

US National Debt after over 4 years of Obama in office:

$16.5 TRILLION

But yeah, this is a thread about the federal deficit. Cool stats though.

[KneelandBobDylan]

Mong, in his infinite wisdom, thinks the debt and the deficit are the same thing.

He's special like that.

[Moggio]

US National Debt when Bush Jnr. left office:

Just over $10 TRILLION

US National Debt after over 4 years of Obama in office:

$16.5 TRILLION

But yeah, this is a thread about the federal deficit. Cool stats though.

Mong, in his infinite wisdom, thinks the debt and the deficit are the same thing.

He's special like that.

NOWHERE did I say they're the same thing.

And not only that but DEATH ROW BLOW JOB'S stats are incorrect, as usual (especially since they're from a Goldman Sachs economist...ROTF! ).

What I'm doing is reminding everyone of the REAL damage the Obama Administration has done...