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CHART OF THE DAY: If Congress Does Nothing, The Deficit Will Disappear
While all this -- from the findings to the politicization of them -- is perfectly expected, the forecast also presents another opportunity to remind people that the medium-term budget outlook is perfectly fine if Congress adheres to the law as it's currently written. That means no repealing the health care law, for one, but more significantly it means allowing the Bush tax cuts to expire, and (unfathomably) allowing Medicare reimbursement rates for doctors to fall to the levels prescribed by the formula Congress wrote almost 15 years ago. In other words, no more "doc fixes."

Helpfully, CBO juxtaposed these two alternative futures in a pair of graphs and, just as last time, it projects that deficits will disappear entirely by the end of President Obama's second term (if he gets a second term) if Congress were to just sit on its hands and do nothing.

Take a look.

Ivytalk wrote:Complete and utter bullshit.

Ivytalk wrote:Complete and utter bullshit.

kalm wrote:I would imagine it's equally as painful to realize that Bush/Obama's tax cuts and the Iraq war contributed way more to the debt than Obama's stimulus package.

Baldy wrote:

kalm wrote:I would imagine it's equally as painful to realize that Bush/Obama's tax cuts and the Iraq war contributed way more to the debt than Obama's stimulus package.

Obama tax cuts?

BlueHen86 wrote:

Ivytalk wrote:Complete and utter bullshit.

How so? Do you have an actual argument to support your position, or just an empty post?

BlueHen86 wrote:

Ivytalk wrote:Complete and utter bullshit.

How so? Do you have an actual argument to support your position, or just an empty post?

Ivytalk wrote:

BlueHen86 wrote:
How so? Do you have an actual argument to support your position, or just an empty post?

Just that the graph is built on unrealistic assumptions. Even the author admits that it "unfathomably" assumes that Medicare reimbursements for MDs will fall. And it's no lead-pipe cinch that the Bush tax cuts will be allowed to disappear. The writer is correct, though, that the upcoming "showdown at the OK Corral" regarding lifting the debt ceiling is totally unnecessary and fails to address the underlying structural problems creating the deficit.

Fearless prediction: There will end up being means-testing for entitlements. Military spending will be cut. Income tax rates will be left alone in exchange for eliminating or curtailing the mortgage-interest deduction and charitable contributions. Spending will be cut gradually, and closer to the GOP number than the Dem number. Let's see whether I'm right.

houndawg wrote:

Ivytalk wrote: Just that the graph is built on unrealistic assumptions. Even the author admits that it "unfathomably" assumes that Medicare reimbursements for MDs will fall. And it's no lead-pipe cinch that the Bush tax cuts will be allowed to disappear. The writer is correct, though, that the upcoming "showdown at the OK Corral" regarding lifting the debt ceiling is totally unnecessary and fails to address the underlying structural problems creating the deficit.

Fearless prediction: There will end up being means-testing for entitlements. Military spending will be cut. Income tax rates will be left alone in exchange for eliminating or curtailing the mortgage-interest deduction and charitable contributions. Spending will be cut gradually, and closer to the GOP number than the Dem number. Let's see whether I'm right.

I think you have a pretty good chance of being right. I'd like to see the tax cuts expire with the proviso that the revenue generated could only be used to pay down existing debt. And it won't be easy to find anybody with the balls to take on the mortgage deduction.

Ivytalk wrote:

BlueHen86 wrote:
How so? Do you have an actual argument to support your position, or just an empty post?

Just that the graph is built on unrealistic assumptions. Even the author admits that it "unfathomably" assumes that Medicare reimbursements for MDs will fall. And it's no lead-pipe cinch that the Bush tax cuts will be allowed to disappear. The writer is correct, though, that the upcoming "showdown at the OK Corral" regarding lifting the debt ceiling is totally unnecessary and fails to address the underlying structural problems creating the deficit.

Fearless prediction: There will end up being means-testing for entitlements. Military spending will be cut. Income tax rates will be left alone in exchange for eliminating or curtailing the mortgage-interest deduction and charitable contributions. Spending will be cut gradually, and closer to the GOP number than the Dem number. Let's see whether I'm right.

kalm wrote:

Baldy wrote:
Obama tax cuts?

Well if it's his economy, they must now be his tax cuts.

blueballs wrote:For the umteenth million time, the workers and business owners of this country are not undertaxed, in fact we're overtaxed when you factor in regulatory and usage fees. Congress has a spending problem and the cure for the deficit is to reduce spending. Period. End of story.

The Paradox of Corporate Taxes

By DAVID LEONHARDT

The Carnival Corporation wouldn’t have much of a business without help from various branches of the government. The United States Coast Guard keeps the seas safe for Carnival’s cruise ships. Customs officers make it possible for Carnival cruises to travel to other countries. State and local governments have built roads and bridges leading up to the ports where Carnival’s ships dock.

But Carnival’s biggest government benefit of all may be the price it pays for many of those services. Over the last five years, the company has paid total corporate taxes — federal, state, local and foreign — equal to only 1.1 percent of its cumulative $11.3 billion in profits. Thanks to an obscure loophole in the tax code, Carnival can legally avoid most taxes.

It is an extreme case, but it’s hardly the only company that pays far less than the much-quoted federal corporate tax rate of 35 percent. Of the 500 big companies in the well-known Standard & Poor’s stock index, 115 paid a total corporate tax rate — both federal and otherwise — of less than 20 percent over the last five years, according to an analysis of company reports done for The New York Times by Capital IQ, a research firm. Thirty-nine of those companies paid a rate less than 10 percent...

Long-term Decline in Corporate Revenues

Other recent analyses have examined the stunning deterioration in the budget outlook, as well as the large, persistent deficits that now loom as far as the eye can see and that will swell further as the baby boom generation retires. In this analysis, we seek to provide context for the upcoming Congressional debate on corporate tax cuts, by examining trends in corporate tax revenues over recent decades. The analysis includes the following findings:

■Although taxes paid by corporations, measured as a share of the economy, rose modestly during the boom years of the 1990s, they remained sharply lower even in the boom years than in previous decades. According to OMB historical data, corporate taxes averaged 2 percent of GDP in the 1990s. That represented only about two-fifths of their share of GDP in the 1950s, half of their share in the 1960s, and three-quarters of their share in the 1970s.
■The share that corporate tax revenues comprise of total federal tax revenues also has collapsed, falling from an average of 28 percent of federal revenues in the 1950s and 21 percent in the 1960s to an average of about 10 percent since the 1980s.
■The effective corporate tax rate — that is, the percentage of corporate profits that is paid in federal corporate income taxes — has followed a similar pattern. During the 1990s, corporations as a group paid an average of 25.3 percent of their profits in federal corporate income taxes, according to new Congressional Research Service estimates. By contrast, they paid more than 49 percent in the 1950s, 38 percent in the 1960s, and 33 percent in the 1970s.
■Corporate income tax revenues are lower in the United States than in most European countries. According to data from the Organization for Economic Cooperation and Development, total federal and state corporate income tax revenues in the United States in 2000, measured as a share of the economy, were about one-quarter less than the average for other OECD member countries. Thirty-five years ago, the opposite was true — corporations in the United States bore a heavier burden than their European counterparts.

houndawg wrote:

Ivytalk wrote: Just that the graph is built on unrealistic assumptions. Even the author admits that it "unfathomably" assumes that Medicare reimbursements for MDs will fall. And it's no lead-pipe cinch that the Bush tax cuts will be allowed to disappear. The writer is correct, though, that the upcoming "showdown at the OK Corral" regarding lifting the debt ceiling is totally unnecessary and fails to address the underlying structural problems creating the deficit.

Fearless prediction: There will end up being means-testing for entitlements. Military spending will be cut. Income tax rates will be left alone in exchange for eliminating or curtailing the mortgage-interest deduction and charitable contributions. Spending will be cut gradually, and closer to the GOP number than the Dem number. Let's see whether I'm right.

I think you have a pretty good chance of being right. I'd like to see the tax cuts expire with the proviso that the revenue generated could only be used to pay down existing debt. And it won't be easy to find anybody with the balls to take on the mortgage deduction.