Shovels, Speech, and Tax Receipts.
Greetings, loyal minions. Your Maximum Leader had planned on writing more yesterday. But he has a persistent alergy problem which has been making him very tired. Well, probably the hacking and coughing all night which prevents him from sleeping is really making him tired… Anyho…
The Foreign Minister makes a feeble attempt to shovel the Minister of Propaganda’s posts further down the page. In this post your Maximum Leader will show you how you do it…
Speaking of speech…
The Minister of Propaganda is making some great leaps of logic in his “Bush hates free speech” posts. Your Maximum Leader re-read the Salon article. (Excursus: Allow your Maximum Leader to say that he did something (twice) he normally doesn’t do. Namely register for a silly one day pass at Salon. That drives him nuts. He hates it he does…) It seems quite alarmist for the M of P to conclude that the President hates free speech (at least that speech that is critical of him) thanks to the experience of two people who were “disinvited” to a “town hall meeting” by a nameless local party operative who happened to be wearing an earpiece. The White House press office an the Secret Service both don’t know what the person with the earpiece was doing. And the person with the earpiece does not appear to be acting on some sort of major policy directive to keep people with Kerry bumper stickers out of Presidential events. This occurance certainly doesn’t rise to the level of “Nixonian” power abuse. Though if one is already predisposed towards thinking the worst about George W. Bush, this story fits right in with that mentality. Your Maximum Leader has problems, however, extrapolating the experience of the article author up to the level of George W. Bush hates free speech.
Now, in fairness to the M of P, your Maximum Leader will say that it is not good form to deny invited people access to Presidential events which are paid for at taxpayer expense. But your Maximum Leader will not go so far as to say you have to invite just anyone to a Presidential event.
Your Maximum Leader doesn’t believe it is incumbent on any President to invite people of dissimilar political persuasions to events. On the other hand, your Maximum Leader does think it is a sortsighted policy decision to insulate the President from different points of view. And your Maximum Leader will admit that President Bush does give the appearance of being insulated from other points of view. Your Maximum Leader doesn’t actually believe that President Bush is unaware of points of view other than his own. Indeed, your Maximum Leader is sure that the President is well aware of differing opinions. He just doesn’t give them much credence and does what he believes. If you disagree with his beliefs, then his actions seem particularly dispicable and badly motivated. Your Maximum Leader agrees with Bush policy stances probably 60% (or more) of the time. But where he disagrees with the President’s policy he doesn’t attribute the disagreement to malificent motives.
NB: Remember! In the M.W.O. there will be no right to free speech. You might actually have the de facto ability to speak freely, but don’t think it will be guaranteed. Indeed, it will be the inability of the Smallholder to keep quiet that will likely make him an early purge target. The M of P on the other hand will accept bribes to live a licensious life at state expense and will hold his tounge. And if the M of P can’t hold his tounge… Well then he’ll have to be purged too. Sad but true.
Now on to the third topic…
Did you miss it my minions? Did you miss the positive news? It was last week when it was reported. Your Maximum Leader waited and waited to see if Smallholder would notice it. But he didn’t. Smallholder isn’t attuned enough with the spiritual to feel the spirit of Arthur Laffer laughing. Why was Laffer laughing?
Because tax receipts unexpectedly increased. Here are salient portions of the article from last week’s Washington Post.
Tax Receipts Exceed Treasury Predictions
By Jonathan Weisman
After three years of rising federal budget deficits, a surge of April tax receipts brought unexpected good news to fiscal policymakers — the tide of government red ink appears to be receding.
The Treasury Department this week reported there would be a $54 billion swing from projected deficit to surplus in the April-to-June quarter, after an unanticipated gush of tax payments poured into the Treasury before the April 15 deadline. That prompted private forecasters to lower their deficit projections for the fiscal year that ends in September.
Budget analysts inside and outside the government said the positive turn is likely to be short-lived. Indeed, after a four-year absence, the Treasury Department announced yesterday it is considering reissuing its 30-year Treasury bond to help finance long-term government debt, jolting the bond markets and pushing down the price of existing 30-year securities.
But in the short term, many forecasters said the budget deficit
appears to have crested.
“I think it has turned the corner,” said David Wyss, chief economist at Standard & oor’s, the credit rating agency. “My guess is 2004 will have been the worst year.”
…
In January, Bush administration officials projected that the streak would continue, with a deficit of $427 billion for the fiscal year that ends Sept. 30. But that estimate was widely regarded as inflated and many forecasters believed the total would be more like $400 billion.
April, however, turned out to be a far better month than anticipated. Taxpayers were confronted with unexpected tax bills, many from capital gains and the alternative minimum tax, a parallel income tax system designed to hit the rich but that is increasingly pinching the middle class. The Treasury announced this week that it will repay $42 billion in federal debt in the third April-to-June quarter, instead of borrowing $12 billion.
Wall Street analysts reduced their deficit forecasts this week, from around $400 billion to around $370 billion. In nominal dollar terms, that would still be the third-highest deficit on record. Even measured against the size of the economy, “it’s still a high number,” said Brian Bethune, director of financial economics at Global Insight Inc., a Massachusetts forecasting firm. “It needs to come down.”
One factor should help in the short term: Seven months into the fiscal year, Congress is only now passing the $82 billion emergency war spending bill for fiscal 2005, which means that much of the money will be spent in 2006. That should reduce the 2005 deficit while bringing down war costs next year. Wyss said the deficit should continue to fall in 2006 and 2007.
“A month ago, I would have told you the budget numbers were on track for $400 billion. To get an adjustment this quickly would suggest a huge surprise,” said Edward F. McKelvey, an economist and federal budget analyst at Goldman Sachs & Co.
Few economists say the U.S. government is out of the woods. One of the reasons for the turnaround, the alternative minimum tax, should be reduced or eliminated before it starts impinging on economic growth, Bethune said.
…
Treasury officials have long resisted reissuing 30-year bonds, in part, because “nobody wanted to admit the deficits were permanent,” said Wyss, the Standard & Poor’s economist.
Treasury officials disputed that notion during a meeting with reporters yesterday.
“The deficit has nothing to do with it,” said Timothy S. Bitsberger, assistant Treasury secretary for financial markets. “In fact, we think the deficits are coming down.”
Wall Street wasn’t buying it. “If you weren’t borrowing this much, you wouldn’t be doing it,” Wyss said. “No question.”
After four years of rising budget surpluses, the Treasury announced in October 2001 that it would no longer issue the 30-year bond. The decision was intended to lower the cost of government borrowing, since bonds that mature in more than 10 years, known as long bonds, typically offer higher interest rates to attract buyers willing to accept the added risk of such long maturation periods.
With a 2001 forecast of surpluses totaling $5.6 trillion over 10 years, Treasury officials figured they could focus on reducing debt, not adding to it. And eliminating the 30-year bond would push buyers to the 10-year Treasury bond. Since 30-year mortgages are closely tied to the 10-year bond, the added demand for that bond would drive down mortgage rates and help the economy.
But forecasted surpluses turned into huge, forecasted deficits. Since President Bush entered office, the total federal debt — including debt to the public and debt owed the Social Security system — has risen from $5.7 trillion to $7.8 trillion. Long-term interest rates should begin rising in the near term, so the government should lock in interest rates on 30-year bonds soon, Wyss said, before the cost of federal
borrowing begins to rise.
Moreover, aging populations around the world have forced governments — especially in Europe — to shore up pension funds by requiring that they invest in long bonds. Washington is considering similar changes for its private pension systems. That has sent dmand for long bonds skyrocketing, said Neal M. Soss, chief economist at Credit Suisse First Boston LLC.
Bush’s proposal to convert part of Social Security to individual investment accounts would also add considerable demand for 30-year bonds if it were to pass, Soss said. A decision on whether to issue 30-year bonds will be announced Aug. 3, Bitsberger said.
So it seems as though there are many reasons to hope for a more promising tomorrow. But the unanswered question is why would tax receipts increase. There was mention of the Alternative Minimum Tax affecting more Americans than ever before. The AMT is the tax that you pay if the government has decided that you make too much money and need to pay taxes above and beyond the regular tax rate for your income level. If more people are paying the AMT that would imply that more people are earning more. And if more people are earning more that would imply that the economy is growing.
But how could both the economy and tax reciepts grow after a tax rate cut? It doesn’t make any sense… Unless… Your tax rate is on the RIGHT SIDE of the Laffer curve.
As your Maximum Leader said back in March… He personally doesn’t believe that the US income tax rates are on the left side of the Laffer curve. He does still believe that much much more needs to be done to curtail spending and bring our financial house under control. But this is a promising sign.
Carry on.
